Recently questions have been asked regarding whether the restrictions found in the Cuban Assets Control Regulations (“CACR”) will bar U.S. oil spill control technology from reaching Cuba and companies working there if an oil spill accident were to occur off of Cuba.

The International Association of Drilling Contractors (“IADC”) in Houston may have the answer. Two years ago they applied for a specific license from the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) to travel to Cuba to gain information pertaining to offshore well management issues there. However, OFAC denied their license application and their travel for such purposes remained prohibited.

However, IADC reapplied after the Macondo well accident as crude oil leaked into the Gulf of Mexico and the license was granted. Upon their travel, IADC officials met with chief officers of the Cuban Ministry of Basic Industries, the Minister of Nuclear and Industry Regulation, and the Ministry of State Affairs, Cuba’s counterpart to the US Department of State. The IADC has reported that Cuba is very knowledgeable about the area and is making great strides in enhancing their abilities to mitigate any fall out from an oil spill, although they are somewhat impeded in this task by the U.S. embargo.

In addition, others have stated that although Cuba has excellent regulations to address oil spill issues, they do not have the technology or resources to put those regulations into practice.

Although IADC has stated that it may be in the U.S. Government’s interest to adjust its policies in regards to this issue, it does not advocate ending the US trade embargo against Cuba. In making such statements, IADC drew a parallel to the export of medicine under OFAC’s TSRA program which allows for the export of agricultural commodities, medicine, and medical devices to embargoed countries such as Cuba, Iran, and Sudan.

Others have stated that legally the Obama administration, does have some latitude to protect U.S. interests and could broadly license US companies to respond to a crude oil spill off the coast of Cuba. The U.S. Department of State has also indicated some support of this position, stating that it is important to be pragmatic in regards to such issues.

Such legal latitude could include emergency presidential licenses or advance planning by the US Coast Guard, to have resources available to respond to those companies engaged in the drilling as opposed to the Cuban Government. Technically, those companies could apply for an OFAC specific license, although there are concerns about how long those licenses would take to process. Another option would be to apply for a license in advance, contingent upon the occurrence of some activity detrimental to U.S. national security interests.

Although, not yet the subject of significant debate, the drilling that will soon take place off of Cuba’s northern coast could someday pose environmental problems that would be exacerbated by the U.S. embargo if not addressed now by license authorization. That said, it seems that the discussions taking place now are moving in the right direction and that the U.S. Government should be prepared to act in the event of some occurrence.

The author of this blog is Erich Ferrari, an attorney specializing in OFAC matters. If you have any questions please contact him at 202-280-6370 or ferrari@ferrari-legal.com.

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