[Federal Register Volume 87, Number 124 (Wednesday, June 29, 2022)]
[Notices]
[Pages 38709-38711]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13881]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Siberian Airlines d/b/a S7 Airlines 633104, Novosibirskaya obl., 
g. Ob, prospekt Mozzherina, d. 10 ofis 201; 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 Russian airline Siberian Airlines d/b/a S7 Airlines (``Siberian''). 
OEE's request and related information indicates that Siberian is 
headquartered in Moscow, Russia.
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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. Sec.  
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 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superseded, set aside, or revoked through action undertaken pursuant 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 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

[[Page 38710]]

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 12226 (Mar. 3, 2022). Additionally, BIS published a 
final rule effective April 8, 2022, which imposed licensing 
requirements on items controlled on the Commerce Control List 
(``CCL'') under Categories 0-2 that are destined for Russia or 
Belarus. Accordingly, now all CCL items require export, reexport, 
and transfer (in-country) licenses if destined for or within Russia 
or Belarus. 87 FR 22130 (Apr. 14, 2022).
    \3\ 87 FR 13048 (Mar. 8, 2022).
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    OEE's request is based upon facts indicating that Siberian engaged 
in conduct prohibited by the Regulations by operating multiple aircraft 
subject to the EAR and classified under ECCN 9A991, including but not 
limited to those below, on international flights, including from 
Atyrau, Kazakhstan, Bishkek, Kyrgyzstan, and Urgench, Uzbekistan to 
Russia after March 2, 2022, without the required BIS authorization. 
Pursuant to Section 746.8 of the EAR, all of these flights would have 
required export or reexport licenses from BIS. Siberian flights would 
not be eligible to use license exception AVS. No BIS authorizations 
were either sought or obtained by Siberian for these exports or 
reexports to Russia.
    Additionally, Siberian's continued use of such U.S.-origin aircraft 
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. See General Prohibition 10 of the EAR at 15 CFR 736.2(b)(10).\4\ 
Specifically, OEE's investigation, including publicly available flight 
tracking information, indicates that after March 2, 2022, Siberian 
continued to operate multiple U.S.-origin aircraft following their 
unauthorized export or reexport to Russia in violation of the EAR, 
including, but not limited to, those identified below, domestically on 
flights into and out of Russian cities, including Bratsk, Russia; St. 
Petersburg, Russia; Moscow, Russia; Omsk, Russia; and Ufa, Russia. The 
information about those flights includes the following:
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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).

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                                                                         Departure/arrival
             Tail No.                Serial No.       Aircraft type            cities               Dates
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VQ-BVM/RA-73411..................           41400  737-8GJ (B738).....  Atyrau, KZ/Moscow,   March 10, 2022.
                                                                         RU.
RA-73411.........................           41400  737-8GJ (B738).....  Ufa, RU/Moscow, RU.  June 21, 2022.
RA-73411.........................           41400  737-8GJ (B738).....  Irkutsk, RU/Moscow,  June 22, 2022.
                                                                         RU.
RA-73411.........................           41400  737-8GJ (B738).....  Bratsk, RU/Moscow,   June 23, 2022.
                                                                         RU.
RA-73411.........................           41400  737-8GJ (B738).....  Moscow, RU/Sochi,    June 23, 2022
                                                                         RU.
VQ-BMG/RA-73672..................           41841  737-8LP (B738).....  Urgench, UZ/Moscow,  March 4, 2022.
                                                                         RU.
RA-73672.........................           41841  737-8LP (B738).....  Sochi, RU/Moscow,    June 22, 2022.
                                                                         RU.
RA-73672.........................           41841  737-8LP (B738).....  Moscow, RU/Ufa, RU.  June 23, 2022.
RA-73672.........................           41841  737-8LP (B738).....  Ufa, RU/Moscow, RU.  June 23, 2022.
VQ-BRQ/RA-73670..................           41710  737-8LP (B738).....  Khujand, TJ/         March 4, 2022.
                                                                         Saratov, RU.
RA-73670.........................           41710  737-8LP (B738).....  Omsk, RU/Moscow, RU  June 20, 2022.
RA-73670.........................           41710  737-8LP (B738).....  Moscow, RU/Ufa, RU.  June 21, 2022.
RA-73670.........................           41710  737-8LP (B738).....  St. Petersburg, RU/  June 23, 2022.
                                                                         Moscow, RU.
RA-73667.........................           41707  737-8LP (B738).....  Bishkek, KG/         May 1, 2022.
                                                                         Novosibirisk, RU.
RA-73667.........................           41707  737-8LP (B738).....  Bratsk, RU/Moscow,   June 21, 2022.
                                                                         RU.
RA-73667.........................           41707  737-8LP (B738).....  Moscow, RU/Omsk, RU  June 21, 2022.
RA-73667.........................           41707  737-8LP (B738).....  Moscow, RU/Irkutsk,  June 22, 2022.
                                                                         RU.
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    Based upon the on-going violations by Siberian, there are 
heightened concerns of future violations of the EAR, especially given 
that any subsequent actions taken with regard to any of the listed 
aircraft, or other Siberian aircraft 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. Id.
    Moreover, additional concerns of future violations of the 
Regulations are raised by public information indicating efforts by 
Siberian to have aircraft re-registered in Russia and assigned Russian 
tail numbers, suggesting that Siberian intends not only to maintain 
control over the aircraft but also to continue operating them in likely 
violation of the EAR. For example, one of the U.S.-origin aircraft 
identified above, bearing serial number 41400, was registered under 
Bermudan tail number VQ-BVM as recently as April 2022. The aircraft has 
since been reregistered in Russia and assigned the aircraft Russian 
tail number RA-73411. 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 Siberian will attempt to evade the Regulations in 
order to obtain new or additional aircraft parts for or service its 
existing aircraft that were exported or reexported to Russia in 
violation of Section 746.8 of the Regulations in order to continue 
operating on domestic routes in Russia.

[[Page 38711]]

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 Siberian took 
actions in apparent violation of the Regulations by operating the 
aircraft cited above, among many others, on flights into and within 
Russia after March 2, 2022, without the required BIS authorization. 
Moreover, the continued operation of these aircraft by Siberian, even 
on domestic routes within Russia, 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, deliberate, covert and/or likely to occur again, 
rather than technical or negligent[.]'' 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 Siberian, 
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, Siberian Airlines d/b/a S7 Airlines, 633104, Novosibirskaya 
obl., g. Ob, prospekt Mozzherina, d. 10 ofis 201, 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 
Siberian 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 Siberian 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 Siberian 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 Siberian 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 Siberian 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 Siberian, or service any item, of 
whatever origin, that is owned, possessed or controlled by Siberian 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 Siberian 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, 
Siberian 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 Siberian 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 Siberian and shall be 
published in the Federal Register.
    This Order is effective immediately and shall remain in effect for 
180 days.

    Dated: June 24, 2022.
Matthew S. Axelrod,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2022-13881 Filed 6-28-22; 8:45 am]
BILLING CODE 3510-DT-P