[Federal Register Volume 88, Number 195 (Wednesday, October 11, 2023)]
[Notices]
[Pages 70417-70420]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-22433]
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DEPARTMENT OF COMMERCE
Bureau of Industry and Security
[Docket Number: 23-BIS-TDO-1]
In the Matter of: OOO Pegas Touristik, 5 Building 1, Volokoplamsk
Highway, Moscow, Russian Federation, 125080, Appellant; Final Decision
and Order
Before me for my final decision is a Recommended Decision (RD),
issued on August 23, 2023, by Administrative Law Judge (ALJ) Tommy
Cantrell. The RD recommends that this appeal filed by OOO Pegas
Touristik (Pegas) be dismissed. As further discussed below, I accept
the findings of fact and conclusions of law in the ALJ's RD.
I. Background
Pegas appeals a Temporary Denial Order (TDO) temporarily denying
the export privileges of Nordwind Airlines (Nordwind), first issued by
the Assistant Secretary of Commerce for Export Enforcement (Assistant
Secretary) of the Bureau of Industry and Security (BIS or the Agency)
on June 24, 2022, 87 FR 38704. The Export Administration Regulations
(EAR or Regulations) at 15 CFR 766.24 authorize the Assistant Secretary
to issue a TDO for a period of up to 180 days to prevent an ``imminent
violation'' of the Regulations. 15 CFR 766.24(b)(1), (b)(4). Moreover,
a TDO may be made applicable to ``related persons'' in accordance with
Sec. 766.23 of the Regulations.
The Agency subsequently renewed the TDO against Nordwind twice, on
December 20, 2022, 87 FR 79725, and June 15, 2023, 88 FR 40202. Upon
the second renewal, the Agency added Pegas as a related person to the
TDO, then modified the TDO on June 27, 2023, to remove Pegas as a
related person, 88 FR 42290.
On August 4, 2023, Pegas, through counsel, filed an appeal (Pegas
Appeal) with the U.S. Coast Guard ALJ Docketing Center (Docketing
Center) pursuant to 15 CFR 766.23(c) of the EAR. After assignment of
the matter to an ALJ by the Docketing Center on August 10, 2023, BIS
filed a response to the appeal on August 17, 2023. ALJ Cantrell issued
the August 23, 2023, RD, which my office received on August 24, 2023.
On August 24, 2023, Pegas requested a hearing and/or opportunity to
respond to the ALJ's RD. Upon consideration of the views of the
parties, I issued an order on August 29, 2023, denying Pegas's request
for a hearing and granting its request to submit a response. The order
also extended the period of time to issue this Final Decision and set
forth a schedule for additional written submissions by the parties.
Consistent with the order, Pegas filed a ``Response to the
Administrative Law Judge's Recommended Decision'' (Pegas Response) on
September 6, 2023, and the Agency filed a ``Reply to Response by Non-
Party OOO Pegas Touristik'' (BIS Reply) on September 15, 2023.
II. Standard
As described above, Sec. 766.24(b) of the Regulations addresses
the Assistant Secretary's authority to issue TDOs. To issue a TDO, BIS
must make a showing that the order is necessary in the public interest
to prevent an ``imminent
[[Page 70418]]
violation'' of the Regulations. 15 CFR 766.24(b)(1). The Regulations
authorize the issuance of a TDO on an ex parte basis but require that
the order define the imminent violation and state why it was issued
without a hearing. Id. at Sec. 766.24(b)(2). BIS also has the
authority to renew the TDO for additional periods. Id. at Sec.
766.24(d)(1).
To prevent evasion of the TDO, the Assistant Secretary may apply
the terms of the TDO to ``related persons,'' that is, ``other persons
then or thereafter related to the respondent by ownership, control,
position of responsibility, affiliation, or other connection in the
conduct of trade or business.'' Id. at Sec. 766.23(a). When seeking to
add a related person to a denial order, ``BIS shall, except in an ex
parte proceeding under Sec. 766.24(a) of this part,'' give that person
notice and an opportunity to oppose such an action. Id. at Sec.
766.23(b).
``Related persons'' may not oppose the issuance or renewal of a
TDO, but may file an appeal with an ALJ, who issues an RD for the
review of the Under Secretary in accordance with Sec. 766.24(e) of the
Regulations. See id. at Sec. Sec. 766.23(c)(2)(ii), 766.24(d)(3)(ii).
For appeals by related persons, the Regulations provide that the ``sole
issues to be raised and ruled on in any such appeal are whether the
person so named is related to the respondent and whether the order is
justified in order to prevent evasion.'' Id. at Sec. 766.23(c).
III. Discussion
Pegas's appeal requests that an Order be issued ``that orders the
Assistant Secretary to issue an amended Order that retroactively
nullifies and voids the addition of Pegas Touristik as a related person
to the TDO and the subjection of Pegas Touristik to a denial order from
June 15, 2023, to June 27, 2023.'' Pegas Appeal at 11. Pegas also seeks
a public acknowledgement from BIS that its designation of Pegas as a
related person to the TDO and the addition of Pegas to the BIS Denied
Persons List was in error. Pegas Appeal at 10, Pegas Response at 8. In
short, the limited scope of the appeal under Sec. 766.23(c) of the
Regulations prevents me from doing as Pegas requests.
The ALJ makes twelve recommended findings of fact in the RD. RD at
2-3. I accept these recommended findings of fact. Three of the
Recommended Facts (2, 9, and 10) were discussed in the additional
submissions by the parties, and warrant additional discussion. In its
response to the RD, Pegas describes these three Recommended Facts as
``materially incomplete and/or misleading,'' but concedes that
Recommended Facts 9 and 10 are indeed factually accurate. Pegas
Response at 6-7. Because both parties agree on accuracy, see id., BIS
Reply at 2, I decline to disturb the ALJ's fact determinations and
accept Recommended Facts 9 and 10 as set forth in the RD. Regarding
Recommended Fact 2, Pegas argues that this fact should be ``clarified''
to reflect additional information about alleged deficiencies in the TDO
renewal process, but does not explicitly contest its accuracy. Pegas
Response at 6. I am unpersuaded by Pegas's contention that Recommended
Fact 2 as submitted by the ALJ is insufficient, and think the
clarification requested by Pegas is not necessary for the disposition
of this Sec. 766.23(c) appeal. Thus I accept Recommended Fact 2 as set
forth in the RD.
Regarding the conclusion of law in the RD, I agree that Pegas seeks
relief outside the scope of an appeal as set forth in 15 CFR 766.23(c).
As discussed above, the Regulations limit the scope of the appeal to
two issues: whether the related person is related to the respondent
subject to the TDO, and whether the TDO is justified to prevent
evasion. 15 CFR 766.23(c). Although Pegas takes issue in its appeal
with the process by which it was added as a related person to the
Nordwind TDO on June 15, 2023, Pegas's appeal does not address in
detail whether it is indeed related to Nordwind, nor does it address
whether the TDO was justified to prevent evasion. Regardless, as of
June 27, 2023, Pegas was no longer a related person under Sec. 766.23
to the Nordwind TDO, and therefore an appeal under Sec. 766.23(c) is
no longer available to Pegas. The ALJ concludes that he ``cannot rule
on these issues because there is no TDO currently in effect naming
Pegas as a related person, thus, [he] cannot affirm, modify, or vacate
as part of this appeal,'' RD at 5, and I agree.
IV. Conclusion and Order
Based on my review of the record, I accept the findings of fact and
conclusions of law made by the ALJ in his RD. I also confirm that as of
the date of issuance of this Final Decision and Order, Pegas is not
listed on the BIS Denied Persons List, nor is it subject to the license
requirements and prohibitions in the Nordwind TDO. Accordingly, it is
therefore ordered:
First, that this appeal is dismissed.
Second, that this Final Decision and Order shall be served on
Appellants and on BIS and shall be published in the Federal Register.
In addition, the ALJ's Recommended Decision shall also be published in
the Federal Register.
This Order, which constitutes the Department's final decision with
regard to this appeal, is effective immediately.
Dated: September 29, 2023.
Alan F. Estevez,
Under Secretary of Commerce for Industry and Security.
UNITED STATES DEPARTMENT OF COMMERCE, BUREAU OF INDUSTRY AND SECURITY,
WASHINGTON, DC 20230
In the matter of: OOO Pegas Touristik, Appellant.
Docket No.: 23-BIS-TDO1
RECOMMENDED DECISION
Issued by: Honorable Tommy Cantrell, Administrative Law Judge
Issued: August 23, 2023
On August 4, 2023, OOO Pegas Touristik (Pegas) filed an appeal
pursuant to 15 CFR 766.23(c) of the Export Administration Regulations
(EAR). Specifically, Pegas requests I issue an order directing the
Assistant Secretary of Commerce for Export Enforcement (Assistant
Secretary) to ``issue an amended Order that retroactively nullifies and
voids the addition of Pegas as a related person'' to a Temporary Denial
Order (TDO) issued to Nordwind Airlines (Nordwind), ``as well as Pegas
Touristik's inclusion in the [Denied Persons List] order from June 15,
2023, to June 27, 2023.'' (Appeal at 3). The Bureau of Industry and
Security (BIS) opposes the appeal, arguing there is no factual or legal
basis to support the appeal or the relief Pegas seeks. For the reasons
set forth herein, I recommend the appeal be dismissed.
I. Procedural Background
On June 24, 2022, the Assistant Secretary issued a TDO to Russian
airline Nordwind pursuant to 15 CFR 766.24. (Ex. 1).\1\ In accordance
with BIS regulations, the Assistant Secretary renewed the TDO for an
additional 180 days on December 20, 2022. (Ex. 2). The Assistant
Secretary again renewed the TDO on June 15, 2023, this time adding
Pegas as a related person pursuant to 15 CFR 766.23 of the EAR. (Ex.
3).\2\ Thereafter, following discussions and an exchange of information
between BIS and Pegas, the Assistant Secretary issued a ``Modification
of June 15, 2023 Renewal of Temporary Denial Order,''
[[Page 70419]]
removing Pegas from the Nordwind TDO. (Exs. 3-7).\3\
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\1\ ``Ex. 1'' references the first of 12 exhibits attached to
the Appeal dated August 4, 2023.
\2\ BIS published this TDO on the Federal Register on June 21,
2023. See 88 FR 40202.
\3\ BIS published this TDO on the Federal Register on June 30,
2023. See 88 FR 42290.
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On August 4, 2023, Pegas filed this appeal with the United States
Coast Guard Administrative Law Judge Docketing Center (Docketing
Center).\4\ The appeal letter included twelve exhibits. On August 10,
2023, the Docketing Center assigned this case to me for adjudication.
BIS submitted its response to the appeal on August 17, 2023. The record
is now closed and the appeal is ripe for decision.
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\4\ Pursuant to an interagency agreement, United States Coast
Guard (USCG) Administrative Law Judges are permitted to adjudicate
BIS cases.
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II. Recommended Findings of Fact
1. On June 24, 2022, the Assistant Secretary issued a Temporary
Denial Order (TDO) to Russian airline Nordwind Airlines (Norwind),
temporarily denying Nordwind's export privileges on an ex parte basis
pursuant to 15 CFR 766.24 to prevent an ``imminent violation'' of the
Export Administration Regulations (EAR). (Ex. 1).
2. On June 15, 2023, the Assistant Secretary renewed the TDO and
added Pegas as a related person. (Ex. 3).
3. As modified, the June 15, 2023, TDO refers to both Nordwind
Airlines and Pegas as ``Denied Persons'' who ``may not, directly or
indirectly, participate in any way in any transaction involving any
commodity, software or technology . . . exported or to be exported from
the United States that is subject to the EAR . . . .'' \5\ (Ex. 3).
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\5\ The TDO refers to Pegas as a ``Denied Person'' but the
record does not contain a separate ``Denied Persons List'' or
``DPL.'' For purposes of this decision, I consider the naming of
Pegas as a related person the same as its inclusion on a DPL.
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4. BIS published the June 15, 2023 TDO in the Federal Register on
June 21, 2023. See 88 FR 40202.
5. On June 20, 2023, Pegas contacted BIS to express concerns about
the TDO, specifically arguing the addition of Pegas as a related person
was legally and factually incorrect because BIS did not provide Pegas
with advance notice or an opportunity to oppose the action. (Ex. 4).
6. On June 21, 2023, the Office of Export Enforcement (OEE)
requested information from Pegas regarding its business operations,
ownership and corporate structure, and other facts related to certain
individuals, including information regarding whether Pegas was related
to Nordwind Airlines. (Ex. 5).
7. Following discussions between Pegas and BIS, on June 27, 2023,
the Assistant Secretary issued a modified TDO removing Pegas as a
related person. (Exs. 6a, 6b, 7).
8. BIS published the June 27, 2023, TDO in the Federal Register on
June 30, 2023. See 88 FR 42290.
9. The modified TDO does not discuss specific reasons for the
removal but states the OEE requested ``Pegas Touristik be removed from
the TDO to allow the opportunity for additional administrative process
under Part 766 of the Regulations.'' (Ex. 7).
10. On July 24, 2023, BIS corrected the Table of Contents for
Export Violations on its website to indicate the June 15, 2023, TDO
related solely to Nordwind Airlines. (Ex. 11).
11. On July 28, 2023, Pegas requested the Assistant Secretary issue
an order which clearly and definitively states ``Pegas Touristik was
erroneously added as a related person to the June 15 Order and to the
List of Denied Persons'' and ``Pegas Touristik has never been subject
to a valid denial order imposed by the U.S. Department of Commerce's
Bureau of Industry and Security.'' (Ex. 10).
12. In response, BIS sent Pegas an email noting the following:
``BIS issued an Order on June 27, 2023, removing Pegas Touristik as a
party from the June 15, 2023 Nordwind TDO. Additionally, on July 24,
2023, BIS amended the caption in its EFOIA Table of Contents. Given the
above, no further action is necessary.'' (Ex. 11).
III. Opinion and Recommended Conclusion of Law
BIS regulations related to export administration are issued ``under
laws relating to the control of certain exports, reexports, and
activities.'' 15 CFR 730.1.\6\ Its export control provisions ``are
intended to serve the national security, foreign policy,
nonproliferation of weapons of mass destruction, and other interests of
the United States.'' 15 CFR 730.6. To prevent an imminent violation of
the EAR, BIS may request the Assistant Secretary issue a TDO on an ex
parte basis. 15 CFR 766.24(a). The TDO is only valid for 180 days, but
the Assistant Secretary may renew it in additional 180-day increments
as deemed necessary. 15 CFR 766.24(b)(4), 766.24(d)(4). When deciding
to renew an order, the only issue to be considered ``is whether the
temporary denial order should be continued to prevent an imminent
violation.'' 15 CFR 766.24(d)(3). The Assistant Secretary may also
modify or amend a TDO. 15 CFR 766.24(d), 766.23(b).
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\6\ The EAR primarily relate to the implementation of the Export
Administration Act of 1979. 15 CFR 730.2.
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To prevent evasion of a TDO, the Assistant Secretary may apply the
order ``not only to the respondent, but also to other persons then or
thereafter related to the respondent by ownership, control, position of
responsibility, affiliation, or other connection in the conduct of
trade or business.'' 15 CFR 766.23(a), 766.24(c). When adding a related
party to an order affecting export privileges, ``BIS shall, except in
an ex parte proceeding under Sec. 766.24'' give that person notice and
an opportunity to oppose the action. 15 CFR 766.23(b).
Where the Assistant Secretary issues or renews a TDO on an ex parte
basis pursuant to 15 CFR 766.24, persons ``designated as a related
person may not oppose the issuance or renewal of the temporary denial
order, but may file an appeal in accordance with Sec. 766.23(c).'' 15
CFR 766.24(d)(3)(ii). The only issues that may be raised on appeal are
``whether the person so named is related to the respondent and whether
the order is justified in order to prevent evasion.'' 15 CFR 766.23(c).
An administrative law judge then submits a recommended decision to the
Under Secretary for Industry and Security ``recommending whether the
issuance or the renewal of the temporary denial order should be
affirmed, modified, or vacated.'' 15 CFR 766.24(e)(4).
Having outlined the relevant regulations governing this appeal, I
now turn to the facts of the case.
a. Pegas Seeks Relief Outside the Scope of an Appeal as Set Forth in 15
CFR 766.23(c)
Here, the issues that may be raised and ruled upon in an appeal
under 15 CFR 766.23(c) are (1) whether Pegas is related to Nordwind
Airlines, and (2) whether the order naming Pegas as a related person is
justified to prevent evasion of the Nordwind TDO. 15 CFR 766.23(c).
Pegas does not argue either of these issues.\7\ Ultimately, I cannot
rule on these issues because there is no TDO currently in effect naming
Pegas as a related person, thus, I cannot affirm, modify, or vacate as
part of this appeal.
[[Page 70420]]
15 CFR 766.24(e)(4). The Assistant Secretary removed Pegas from the
Nordwind TDO on June 27, 2023. (Ex. 7). According to Pegas, BIS also
removed it from its list of ``Denied Persons.'' (Ex. 9). The latest
version of the Nordwind TDO is not called into question and remains in
effect regarding Nordwind Airlines--not Pegas--until December 12, 2023.
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\7\ At the crux of Pegas's appeal is the argument BIS acted
outside its regulations when it named the company a related party
without first giving it notice and an opportunity to oppose the
action. It asserts this allegedly ultra vires activity should render
the June 15, 2023, TDO null and void. I note, however, the Assistant
Secretary issued and renewed the Nordwind TDO on an ex parte basis
pursuant to 15 CFR 766.24. Specifically, the June 15, 2023, TDO
which added Pegas as a related party was also issued ex parte in
accordance with 15 CFR 766.24. As such, as a related party Pegas
could not oppose its issuance or renewal but could file an appeal
pursuant to Sec. 766.23(c). 15 CFR 766.24(d)(3)(ii); 15 CFR
766.23(b).
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While I understand Pegas's business concerns, the regulations do
not grant me authority to issue an order retroactively nullifying the
addition of Pegas as a related party in the June 15, 2023, TDO. In
light of the above, I recommend this appeal be dismissed.
Done and dated this 23rd day of August 2023, at Galveston,
Texas.
[GRAPHIC] [TIFF OMITTED] TN11OC23.000
Certificate of Service
I hereby certify that I have served by electronic mail the
foregoing Recommended Decision upon the following:
Gregory Michelsen, Esq., Andrea Duvall, Esq., Attorneys for Bureau of
Industry and Security, Office of Chief Counsel for Industry and
Security,
U.S. Department of Commerce (Sent via electronic mail)
Melissa B. Mannino, Esq., Lana Muranovic, Esq., Orga Cadet, Esq., BAKER
& HOSTETLER LLP, Attorneys for Respondent (Sent via electronic mail)
U.S. Coast Guard, ALJ Docketing Center, Attn: Hearing Docket Clerk
(Sent via electronic mail)
I hereby certify that I have forwarded by Express Courier the
foregoing Recommended Decision and the case file upon the following:
Alan F. Estevez, Under Secretary for Industry and Security, Bureau of
Industry and Security, U.S. Department of Commerce (Sent via Fed Ex)
[GRAPHIC] [TIFF OMITTED] TN11OC23.001
[FR Doc. 2023-22433 Filed 10-10-23; 8:45 am]
BILLING CODE 3510-33-P