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.

A spokesman for the Treasury Department’s Office of Foreign Assets Control (“OFAC”) told Export Law Blog this morning that discussions between OFAC and the North Pole over Santa Claus’s Christmas Eve itinerary had once again broken down and were not expected to be resumed before Santa’s scheduled departure on December 24 at 10 pm EST.

The dispute arose from a dilemma that the U.S. sanctions against Cuba posed for Santa’s planned delivery of toys to children in Cuba. If Santa delivers toys for U.S. children first, there will be toys destined for Cuba in the sleigh in violation of 31 C.F.R. § 515.207(b). That rule prohibits Santa’s sleigh from entering the United States with “goods in which Cuba or a Cuban national has an interest.” On the other hand, if Santa delivers the toys to Cuban children first, then 31 C.F.R. § 515.207(a) prohibits the sleigh from entering the United States and “unloading freight for a period of 180 days from the date the vessel departed from a port or place in Cuba.”

A press release from the North Pole announced that the OFAC rules left Santa no choice but to bypass the children of the United States this Christmas. A spokesman from OFAC warned that if Santa attempted to overfly the United States, his sleigh would be forced to land and his cargo seized. He continued:

We know that the outcome is harsh, but we cannot allow the Cuban regime to continue to be propped up by Santa’s annual delivery of valuable Christmas toys to Cuban children. We told Santa that, as long as he only delivered food, books, and mobile phones to children in Cuba he would be eligible to enter the United States under the exception in § 515.550, but he insisted on delivering teddy bears as well. We draw the line at teddy bears, so in our view it’s his fault, not ours.

Congressional leaders did not return our calls.

This post is an annual tradition and has appeared every year since 2007. Alert readers will notice a slight change in this year’s post.

Export Law Blog would like to take the opportunity of this post to extend its best holiday wishes to all of its readers. Posting will be light between now and the end of the holidays.