[Federal Register Volume 87, Number 70 (Tuesday, April 12, 2022)]
[Notices]
[Pages 21611-21614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-07768]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
PJSC Aeroflot, 1 Arbat St., 119019, Moscow, Russia; Order
Temporarily Denying Export Privileges
Pursuant to Section 766.24 of the Export Administration
Regulations, 15 CFR parts 730-774 (2021) (``EAR'' or ``the
Regulations''),\1\ the Bureau of Industry and Security (``BIS''), U.S.
Department of Commerce, through its Office of Export Enforcement
(``OEE''), has requested the issuance of an Order temporarily denying,
for a period of 180 days, the export privileges under the Regulations
of: PJSC Aeroflot (``Aeroflot''). OEE's request and related information
indicates that the Russian Federal Government is the majority owner of
Aeroflot, through its Federal Agency for State Property Management, and
it is headquartered in Moscow, Russia, with numerous international
offices facilitating Aeroflot's international flight and business
activities.
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\1\ On August 13, 2018, the President signed into law the John
S. McCain National Defense Authorization Act for Fiscal Year 2019,
which includes the Export Control Reform Act of 2018, 50 U.S.C.
4801-4852 (``ECRA''). While Section 1766 of ECRA repeals the
provisions of the Export Administration Act, 50 U.S.C. app. 2401 et
seq. (``EAA''), (except for three sections which are inapplicable
here), Section 1768 of ECRA provides, in pertinent part, that all
orders, rules, regulations, and other forms of administrative action
that were made or issued under the EAA, including as continued in
effect pursuant to to the International Emergency Economic Powers
Act, 50 U.S.C. 1701 et seq. (``IEEPA''), and were in effect as of
ECRA's date of enactment (August 13, 2018), shall continue in effect
according to their terms until modified, superseded, set aside, or
revoked through action undertaken pursuant to the authority provided
under ECRA. Moreover, Section 1761(a)(5) of ECRA authorizes the
issuance of temporary denial orders. 50 U.S.C. 4820(a)(5).
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I. Legal Standard
Pursuant to Section 766.24, BIS may issue an order temporarily
denying a respondent's export privileges upon a showing that the order
is necessary in the public interest to prevent an ``imminent
violation'' of the Regulations, or any order, license or authorization
issued thereunder. 15 CFR 766.24(b)(1) and 766.24(d). ``A violation may
be `imminent' either in time or degree of likelihood.'' 15 CFR
766.24(b)(3). BIS may show ``either that a violation is about to occur,
or that the
[[Page 21612]]
general circumstances of the matter under investigation or case under
criminal or administrative charges demonstrate a likelihood of future
violations.'' Id. As to the likelihood of future violations, BIS may
show that the violation under investigation or charge ``is significant,
deliberate, covert and/or likely to occur again, rather than technical
or negligent[.]'' Id. A ``lack of information establishing the precise
time a violation may occur does not preclude a finding that a violation
is imminent, so long as there is sufficient reason to believe the
likelihood of a violation.'' Id.
II. OEE's Request for a Temporary Denial Order (``TDO'')
The U.S. Commerce Department, through BIS, responded to the Russian
Federation's (``Russia's'') further invasion of Ukraine by implementing
a sweeping series of stringent export controls that severely restrict
Russia's access to technologies and other items that it needs to
sustain its aggressive military capabilities. These controls primarily
target Russia's defense, aerospace, and maritime sectors and are
intended to cut off Russia's access to vital technological inputs,
atrophy key sectors of its industrial base, and undercut Russia's
strategic ambitions to exert influence on the world stage. Effective
February 24, 2022, BIS imposed expansive controls on aviation-related
(e.g., Commerce Control List Categories 7 and 9) items to Russia,
including a license requirement for the export, reexport or transfer
(in-country) to Russia of any aircraft or aircraft parts specified in
Export Control Classification Number (ECCN) 9A991 (Section 746.8(a)(1)
of the EAR).\2\ BIS will review any export or reexport license
applications for such items under a policy of denial. See Section
746.8(b). Effective March 2, 2022, BIS excluded any aircraft registered
in, owned, or controlled by, or under charter or lease by Russia or a
national of Russia from being eligible for license exception Aircraft,
Vessels, and Spacecraft (AVS) (Section 740.15 of the EAR).\3\
Accordingly, any U.S.-origin aircraft or foreign aircraft that includes
more than 25% controlled U.S.-origin content, and that is registered
in, owned, or controlled by, or under charter or lease by Russia or a
national of Russia, is subject to a license requirement before it can
travel to Russia.
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\2\ 87 FR 12,226 (Mar. 3, 2022).
\3\ 87 FR 13,048 (Mar. 8, 2022).
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OEE's request is based upon facts indicating that Aeroflot engaged
in recent conduct prohibited by the Regulations by operating aircraft
subject to the EAR and classified under ECCN 9A991.b, on flights into
Russia after March 2, 2022, without the required BIS authorization.
Specifically, OEE's investigation, including publicly available
flight tracking information, indicates that after March 2, 2022,
Aeroflot operated multiple U.S.-origin aircraft subject to the EAR,
including, but not limited to, those identified below, on flights into
and out of Moscow, Russia from/to Beijing, China; Delhi, India; Antalya
and Istanbul, Turkey; and Dubai, United Arab Emirates; respectively.
Pursuant to Section 746.8 of the EAR, all of these flights would have
required export or reexport licenses from BIS. Aeroflot flights would
not be eligible to use license exception AVS. No BIS authorizations
were either sought or obtained by Aeroflot for these exports or
reexports to Russia. The information about those flights includes the
following:
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Departure/arrival
Tail No. Serial No. Aircraft type cities Dates
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VP-BGB........................... 41679 777-3M0 (ER) (B77W) Beijing, CN/Moscow, March 3, 2022.
RU.
VQ-BFL........................... 65309 777-300 (ER) (B77W) Beijing, CN/Moscow, March 6, 2022.
RU.
VP-BGF........................... 41686 777-3M0 (ER) (B77W) Delhi, IN/Moscow, March 5, 2022.
RU.
VQ-BFO........................... 65311 777-300 (ER) (B77W) Delhi, IN/Moscow, March 7 ,2022.
RU.
VQ-BQC........................... 41688 777-3M0 (ER) (B77W) Antalya, TR/Moscow, March 7, 2022.
RU.
VQ-BQD........................... 41682 777-3M0 (ER) (B77W) Istanbul, TR/ March 6, 2022.
Moscow, RU.
VQ-BQE........................... 41683 777-3M0 (ER) (B77W) Istanbul, TR/ March 5, 2022.
Moscow, RU.
VQ-BUB........................... 41690 777-3M0 (ER) (B77W) Dubai, UAE/Moscow, March 6, 2022.
RU.
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Based on this information, there are heightened concerns of future
violations of the EAR, given that any subsequent actions taken with
regard to any of the listed aircraft, or other Aeroflot aircraft
illegally exported or reexported to Russia after March 2, 2022, may
violate the EAR. Such actions include, but are not limited to,
refueling, maintenance, repair, or the provision of spare parts or
services. See General Prohibition 10 of the EAR at 15 CFR
736.2(b)(10).\4\ Even Aeroflot's continued use of such U.S.-origin
aircraft only on domestic routes within Russia runs afoul of General
Prohibition 10, which (among other restrictions) prohibits the
continued use of an item that was known to have been exported or
reexported in violation of the EAR.\5\ For example, publicly available
flight tracking data shows that on March 17-18, 2022, aircraft VP-BGB
and VQ-BFL flew on flights into and out of Moscow, Russia to/from
Vladivostok, Russia and Petropavlovsk-Kamchatsky, Russia, respectively.
In addition, Aeroflot has publicly announced its intention to continue
operating domestic flights across its route network within Russia and
to/from Belarus. In a public statement on its website and available as
of the signing of this order, Aeroflot stated that ``AEROFLOT WILL
CONTINUE FULL OPERATIONS OF ITS FLIGHT NETWORK WITHIN RUSSIA, WITH THE
EXCEPTION OF TEMPORARY RESTRICTIONS ON FLIGHTS TO SOUTHERN CITIES IN
RUSSIA. FLIGHTS TO/FROM MINSK (BELARUS) WILL CONTINUE'' (emphasis in
original).\6\
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\4\ Section 736.2(b)(10) of the EAR provides: General
Prohibition Ten--Proceeding with transactions with knowledge that a
violation has occurred or is about to occur (Knowledge Violation to
Occur). You may not sell, transfer, export, reexport, finance,
order, buy, remove, conceal, store, use, loan, dispose of,
transport, forward, or otherwise service, in whole or in part, any
item subject to the EAR and exported or to be exported with
knowledge that a violation of the Export Administration Regulations,
the Export Administration Act or any order, license, License
Exception, or other authorization issued thereunder has occurred, is
about to occur, or is intended to occur in connection with the item.
Nor may you rely upon any license or License Exception after notice
to you of the suspension or revocation of that license or exception.
There are no License Exceptions to this General Prohibition Ten in
part 740 of the EAR. (emphasis in original).
\5\ https://www.ibtimes.com/russias-aeroflot-says-halting-all-flights-abroad-march-8-3425087.
\6\ https://www.aeroflot.ru/us-en/news/62292?_preferredLocale=us&_preferredLanguage=en.
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Moreover, additional concerns of future violations of the
regulations are raised by public statements available as of the signing
of this order on Aeroflot's own website stating, in part, that ``[o]ne
of the goals of Aeroflot Group's 2028
[[Page 21613]]
business strategy is to expand its fleet to 600 aircraft (235 of which
will be Russia-built).'' \7\ As of December 2021, Aeroflot's fleet
consisted of 187 aircraft, of which 59 were U.S.-origin aircraft along
with 118 additional aircraft manufactured outside of Russia, some of
which could also be subject to the EAR based on containing more than
25% U.S.-origin controlled content.\8\ Given BIS's review policy of
denial under section 746.8(a) of the Regulations for exports and
reexports to Russia, it is foreseeable that Aeroflot will attempt to
evade the Regulations in order to obtain new or additional aircraft and
parts, or service its existing aircraft that were exported or
reexported to Russia in violation of section 746.8 of the regulations.
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\7\ https://www.aeroflot.ru/ru-en/about/aeroflot_today/
company_profile#:~:text=Aeroflot%20is%20Russia%E2%80%99s%20de%20facto
%20national%20carrier%20and,1923%2C%20Aeroflot%20is%20among%20the%20w
orld%E2%80%99s%20oldest%20airlines.
\8\ Id.
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III. Findings
Under the applicable standard set forth in Section 766.24 of the
Regulations and my review of the entire record, I find that the
evidence presented by BIS convincingly demonstrates that Aeroflot took
actions in apparent violation of the Regulations by exporting or
reexporting the aircraft cited above, among many others, on flights
into Russia after March 2, 2022, without the required BIS
authorization. Moreover, the continued operation of these aircraft by
Aeroflot, even on domestic routes within Russia, along with its stated
intent to acquire additional aircraft, and the company's on-going need
to acquire replacement parts and components, many of which are U.S.-
origin, presents a high likelihood of imminent violations warranting
imposition of a TDO. I further find that such apparent violations have
been significant, and deliberate. Therefore, issuance of the TDO is
necessary in the public interest to prevent imminent violation of the
Regulations and to give notice to companies and individuals in the
United States and abroad that they should avoid dealing with Aeroflot,
in connection with export and reexport transactions involving items
subject to the Regulations and in connection with any other activity
subject to the Regulations.
This Order is being issued on an ex parte basis without a hearing
based upon BIS's showing of an imminent violation in accordance with
Section 766.24 and 766.23(b) of the Regulations.
IV. Order
It is therefore ordered: FIRST, PJSC Aeroflot, 1 Arbat St., 119019,
Moscow, Russia, when acting for or on their behalf, any successors or
assigns, agents, or employees may not, directly or indirectly,
participate in any way in any transaction involving any commodity,
software or technology (hereinafter collectively referred to as
``item'') exported or to be exported from the United States that is
subject to the EAR, or in any other activity subject to the EAR
including, but not limited to:
A. Applying for, obtaining, or using any license (except directly
related to safety of flight), license exception, or export control
document;
B. Carrying on negotiations concerning, or ordering, buying,
receiving, using, selling, delivering, storing, disposing of,
forwarding, transporting, financing, or otherwise servicing in any way,
any transaction involving any item exported or to be exported from the
United States that is subject to the EAR except directly related to
safety of flight and authorized by BIS pursuant to Section 764.3(a)(2)
of the Regulations, or engaging in any other activity subject to the
EAR except directly related to safety of flight and authorized by BIS
pursuant to Section 764.3(a)(2) of the Regulations; or
C. Benefitting in any way from any transaction involving any item
exported or to be exported from the United States that is subject to
the EAR, or from any other activity subject to the EAR except directly
related to safety of flight and authorized by BIS pursuant to Section
764.3(a)(2) of the Regulations.
SECOND, that no person may, directly or indirectly, do any of the
following:
A. Export, reexport, or transfer (in-country) to or on behalf of
Aeroflot any item subject to the EAR except directly related to safety
of flight and authorized by BIS pursuant to Section 764.3(a)(2) of the
Regulations;
B. Take any action that facilitates the acquisition or attempted
acquisition by Aeroflot of the ownership, possession, or control of any
item subject to the EAR that has been or will be exported from the
United States, including financing or other support activities related
to a transaction whereby Aeroflot acquires or attempts to acquire such
ownership, possession or control except directly related to safety of
flight and authorized by BIS pursuant to Section 764.3(a)(2) of the
Regulations;
C. Take any action to acquire from or to facilitate the acquisition
or attempted acquisition from Aeroflot of any item subject to the EAR
that has been exported from the United States except directly related
to safety of flight and authorized by BIS pursuant to Section
764.3(a)(2) of the Regulations;
D. Obtain from Aeroflot in the United States any item subject to
the EAR with knowledge or reason to know that the item will be, or is
intended to be, exported from the United States except directly related
to safety of flight and authorized by BIS pursuant to Section
764.3(a)(2) of the Regulations; or
E. Engage in any transaction to service any item subject to the EAR
that has been or will be exported from the United States and which is
owned, possessed or controlled by Aeroflot, or service any item, of
whatever origin, that is owned, possessed or controlled by Aeroflot if
such service involves the use of any item subject to the EAR that has
been or will be exported from the United States except directly related
to safety of flight and authorized by BIS pursuant to Section
764.3(a)(2) of the Regulations. For purposes of this paragraph,
servicing means installation, maintenance, repair, modification, or
testing.
THIRD, that, after notice and opportunity for comment as provided
in section 766.23 of the EAR, any other person, firm, corporation, or
business organization related to Aeroflot by ownership, control,
position of responsibility, affiliation, or other connection in the
conduct of trade or business may also be made subject to the provisions
of this Order.
In accordance with the provisions of Sections 766.24(e) of the EAR,
Aeroflot may, at any time, appeal this Order by filing a full written
statement in support of the appeal with the Office of the
Administrative Law Judge, U.S. Coast Guard ALJ Docketing Center, 40
South Gay Street, Baltimore, Maryland 21202-4022.
In accordance with the provisions of Section 766.24(d) of the EAR,
BIS may seek renewal of this Order by filing a written request not
later than 20 days before the expiration date. A renewal request may be
opposed by Aeroflot as provided in Section 766.24(d), by filing a
written submission with the Assistant Secretary of Commerce for Export
Enforcement, which must be received not later than seven days before
the expiration date of the Order.
A copy of this Order shall be provided to Aeroflot, and shall be
published in the Federal Register.
This Order is effective immediately and shall remain in effect for
180 days.
[[Page 21614]]
Dated: April 7, 2022.
Matthew S. Axelrod,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2022-07768 Filed 4-11-22; 8:45 am]
BILLING CODE 3510-DT-P