Today, the Office of Foreign Assets Control (“OFAC”) amended the Cuban Assets Control Regulations to, among other things, expand the general licenses authorizing travel by U.S. citizens to Cuba. Under the new amendments, U.S. citizens can travel to Cuba under the people-to-people general license without doing so under the auspices of a sponsoring organization. As long as the individual arranges for himself or herself a “full-time schedule of educational exchange activities that will result in meaningful interaction between the traveler and individuals in Cuba,” the trip is authorized under the general license for educational activities in section 515.565. The amended rules still exclude travel that is “primarily tourist-oriented” but eliminates the exclusion for “self-directed educational activities that are intended only for personal enrichment.”

A new example tries to grapple with the distinction between a trip that is primarily tourist-oriented and a permitted self-directed activity that involves a meaningful exchange with individual Cubans:

An individual plans to travel to Cuba to rent a bicycle to explore the streets of Havana, engage in brief exchanges with Shopkeepers while making purchases, and have casual conversations with waiters at restaurants and hotel staff. None of these activities are educational exchange activities that will result in meaningful interaction between the traveler and individuals in Cuba, and the traveler’s trip does not qualify for the general license.

In that case, go directly to OFAC jail; do not pass go. As you might imagine, it may be difficult for individuals, anxious to swill down a few mojitos in Old Havana before there is a Starbucks on every corner and an Olive Garden in every storefront, to grasp the difference between a meaningful exchange and a pub crawl. The checks and balances of a sponsoring organization will be absent.

Worse yet, consider this: under the rules for the people-to-people license, the individual will need to “retain records sufficient to demonstrate” a “full-time schedule of activities” that result in a meaningful interaction with Cubans (other than waiters, bartenders and hotel staff). Forgive my cynicism (or not), but a large number of individuals engaged in self-directed people-to-people (other than waiters, bartenders and shopkeepers) travel are not going to have a clue as to how to do this. Unless this is intended to be a requirement that is never enforced and a concealed license for tourism in Cuba, this is not going to end well for many people relying on this self-directed license. Don’t get me wrong, as you can imagine, I’m all for unfettered travel to Cuba. But I really don’t relish the possibility that, 18 months from now, I’ll be getting calls to help out a friend whose kids went to Cuba and thought that their Instagram account qualified as adequate documentation of their self-directed people-to-people trip to Cuba.

Photo Credit: Mojito by Sami Keinänen [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/4GyGSs [cropped]

A group of publishers have just petitioned the White House to “End the Book Embargo Against Cuba.” Say what? It’s illegal to send books to Cuba or import books from Cuba? Not so much. Due to the information exception in the Berman amendment, the import of books from, and the export of books to, Cuba is permitted and may not be forbidden by OFAC. But you would never know that from the petition.

Of course, what’s really going on here is that the information exception, as narrowly construed by OFAC, is defined to include only information and books already in existence. You can import Che Guevara’s El Diario del Che en Bolivia from Cuba and export Henry James’s What Maisie Knew to Cuba because both works are already in existence. What you can’t do is pay an author in Cuba to write a book for you and edit it for publication, which is, I suppose, what the publishers, however inartfully, are getting at.

The publishers do have an excellent argument to make, and it is somewhat baffling that they did not make it directly. Under the recent amendments to the Cuban Assets Control Regulations, movie, television and record companies are allowed to go hog-wild in Cuba, hiring Cubans to work on “filming or production of media programs (such as movies and television programs), the recording of music, and the creation of artworks in Cuba,” leaving book publishers behind in the dust. That, simply put, does not make an ounce of sense. I suspect that given that many publishers also have interest in music and movie production, they aren’t anxious to complain openly about differential treatment of movies, music and books.

Photo Credit: Poro en el mercado de libros usados by Javier Ignacio Acuña Ditzel [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/5xQkWj [cropped]

Yesterday the Office of Foreign Assets Control (“OFAC”) announced that it had extracted $304,706 from Halliburton Atlantic Limited and Halliburton Oversea Limited in connection with unlicensed exports of $1,189,752 in goods and services by those companies to the joint venture granted the concession to the Cabinda Onshore South Block in Angola.

Wait, you ask, did the U.S. reimpose sanctions on Angola while I was not looking? Nope. The problem here was that Unión Cuba-Petróleo (CUPET) owns a whopping 5% interest in the joint venture at issue.

Wait, you ask again, did OFAC suddenly get rid of the 50% rule? I thought you didn’t have to worry about interests held by blocked parties less than 50 percent, individually or in the aggregate. You don’t normally, but the Cuba rules are different. Section 515.201 of the Cuban Assets Control Regulations prohibit any dealings in property in which any Cuban “has at any time on or since the effective date of this section had [sic] any interest of any nature whatsoever, direct or indirect.”

So, since CUPET had a five percent interest in the joint venture, exports of goods and services to it were illegal. Further, those exports would have been illegal if CUPET had only a 0.0001% interest in the joint venture because the regulation covers “any” interest. And they would have been illegal if Cuba had a 0.0001% interest in an Angolan company that had a 0.0001% interest because the regulation covers “any interest … direct or indirect.” Worse, the exports would have been illegal if CUPET had divested its 0.0001% interest in the Angolan company with a 0.0001% interest in the joint venture ten years before the exports. That would be because the regulation covers property in which a Cuban “has” or “had” any interest. One might be able to seek refuge in the ungrammatical peculiarities of  “has at any time on or since the effective date of this section had [sic] any interest of any nature whatsoever, direct or indirect” — read it carefully — but I wouldn’t count on it.

In theory, the breadth of this regulation imposes a nearly impossible task on any exporter, requiring the exporter to ferret out any remote Cuban abuela or abuelo hiding behind a potted palm somewhere before exporting anything, particularly given that violations of OFAC rules do not require knowledge. In this case, OFAC noted that Halliburton had been supplied documents showing the Cuban interest, but this was not the basis for liability here but instead an “aggravating factor,” suggesting that OFAC would have fined Halliburton even if had not known of CUPET’s paltry, non-controlling interest in the joint venture.

You have to wonder whether the federal employees who run OFAC have ever worked outside the government and have even the slightest conception of the real impact of requiring businesses to confirm that there is no Cuban interest, past or present, of any size whatsoever, in any foreign customer before exporting goods or services to that customer.

Two days ago, the Office of Foreign Assets Control (“OFAC”) announced that CGGVeritas S.A, a French company, and its U.S. and Venezuelan affiliates had agreed to hand over $614,250 to settle allegations that the companies had violated the U.S. embargo on Cuba. Most of the violations involve CGG’s export of U.S.-origin parts and equipment to two vessels engaged in oil exploration activities in Cuban waters.

Under most sanctions regulations, re-export by foreign persons of U.S. origin goods that are EAR99 is not a violation, but the situation for Cuba is different and re-exports by foreign persons of such goods will be a violation. Section 515.201 prohibits “any person” (that includes the French) from “all dealings in” any “property” that is “subject to the jurisdiction of the United States” and in which Cuba or any Cuban national has or had “any interest of any nature whatsoever.” On its face, that prohibits all exports of U.S. origin items by anyone to Cuba.

Because licensing jurisdiction for exports to Cuba has been ceded by OFAC to the Bureau of Industry and Security (“BIS”), section 515.533 provides that exports are authorized under OFAC rules if the export is “licensed or otherwise authorized” by BIS. Section 746.2 of the EAR indicates that a license is required to “export or reexport … all items subject to the EAR,” which of course includes all EAR99 items in the United States or manufactured outside the U.S. with more than 10% controlled U.S. content. There is nothing in either BIS’s rules or OFAC’s rules for Cuba comparable to section 560.205 of the Iranian Transactions and Sanctions Regulations to permit re-exports by foreign persons of EAR99 goods.

CGG, of course, is in an interesting position because under Council Regulation (EC) No 2271/96, CGG would have broken the law in its home country by refusing to send the U.S. parts and equipment based on the U.S. embargo on Cuba. OFAC, naturally, takes the position that the U.S. has jurisdiction over the entire planet (if not the entire universe) and that U.S. law naturally trumps any laws passed by other (and necessarily inferior) countries or governments such as France or the European Union. BIS takes the same position so CGG is no doubt busy bickering with BIS over how much it owes BIS for complying with the law in CGG’s home country.

The other violation cited by OFAC involved CGG’s Venezuelan affiliate, which was a subsidiary of CGG’s U.S. affiliate, engaging in the  “processing of data from seismic surveys conducted in Cuba’s Exclusive Economic Zone benefiting a Cuban company.” This was alleged also to be a violation of section 515.201, but that can only be the case if the language of the regulation, which prohibits U.S. persons from dealing in “property” in which Cuba or a Cuban national “has any interest,” is interpreted such that the meaning of “property” is stretched beyond all reasonable bounds. Even given the broad definition of data contained in section 515.311 it doesn’t include within its bounds mere data about Cuba. If it did, is satellite imagery of Cuba property in which Cuba has an interest? Has Google violated the embargo by processing that information for online presentation? Even if that benefits companies in Cuba? There might be an argument that a violation occurred if the seismic data survey was conducted pursuant to a contract with a Cuban entity giving it proprietary rights in those results — but that is not what OFAC says happened.