[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