Siberian Airlines d/b/a S7 Airlines 633104, Novosibirskaya obl., g. Ob, prospekt Mozzherina, d. 10 ofis 201; Order Temporarily Denying Export Privileges

Primary source

Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.

Published

June 29, 2022

Issuing agencies

Commerce DepartmentIndustry and Security Bureau

Full Text

<html>
<head>
<title>Federal Register, Volume 87 Issue 124 (Wednesday, June 29, 2022)</title>
</head>
<body><pre>
[Federal Register Volume 87, Number 124 (Wednesday, June 29, 2022)]
[Notices]
[Pages 38709-38711]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-13881]

-----------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\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).
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

\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).
---------------------------------------------------------------------------

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:
---------------------------------------------------------------------------

\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).

----------------------------------------------------------------------------------------------------------------
Departure/arrival
Tail No. Serial No. Aircraft type cities Dates
----------------------------------------------------------------------------------------------------------------
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.
----------------------------------------------------------------------------------------------------------------

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

</pre></body>
</html>

View on FederalRegister.gov →Plain-text source

Indexed from Federal Register on June 29, 2022.

This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.