Rossiya Airlines, Pilotov St 18-4, St. Petersburg, Russia, 196210; Order Temporarily Denying Export Privileges

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Published

May 25, 2022

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Commerce DepartmentIndustry and Security Bureau

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<title>Federal Register, Volume 87 Issue 101 (Wednesday, May 25, 2022)</title>
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[Federal Register Volume 87, Number 101 (Wednesday, May 25, 2022)]
[Notices]
[Pages 31856-31859]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-11214]

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DEPARTMENT OF COMMERCE

Bureau of Industry and Security

Rossiya Airlines, Pilotov St 18-4, St. Petersburg, Russia,
196210; 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.

[[Page 31857]]

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 Rossiya Airlines (``Rossiya''). OEE's request and
related information indicates that Rossiya is headquartered in St.
Petersburg, Russia, and Aeroflot Russian Airlines JSC, a/k/a PJSC
Aeroflot (``Aeroflot'') is Rossiya's majority shareholder.\2\ The
Russian Federal Government is the majority owner of Aeroflot, through
its Federal Agency for State Property Management.
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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).
\2\ Aeroflot is the subject of a Temporary Denial Order issued
on April 8, 2022. See 87 FR 21611 (April 12, 2022).
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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 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).\3\ 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).\4\
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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\3\ 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).
\4\ 87 FR 13048 (Mar. 8, 2022).
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OEE's request is based upon facts indicating that Rossiya engaged
in recent conduct prohibited by the Regulations by operating aircraft
subject to the EAR and classified under ECCN 9A991 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,
Rossiya 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 and St. Petersburg, Russia from/to Sharjah,
United Arab Emirates; Tel Aviv, Israel; and Dubai, United Arab
Emirates. Pursuant to Section 746.8 of the EAR, all of these flights
would have required export or reexport licenses from BIS. Rossiya
flights would not be eligible to use license exception AVS. No BIS
authorizations were either sought or obtained by Rossiya for these
exports or reexports to Russia. The information about those flights
includes the following:

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Departure/
Tail No. Serial No. Aircraft type arrival cities Dates
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VQ-BVU....................... 41202 737-8LJ (B738) Sharjah, AE/ March 7, 2022.
Moscow, RU.
VP-BUS....................... 44435 737-8MC (B738) Tel Aviv, IL/ March 3, 2022.
St.
Petersburg, RU.
VP-BUS....................... 44435 737-8MC (B738) Dubai, AE/St. March 4, 2022.
Petersburg, RU.
VP-BUS....................... 44435 737-8MC (B738) Dubai, AE/St. March 5, 2022.
Petersburg, RU.
VP-BUS....................... 44435 737-8MC (B738) Dubai, AE/St. March 6, 2022.
Petersburg, RU.
VQ-BWJ....................... 41212 737-8LJ (B738) Sharm el- March 6, 2022.
Sheikh, EG/St.
Petersburg, RU.
EI-XLH....................... 27650 747-446 (B744) Hurghada, EG/ March 8, 2022.
Moscow, 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 Rossiya 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).\5\ Even

[[Page 31858]]

Rossiya'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. For
example, publicly available flight tracking data shows that, between
April 14 and April 15, 2022, aircraft VQ-BVU (SN: 41202), VP-BUS (SN:
44435), and VQ-BWJ (SN: 41212) flew on flights into and out of St.
Petersburg, Russia to/from Kaliningrad, Russia, Sochi, Russia, Omsk,
Russia, Kazan, Russia, and Moscow, Russia, respectively.
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\5\ 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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Moreover, additional concerns of future violations of the
Regulations are raised by public information indicating efforts by
Rossiya to have aircraft re-registered in Russia and assigned Russian
tail numbers, suggesting that Rossiya intends not only to maintain
control over the aircraft but also to continue operating them in likely
violation of the EAR. Specifically, a public statement dated March 30,
2022, and available as of the signing of this order states ``Rossiya
completes the process of transferring aircraft to Russian
jurisdiction.'' \6\ Publicly available information further shows, for
example, that in March 2022, Rossiya re-registered a U.S.-origin 747
(SN: 27100) in Russia and assigned the aircraft Russian tail number RA-
73283.\7\ 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 Rossiya 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.
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\6\ <a href="https://www.rossiya-airlines.com/en/about/news/rossiya-completes-the-process-of-transferring-aircraft-to-russian-jurisdiction/">https://www.rossiya-airlines.com/en/about/news/rossiya-completes-the-process-of-transferring-aircraft-to-russian-jurisdiction/</a>.
\7\ The aircraft was previously registered in Ireland with tail
number EI-XLC.
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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 Rossiya 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
Rossiya, 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. Additionally, given that Rossiya and
its majority shareholder Aeroflot both own and operate a number of
similar models of U.S-origin aircraft requiring the same spare parts, I
find it necessary to issue this Order not only to prevent further
violations involving Rossiya's aircraft but also to prevent evasion of
the Aeroflot TDO that I issued on April 8, 2022. 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 Rossiya, 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, Rossiya Airlines, Pilotov St 18-4, St. Petersburg, Russia,
196210, 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
Rossiya 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 Rossiya 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 Rossiya 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 Rossiya 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 Rossiya 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 Rossiya, or service any item, of
whatever origin, that is owned, possessed or controlled by Rossiya 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 Rossiya by

[[Page 31859]]

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,
Rossiya 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 Rossiya 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 Rossiya and shall be
published in the Federal Register.
This Order is effective immediately and shall remain in effect for
180 days.

Dated: May 20, 2022.
Matthew S. Axelrod,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2022-11214 Filed 5-24-22; 8:45 am]
BILLING CODE 3510-DT-P

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