[Federal Register Volume 87, Number 70 (Tuesday, April 12, 2022)]
[Notices]
[Pages 21611-21614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-07768]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


PJSC Aeroflot, 1 Arbat St., 119019, Moscow, Russia; 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: PJSC Aeroflot (``Aeroflot''). OEE's request and related information 
indicates that the Russian Federal Government is the majority owner of 
Aeroflot, through its Federal Agency for State Property Management, and 
it is headquartered in Moscow, Russia, with numerous international 
offices facilitating Aeroflot's international flight and business 
activities.
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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. 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 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according to their terms until modified, superseded, set aside, or 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

[[Page 21612]]

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).\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 12,226 (Mar. 3, 2022).
    \3\ 87 FR 13,048 (Mar. 8, 2022).
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    OEE's request is based upon facts indicating that Aeroflot engaged 
in recent conduct prohibited by the Regulations by operating aircraft 
subject to the EAR and classified under ECCN 9A991.b, 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, 
Aeroflot 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 from/to Beijing, China; Delhi, India; Antalya 
and Istanbul, Turkey; and Dubai, United Arab Emirates; respectively. 
Pursuant to Section 746.8 of the EAR, all of these flights would have 
required export or reexport licenses from BIS. Aeroflot flights would 
not be eligible to use license exception AVS. No BIS authorizations 
were either sought or obtained by Aeroflot for these exports or 
reexports to Russia. The information about those flights includes the 
following:

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                                                                         Departure/arrival
             Tail No.                Serial No.       Aircraft type            cities               Dates
----------------------------------------------------------------------------------------------------------------
VP-BGB...........................           41679  777-3M0 (ER) (B77W)  Beijing, CN/Moscow,  March 3, 2022.
                                                                         RU.
VQ-BFL...........................           65309  777-300 (ER) (B77W)  Beijing, CN/Moscow,  March 6, 2022.
                                                                         RU.
VP-BGF...........................           41686  777-3M0 (ER) (B77W)  Delhi, IN/Moscow,    March 5, 2022.
                                                                         RU.
VQ-BFO...........................           65311  777-300 (ER) (B77W)  Delhi, IN/Moscow,    March 7 ,2022.
                                                                         RU.
VQ-BQC...........................           41688  777-3M0 (ER) (B77W)  Antalya, TR/Moscow,  March 7, 2022.
                                                                         RU.
VQ-BQD...........................           41682  777-3M0 (ER) (B77W)  Istanbul, TR/        March 6, 2022.
                                                                         Moscow, RU.
VQ-BQE...........................           41683  777-3M0 (ER) (B77W)  Istanbul, TR/        March 5, 2022.
                                                                         Moscow, RU.
VQ-BUB...........................           41690  777-3M0 (ER) (B77W)  Dubai, UAE/Moscow,   March 6, 2022.
                                                                         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 Aeroflot 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).\4\ Even Aeroflot'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.\5\ For example, publicly available 
flight tracking data shows that on March 17-18, 2022, aircraft VP-BGB 
and VQ-BFL flew on flights into and out of Moscow, Russia to/from 
Vladivostok, Russia and Petropavlovsk-Kamchatsky, Russia, respectively. 
In addition, Aeroflot has publicly announced its intention to continue 
operating domestic flights across its route network within Russia and 
to/from Belarus. In a public statement on its website and available as 
of the signing of this order, Aeroflot stated that ``AEROFLOT WILL 
CONTINUE FULL OPERATIONS OF ITS FLIGHT NETWORK WITHIN RUSSIA, WITH THE 
EXCEPTION OF TEMPORARY RESTRICTIONS ON FLIGHTS TO SOUTHERN CITIES IN 
RUSSIA. FLIGHTS TO/FROM MINSK (BELARUS) WILL CONTINUE'' (emphasis in 
original).\6\
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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).
    \5\ https://www.ibtimes.com/russias-aeroflot-says-halting-all-flights-abroad-march-8-3425087.
    \6\ https://www.aeroflot.ru/us-en/news/62292?_preferredLocale=us&_preferredLanguage=en.
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    Moreover, additional concerns of future violations of the 
regulations are raised by public statements available as of the signing 
of this order on Aeroflot's own website stating, in part, that ``[o]ne 
of the goals of Aeroflot Group's 2028

[[Page 21613]]

business strategy is to expand its fleet to 600 aircraft (235 of which 
will be Russia-built).'' \7\ As of December 2021, Aeroflot's fleet 
consisted of 187 aircraft, of which 59 were U.S.-origin aircraft along 
with 118 additional aircraft manufactured outside of Russia, some of 
which could also be subject to the EAR based on containing more than 
25% U.S.-origin controlled content.\8\ 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 Aeroflot will attempt to 
evade the Regulations in order to obtain new or additional aircraft and 
parts, 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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    \7\ https://www.aeroflot.ru/ru-en/about/aeroflot_today/
company_profile#:~:text=Aeroflot%20is%20Russia%E2%80%99s%20de%20facto
%20national%20carrier%20and,1923%2C%20Aeroflot%20is%20among%20the%20w
orld%E2%80%99s%20oldest%20airlines.
    \8\ Id.
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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 Aeroflot 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 
Aeroflot, even on domestic routes within Russia, along with its stated 
intent to acquire additional aircraft, 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, and deliberate. 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 Aeroflot, 
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, PJSC Aeroflot, 1 Arbat St., 119019, 
Moscow, Russia, 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 
Aeroflot 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 Aeroflot 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 Aeroflot 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 Aeroflot 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 Aeroflot 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 Aeroflot, or service any item, of 
whatever origin, that is owned, possessed or controlled by Aeroflot 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 Aeroflot 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, 
Aeroflot 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 Aeroflot 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 Aeroflot, and shall be 
published in the Federal Register.
    This Order is effective immediately and shall remain in effect for 
180 days.


[[Page 21614]]


    Dated: April 7, 2022.
Matthew S. Axelrod,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2022-07768 Filed 4-11-22; 8:45 am]
BILLING CODE 3510-DT-P