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In response to Russia’s invasion of Ukraine, the U.S. government has deployed a whole-of-government approach to impose sanctions and tighter export controls on Russia. This alert summarizes the key export restrictions currently in place, including those imposed by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) and by the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC)). These controls significantly curtail exports, reexports and transfers (in country) of technology, commodities, and software (collectively, the “items”) destined for or transiting Russia or Belarus and items intended for certain persons affiliated with Russia or Belarus. The BIS restrictions are described in the Export Administration Regulations (<a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C" target="_blank" rel="noreferrer noopener">EAR</a>), which are set forth in 15 C.F.R. Parts 730-774. This website provides an overview of the key export controls currently in place.

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This alert is not intended to be and is not a detailed summary of the export controls implemented in response to the invasion of Ukraine. Rather, it is a tool to help businesses, both American and foreign, identify whether their transactions with Russia, Belarus or Ukraine may now require a license or be prohibited under the wide-ranging controls that have been imposed. A review of the regulations will be necessary to determine specific licensing requirements.

An overview of the sanctions imposed by the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), which apply in addition to the export controls summarized in this alert, can <a href="https://www.bakerlaw.com/insights/current-state-of-u-s-economic-sanctions-imposed-in-response-to-russias-invasion-of-ukraine-february-22-2024/" target="_blank" rel="noreferrer noopener">be viewed here.</a>

Executive Summary of Changes Since October 4, 2023

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Effective January 23, 2024, BIS implemented a new rule that expanded the scope of items subject to license requirements under the EAR for export or reexport to, or transfer within, Russia or Belarus (the “January 2024 Rule”) and imposed new export controls on certain items destined for Crimea and Iran. In addition, the January 2024 Rule corrected and clarified certain existing provisions of the EAR.

Key new restrictions imposed by the January 2024 Rule are:

Addition of items covered by 94 more six-digit Harmonized Tariff Schedule (HTS) codes to Supplement No. 4 to Part 746,&nbsp;Russian and Belarusian Industry Sector Sanctions Pursuant to Section 764.5(a)(1)(ii) of the EAR. These HTS codes cover certain aircraft, spacecraft, and related parts, as well as industrial items needed for manufacturing. As a result, now all items covered by Chapters 84, 85, 88 and 89 of the HTS schedule require a license under Section 764.5(a)(1)(ii) for export or reexport to or transfer (in-country) within Russia and Belarus.

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Addition of HTS Code 852910, which covers antennas and certain parts for antennas, to Supplement No. 7 of Part 746. As a result, a license is now required for the items when destined for Russia, Belarus, Iran, or Crimea.

Implementation of a zero&nbsp;de minimis&nbsp;levelfor U.S.-origin ECCN 600 series and 9x515 subsection .y items when determining whether foreign-produced items intended for Russia or Belarus are subject to the EAR. Thus, a greater number of foreign-produced items are now subject to EAR license requirements when exported from abroad or reexported or transferred to Russia or Belarus.

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The January 2024 Rule also corrected or clarified existing controls, in some cases with the effect of loosening controls, as follows:

A BIS license is no longer required under Section 746.6 (controls on exports to the covered regions of Ukraine – i.e., Crimea, Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR)) for items destined to or transferred within the covered regions when related to the deployment of the Armed Forces of Ukraine.

U.S.-origin firearms subject to the EAR provided to the Ukrainian military under a BIS or Department of State license may be imported into the United States for repair or replacement and returned to the Ukrainian military under License Exception RPL (Servicing and Replacement of Parts and Equipment).

A case-by-case review policy for license applications connected to the safety of flights is now the standard under Sections 745.6 and 746.10; this change better aligns with the case-by-case review policy applicable under Section 746.8.

BIS clarified the order of review for CCL and EAR99 items listed in or covered by Supplements 2, 4, 5, 6 or 10 to Part 746. The clarifications do not change or modify any of the existing controls concerning items subject to the EAR destined to or within Russia and Belarus or to Russian and Belarussian oligarchs and malign actors as defined in Section 746.10 of the EAR.

The January 2024 Rule clarified that certain fasteners and other minor parts and components are excluded from the scope of Supplements No. 2, 4, 5 and 7 to Part 746 but remain subject to the end-use and end-user controls in Part 744 of the EAR.

The January 2024 Rule also clarified that medicines (as defined in the EAR) are excluded from Supplement No. 6 to Part 746 of the EAR.

Finally, the January 2024 Rule conformed license exceptions available under Sections 746.5, 746.8 and 746.10 as subject to the general restrictions and terms and conditions of each license exception provided in Part 740 of the EAR.

I. Overview of BIS Export Controls Relating to Russia and Belarus

A. BIS License Requirements Relating to Russia

Exports (direct or indirect), reexports (from one third country to another) and transfers (in country) (any transfer within any third country) of the following items are subject to license requirements:

All items on the EAR’s Commerce Control List (CCL).

Luxury goods (EAR99) listed in Supplement No. 5 to Part 746 of the EAR.

Sector-specific items listed in Section 746.5 and Supplement Nos. 2, 4 and 6 to Part 746 of the EAR.

Any items subject to the EAR going to a military end use or end user (MEU) or a military intelligence end use or end user (MIEU), regardless of whether located in or outside Russia (note that slightly different due diligence standards apply for exports to end users outside Russia; please consult Section 744.21 of the EAR).

Foreign-produced items that are subject to the EAR under the FDPRs, including the specific Russia/Belarus rules in Sections 746.8 and 734.9(f) and (g) of the EAR.

Any item subject to the EAR if a person on the BIS Entity List or BIS Denied Persons List or another sanctioned persons list is involved in the transaction.

For a detailed summary of each of these requirements, see Part II below.

B. BIS License Requirements Relating to Belarus

Exports, reexports and transfers (in country) of the following items are subject to license requirements:

Sector-specific items listed in Section 746.5 and Supplement Nos. 2, 4 and 6 to Part 746 of the EAR (noting that Section 746.5(a)(1)(i) and Supplement No. 2 apply only to use in Arctic offshore locations or shale formations in Belarus).

Any items subject to the EAR going to an MEU or MIEU, regardless of whether it is located in or outside Belarus (note that slightly different due diligence standards apply for exports to end users outside Russia; please consult Section 744.21 of the EAR).

Foreign-produced items that are subject to the EAR under the FDPR, including the specific Russia/Belarus rules in Sections 746.8 and 734.9(f) and (g) of the EAR.

For a detailed summary of each of these requirements, see Part III below.

C. License Requirements Relating to the Covered Regions of Ukraine

All items subject to the EAR, including EAR99 items.

The covered regions of Ukraine are Crimea, the DNR, and the LNR.

For a detailed summary of each of these requirements, see Part IV below.

The following requirements apply to U.S. Munitions List (USML) items:

All defense articles and defense services on the USML contained in the International Traffic in Arms Regulations (ITAR) require licenses for export to Belarus, and applications for such licenses have long been subject to a policy of denial.

All defense articles and defense services on the USML require licenses for export to Russia, and applications for such licenses are subject to a policy of denial, except for license applications related to government space cooperation, which will be considered on a case-by-case basis.

For a detailed summary of each of these requirements, see Part V below.

In addition to the information provided in Parts II through V regarding the BIS export controls applicable to Russia, Belarus and the covered regions of Ukraine, as well as ITAR controls applicable to Russia and Belarus, further information on the BIS Entity List-based controls and compliance tips may be found in Parts VI and VII below.

II. License Requirements Relating to Russia

Items subject to the jurisdiction of BIS under the EAR include most items exported from the United States, U.S.-origin items, wherever located, and foreign-produced items subject to the EAR under the&nbsp;De Minimis&nbsp;Rule or any of the applicable FDPRs. The EAR’s jurisdiction is based on the item; both U.S. and foreign persons must comply with the EAR – including the EAR’s General Prohibition 10, which prohibits any transaction related to an item that has been exported in violation of the EAR. For example, BIS has issued several public notices regarding Russian-owned aircraft that are subject to these prohibitions.

All items on the EAR’s CCL require a BIS license for export (direct and indirect), reexportation (from one third country to another) or transfer (in country; any transfer within any third country)&nbsp;<a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-746#p-746.8(a)(1)" target="_blank" rel="noreferrer noopener">(15 C.F.R. Section 746.8(a)(1))</a>&nbsp;if the intended end user is in Russia or the item will transit Russia.

As of April 8, 2022, any item listed in any of the 10 CCL categories requires a BIS license when destined for Russia, regardless of the end use or end user. The license requirements for items in Categories 3-9 of the CCL were&nbsp;<a href="https://www.federalregister.gov/documents/2022/03/03/2022-04300/implementation-of-sanctions-against-russia-under-the-export-administration-regulations-ear" target="_blank" rel="noreferrer noopener">imposed on February 24, 2022</a>, and the license requirements for items in Categories 0-2 of the CCL were imposed on&nbsp;<a href="https://www.federalregister.gov/documents/2022/04/14/2022-07937/expansion-of-sanctions-against-russia-and-belarus-under-the-export-administration-regulations-ear" target="_blank" rel="noreferrer noopener">April 8, 2022</a>. The permitted uses of license exceptions are very limited though; for example, certain carve-outs for some mass market items classified under ECCNs 5A992 or 5D992 may apply.

Deemed exports and reexports are not subject to these license requirements.

Items, including EAR99 items, subject to <a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-746#746.8" target="_blank" rel="noreferrer noopener">Russian industry sector sanctions</a> require a BIS license (<a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-746#746.5" target="_blank" rel="noreferrer noopener">15 C.F.R. Section 746.5</a>).

A BIS license is required for the export, reexport or transfer (in country) to or within Russia of items subject to the ECCNs listed in Section 746.5(a)(1)(i) or any of the items listed in Section 746.5, Supplement No. 2 to Part 746 of the EAR (for certain deepwater oil-and-gas-related end uses), and for the export, reexport or transfer (in country) to or within Russia of such items (for certain Arctic offshore or shale formation oil-and-gas-related end uses). In addition, a BIS license is required for the export, reexport or transfer (in country) to or within Russia of items listed in&nbsp;<a href="https://bis.doc.gov/index.php/documents/regulation-docs/420-part-746-embargoes-and-other-special-controls/file" target="_blank" rel="noreferrer noopener">Supplement Nos. 4 and 6 to Part 746 of the EAR.</a>

As of October 2, 2023, all items in Supplement Nos. 2 and 4 to Part 746 of the EAR were identified by a six-digit HTS code and description. The license requirement is based on the six-digit HTS code. This means that if an item is classified under the six-digit HTS code but does not correspond to the HTS description, the item is nonetheless covered and subject to licensing requirements. If any item is potentially described in more than one HTS description, the HTS code controls license determinations. Further, any item classified under an eight- or 10-digit HTS code that begins with a listed six-digit HTS code is also subject to license requirements.

As of February 21, 2024, there are over&nbsp;<a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-746/appendix-Supplement%20No.%204%20to%20Part%20746" target="_blank" rel="noreferrer noopener">2,100 items listed in Supplement No. 4</a>, a list of commercial and industrial items that require a license for export or reexport to or transfer within Russia or Belarus. Supplement No. 4 covers all items classified in Chapters 84, 85, 88 and 90 of the HTS.

As of October 2, 2023, Supplement No. 4 included modified or designed “components,” “parts,” “accessories,” and “attachments” for items listed in Supplement 4 regardless of the HTS code or HTS description of the “components,” “parts,” “accessories,” and “attachments.” The January 2024 Rule clarifies that while certain “parts” or minor “components” (i.e., fasteners, washers, spacers, insulators, grommets, bushings, springs, wires or solder) are excluded from the scope of Supplement No. 4 (as well as Supplement Nos. 2, 5 and 7 to Part 746 of the EAR, discussed above and below), the end use and end-user requirements of Part 744 of the EAR continue to apply to these items.

License applications for items in Supplement Nos. 2, 4, and 6 submitted by companies not headquartered in Country Groups D:1, D:5, E:1 or E:2 and intending to curtail or close all operations in Russia will be reviewed on a case-by-case basis to determine whether any item to be disposed of will benefit the Russian government or military.

Over 130 items are listed in&nbsp;<a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-746/appendix-Supplement%20No.%206%20to%20Part%20746" target="_blank" rel="noreferrer noopener">Supplement No. 6</a>&nbsp;as of February 21, 2024. The items in Supplement No. 6 include discrete chemicals, biologics, fentanyl and its precursors, and related equipment. The chemicals are specified based on their Chemical Abstracts Service (CAS) Registry Numbers in certain concentrations by weighted percentage and include:

Triethylamine (CAS 121-44-8), trimethylamine (CAS 75-50-3), lithium chloride (CAS 7447-41-8), lithium chloride hydrate (CAS 85144-11-2), (44) lithium chloride monohydrate (CAS 16712-20-2) and lithium carbonate (CAS 554-13-2).

Assay kits and reagents for nucleotide or peptide isolation, extraction or purification, n.e.s.

Laboratory equipment, including “components,” “parts,” “accessories” and “consumable materials” for such equipment for the analysis or detection, destructive or nondestructive, of chemical substances, n.e.s.

The license requirement is based on product description and the CAS in distinct concentrations. Supplement No. 6 also includes quantum computing items, cryogenic refrigeration systems, additive manufacturing equipment, microscopes and several other items. The January 2024 Rule clarified that medicines as defined in Section 722.1 of the EAR are not included in Supplement No. 6 (i.e., medicines that meet the definition of “drug” in Section 201 of the Federal Food, Drug, and Cosmetic Act). However, it should be noted that certain medicines are on the CCL and thus subject to license requirements, as discussed above.

In the January 2024 Rule, BIS issued guidance on the order of review for determining whether a license required and, if yes, whether a license exception applies for Section 746.5 and made a conforming change to Section 746.8. The clarifications were made because Supplement Nos. 4 and 6 to Part 746 contain both EAR items and items on the CCL, but the CCL items are subject to license requirements under Section 746.8.

Under Section 746.5,&nbsp;Russian and Belarusian Industry Sector Sanctions, if an item has an ECCN on the CCL, then you start with Section 746.8, which covers all items on the CCL. A license will be required to export, reexport, or transfer (in-country) to or within Russia or Belarus any items covered by Section 746.8. See below for limited availability for license exceptions. If the item is EAR99, then you should determine the HTS code and whether it is covered in Supplement 4 or 6 to Part 746, and if yes, then a license will be required under Section 746.5(a)(1)(ii) or (iii). Due to the complexity of the new order of review, it may require assistance from an expert in HTS codes, export classifications, and the EAR to determine whether a license is required.

EAR99 Luxury Goods Require a BIS License <a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-746#746.10" target="_blank" rel="noreferrer noopener">(15 C.F.R. Section 746.10)</a>

<a href="https://www.bis.doc.gov/index.php/component/docman/?task=doc_download&amp;gid=2932" target="_blank" rel="noreferrer noopener">Since March 11, 2022</a>, a BIS license has been required for exports, reexports and transfers to or within Russia of certain luxury goods subject to the EAR, as well as to designated Russian oligarchs or other persons, regardless of their location.

Over 600 luxury goods are listed in&nbsp;<a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-746/appendix-Supplement%20No.%205%20to%20Part%20746" target="_blank" rel="noreferrer noopener">Supplement No. 5 to Part 746 of the EAR</a>&nbsp;as of February 21; they include household and department store items such as kitchen appliances, fans, radio/TV products, certain spirits, tobacco products, clothing items, jewelry, leather items, plastic items, vehicles, antiques, sporting goods and other goods. Unlike items listed in other supplements to Part 746, the items in Supplement No. 5 are identified by a Schedule B number, the two-digit Schedule B chapter heading and a 10-digit commodity description. In certain cases, value thresholds apply, although in many cases, value thresholds have not been assigned, and in some cases, the value thresholds have changed over the course of the past year. Thus, it is important to check the value thresholds to determine whether identified luxury goods were or will be subject to the licensing requirements of Supplement No. 5 to Part 746 of the EAR.

The January 2024 Rule clarified the order of review for licensing determinations under Section 746.10 for luxury goods. If the item has an ECCN on the CCL, you should review the Section 746.8 license requirements first. If the item is EAR99, you should review Supplement 5 to Part 746 to determine whether a license is required under Section 746.10(a)(1), which applies to luxury goods destined for Russia or Belarus. If it concerns Russian or Belarussian oligarch or maligned actors as defined in Section 746.10(a)(2), if it is an item with an ECCN on the CCL then there is likely a license requirement under Section 746.8 and under the OFAC regulations. However, if it is an EAR99 item identified in Supplement 5 to Part 746 and is going to an oligarch or maligned actor anywhere in the world, a license will likely be required under Section 746.10(a)(2) and under the OFAC regulations.

The January 2024 Rule clarified how to apply&nbsp;de minimis&nbsp;calculations for foreign-produced goods incorporating luxury good items identified in Supplement No. 5. The January 2024 Rule added a new subsection, 746.10(a)(3), to clarify that parties can exclude any U.S.-origin content if the item is identified in Supplement No. 5 and the foreign-made item will be exported from abroad or reexported from a country listed in Supplement 3 to Part 746, provided that the content is not excluded from the applicable scope column in Supplement No. 3. This aligns Section 746.10 with Sections 746.5 and 746.8. License applications for luxury goods listed in Supplement No. 5 are reviewed on a case-by-case basis for those goods that meet humanitarian needs. As discussed above, license applications for disposition of items subject to the EAR under certain conditions are reviewed on a case-by-case basis.

EAR99 Items to MEUs Require a BIS License <a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-744#744.21" target="_blank" rel="noreferrer noopener">(15 C.F.R. Sections 744.21 and 744.22)</a>

A BIS license is required for the export, reexport or transfer to or within Russia and Belarus of all items subject to the EAR (including foreign-produced items subject to the EAR as well as U.S.-origin items) to MEUs or MIEUs located anywhere in the world. Conducting due diligence to verify whether an entity qualifies as an MEU or MIEU remains essential, but the Russian and Belarusian MEUs and MIEUs that are located outside Russia or Belarus are on the BIS Entity List in Supplement No. 4 to Part 744 of the EAR. The terms “military end use” and “military end user,” as well as “military intelligence end use” and “military intelligence end user,” are broadly defined in the EAR.

As of February 21, 2024, BIS has designated over 400 Russian and Belarusian entities/individuals as MEUs. They are now on the BIS Entity List. No license exceptions, other than for limited use of License Exception GOV, are available to overcome this license requirement.

Use of License Exceptions Has Been Severely Limited

The availability of license exceptions has been severely limited for transactions involving Russia. Even when a license exception is available, the terms and conditions of its use are very restrictive. However, to support Ukraine’s war efforts against Russia, the January 2024 Rule clarified that items destined to or transferred in Crimea, the DNR or the LNR for use by the Ukrainian military are not subject to the license requirements of EAR Section 746.6. Similarly, the January 2024 Rule clarified that firearms subject to the EAR previously exported, reexported, or transferred under a BIS or DDTC license to Ukraine can be temporarily imported for service and repair in the United States and sent back for use by the Ukrainian military, notwithstanding the exceptions to License Exceptions TMP and RPL related to Ukraine. It is important to review each specific control carefully, as the availability and scope of license exceptions differ among the various controls.

Certain Foreign-Produced Items Require a BIS License

There are two ways that foreign-produced items (commodities, technology, and software) can be subject to the EAR – under the&nbsp;De Minimis&nbsp;Rule or under the FDPRs. These complex rules are summarized below; the applicable regulations should be consulted to determine whether the rules may apply to a specific foreign-produced item. If a foreign-produced item is subject to the EAR, it may be subject to the same export license requirements as if the item were exported from the United States.&nbsp;(Note: The FDPRs discussed below are the FDPRs targeted at Russia and Belarus; for a complete list of FDPRs, please consult EAR Section 734.9.)

De Minimis Rule <a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-734#734.4" target="_blank" rel="noreferrer noopener">(15 C.F.R. Section 734.4)</a>. The De Minimis Rule provides that a foreign-produced item that derives more than 25 percent of its value from controlled U.S.-origin items is subject to the EAR. As of January 23, 2024, there is no de minimis level for any foreign-produced item incorporating a U.S.-origin item that is on the EAR’s CCL classified as a 9x515 or 600 series .y item when destined for Russia or Belarus. For all other items, any U.S.-origin item on the EAR’s CCL would qualify as controlled content for the purpose of calculating whether more than 25 percent of the foreign-made item’s value is derived from controlled items under the De Minimis Rule. (To date, the lower de minimis level of 10 percent or more applicable to shipments to Country Group E:1 countries (Iran, Syria, Sudan, and North Korea) has not been applied to Russia or Belarus.)

FDPRs <a href="https://bis.doc.gov/index.php/documents/regulations-docs/2382-part-734-scope-of-the-export-administration-regulations-1/file" target="_blank" rel="noreferrer noopener">(15 C.F.R. Sections 746.8 and 734.9).</a> Under the FDPRs, if the foreign-produced item is the “direct product” of certain U.S.-origin-controlled technology or software, it can be subject to the EAR. There are two specific FDPRs that subject a broad range of foreign-produced items to the EAR when destined for Russia or Belarus. The first one applies to any end user in Russia or Belarus and the second one, which is more restrictive, relates to MEUs.

In most cases, BIS will review license applications related to items subject to these license requirements under a policy of denial. Applications related to EAR99 food and medicine will be reviewed on a case-by-case basis.

III. License Requirements Relating to Belarus

The license requirements and restrictions on the use of license exceptions imposed on transactions involving Belarus largely mirror those imposed on Russia. For a summary of the license requirements and availability of license exceptions relating to Belarus, please see the above discussion of controls applicable to Russia.

IV. License Requirements Relating to the Covered Regions of Ukraine

Export license requirements applicable to Crimea have been in place for several years&nbsp;<a href="https://www.ecfr.gov/current/title-15/subtitle-B/chapter-VII/subchapter-C/part-746#746.6" target="_blank" rel="noreferrer noopener">(15 C.F.R. 746.6)</a>, as have related sanctions.&nbsp;<a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2022/02/21/executive-order-on-blocking-property-of-certain-persons-and-prohibiting-certain-transactions-with-respect-to-continued-russian-efforts-to-undermine-the-sovereignty-and-territorial-integrity-of-ukraine/" target="_blank" rel="noreferrer noopener">Effective February 21, 2022</a>, these requirements were extended to cover all items subject to the EAR (other than food and medicine designated as EAR99 and certain software and Internet-based personal communications) destined for the DNR and LNR regions of Ukraine. That same day, the President issued an&nbsp;<a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2022/02/21/executive-order-on-blocking-property-of-certain-persons-and-prohibiting-certain-transactions-with-respect-to-continued-russian-efforts-to-undermine-the-sovereignty-and-territorial-integrity-of-ukraine/" target="_blank" rel="noreferrer noopener">executive order</a>&nbsp;prohibiting U.S. persons from engaging in new investment in the DNR and LNR regions or engaging in trade, including export, import, reexport, sale or supply of goods, services or technology, with the DNR and LNR regions. U.S. persons, wherever located, are prohibited from approving, financing, facilitating, or guaranteeing transactions by foreign persons that cannot be performed by U.S. persons because of the executive order. Licenses from both BIS and OFAC may be required for any export, reexport or transfer (in country) involving Crimea, the DNR, or the LNR regions.

All defense articles and services on the USML have long required licenses for export to Belarus, and applications for such licenses remain subject to a policy of denial. Since March 2021, all defense articles and services on the USML have been subject to license requirements for export to Russia, and applications for such licenses are subject to a policy of denial, except for license applications related to government space cooperation, which will be considered on a case-by-case basis.&nbsp;

Most license exemptions are not available for exports to Russia, although certain exemptions may be used in support of government space cooperation or when the U.S. government is the recipient.

VI. The BIS Entity List, Denied Persons List and Unverified List

As of February 21, 2024, BIS has added over 540 Russian and Belarusian entities and individuals to its Entity List, and more than 400 of those have been designated as MEUs. In the last few months of 2023 and early 2024, BIS added over 25 Russian entities for operating illicit procurement networks intended to supply the Russian military and other persons involved in activities deemed a threat to U.S. national security and foreign policy interest. These listings showcase the agency’s persistent effort to prevent the Russian military and industrial complex from obtaining vital items necessary to maintain Russia’s war efforts in Ukraine.

BIS has also added Russian individuals and related entities to its Denied Persons List, subjecting them to a denial order or temporary denial order (TDO) for violating the EAR or to prevent the occurrence of an imminent violation of the EAR. Many of the Russian airlines and associated foreign affiliates predominately operating out of Central Asia and Turkey remain subject to temporary denial orders issued in the early months of the conflict in Ukraine as a result of successive TDO renewals. The denial of export privileges is one of the most severe enforcement tools to address violations of U.S. export controls and to prevent imminent violations of the EAR, and it can be imposed even when there is no criminal component to the violation. Since BIS revised its TDO renewal policy in&nbsp;<a href="https://www.govinfo.gov/content/pkg/FR-2023-08-30/pdf/2023-18772.pdf" target="_blank" rel="noreferrer noopener">August 2023</a>&nbsp;to the one-year standard, it is now a common occurrence that TDOs are renewed for a one-year period rather than the prior 180-day maximum.

Also of importance is the BIS Unverified List (UVL), which is composed of foreign parties involved in any transaction involving an item subject to the EAR where BIS has been unable to verify the bona fides of a transaction through a post-shipment verification or pre-license check. Under BIS policy, if 60 days pass following addition to its UVL and BIS still has not been able to successfully complete an end-use check, BIS may begin the process to have the foreign party moved to its Entity List. Given this policy, adopted in October 2022, U.S. exporters and foreign reexporters should pay particular attention to parties listed on the BIS UVL due to the high risk that parties on this list may be added to the BIS Entity List.

The October 2022 policy and related&nbsp;Federal Register&nbsp;notice may be found&nbsp;<a href="https://www.bis.doc.gov/index.php/documents/policy-guidance/3156-axelrod-prevention-of-end-use-checks-policy-memo-10-7-22/file" target="_blank" rel="noreferrer noopener">here</a>&nbsp;and&nbsp;<a href="https://www.federalregister.gov/documents/2022/12/16/2022-27149/revisions-to-the-unverified-list-and-the-entity-list" target="_blank" rel="noreferrer noopener">here</a>, respectively. A BIS license (or, in the case of an entity on the BIS UVL, a BIS UVL statement as required by Section 744.15(b) of the EAR) must be obtained if a transaction involves an item subject to the EAR and a listed entity. Use of license exceptions is not permitted. Generally, license applications will be approved only on an exceptional basis for transactions involving a listed person.

Three important steps for compliance are:

Determine the export control jurisdiction and USML category or ECCN of any technology, commodity or software destined, directly or indirectly, for Russia or Belarus, and determine license requirements and availability.

If the item is not on the USML or the EAR’s CCL, verify its Schedule B number, Schedule B description, HTS code, value threshold and HTS description, and then review the relevant EAR supplements.

Conduct sanctioned person screening at the time of the order and prior to the export, reexport or transfer (in country) to verify that no party to a transaction is covered by any applicable sanctioned persons list, including BIS’s UVL, Denied Persons List or Entity List, and OFAC’s List of Specially Designated Nationals and Blocked Persons.

Please do not hesitate to reach out to any member of our&nbsp;<a href="https://www.bakerlaw.com/International-Trade-National-Security" target="_blank" rel="noreferrer noopener">International Trade and National Security team</a>&nbsp;or your BakerHostetler relationship partner if you have questions. BakerHostetler continues to closely monitor this rapidly changing situation.

This alert is a tool to help businesses, both U.S. and foreign, identify whether their business with Russia, Belarus or Ukraine may now be subject to U.S. export license requirements or involve newly sanctioned or blocked persons. This alert cannot be relied on as legal advice and provides only a high-level summary of the export controls applicable to Russia, Belarus and the covered regions of Ukraine. The export controls and related sanctions are complex, detailed and continuing to develop, and legal counsel should be sought for guidance on specific transactions.

BakerHostetler publications are intended to inform our clients and other friends of the firm about current legal developments of general interest. They should not be construed as legal advice, and readers should not act on the information contained in these publications without professional counsel. The hiring of a lawyer is an important decision that should not be based solely on advertisements. Before you decide, ask us to send you written information about our qualifications and experience.

Current State of U.S. Export Controls in Response to the Russian Federation’s Invasion of Ukraine – February 2024

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