Order Temporarily Denying Export Privileges, 51305-51307 [2024-13257]

Agencies

• DEPARTMENT OF COMMERCE
• Bureau of Industry and Security

[Federal Register Volume 89, Number 117 (Monday, June 17, 2024)]
[Notices]
[Pages 51305-51307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-13257]


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DEPARTMENT OF COMMERCE

Bureau of Industry and Security


Order Temporarily Denying Export Privileges

Turboshaft FZE, Q3-117 Saif Zone 9732, Sharjah, UAE;
Treetops Aviation, Office #4801, Marina Pinnacle Tower, Dubai, UAE;
#1575 New Agents Bldg., Cargo Village P.O. Box 62369, Dubai, UAE;
Black Metal FZE, Q3-117 Saif Zone 9732, Sharjah, UAE;
Timur Badr, Q3-117 Saif Zone 9732, Sharjah, UAE;
Elaine Balingit, Office #4802, Marina Pinnacle Tower, Dubai, UAE;
Q3-117 Saif Zone 9732, Sharjah, UAE

    Pursuant to section 766.24 of the Export Administration 
Regulations, 15 CFR parts 730-774 (``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: Turboshaft 
FZE (``Turboshaft''), Treetops Aviation (``Treetops''), Black Metal FZE 
(``Black Metal''), Timur Badr, and Elaine Balingit (collectively, the 
``Respondents''). OEE's request and related information indicate that 
the parties are located in the United Arab Emirates (``UAE''), at the 
respective addresses listed on the caption page of this order, and that 
Badr, a Russian national, owns or controls Turboshaft FZE and Treetops 
Aviation.
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    \1\ The Regulations, currently codified at 15 CFR parts 730-774 
(2021), originally issued pursuant to the Export Administration Act 
(50 U.S.C. 4601-4623 (Supp. III 2015) (``EAA''), which lapsed on 
August 21, 2001. The President, through Executive Order 13222 of 
August 17, 2001 (3 CFR 2001 Comp. 783 (2002)), as extended by 
successive Presidential Notices, continued the Regulations in effect 
under the International Emergency Economic Powers Act (50 U.S.C. 
1701, et seq. (2012)) (``IEEPA''). 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 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 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.
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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. 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 
``[l]ack 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.

[[Page 51306]]

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\
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    \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).
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    In its request, OEE presented evidence indicating that the 
Respondents seek to procure the shipment of various U.S.-origin 
commodities, including certain aircraft parts classified as ECCN 
9A991.d, to Russia, including to parties on the BIS Denied Persons List 
(``DPL'').

A. Badr Conduct Prior to the February 2022 Russian Invasion of Ukraine

    In May 2019, Export Enforcement (EE) personnel met with Badr at his 
office in Sharjah, UAE. Badr informed the EE personnel that his 
business consisted of trading in civilian aviation electronics and 
parts--specifically purchasing the parts at low prices and then 
reselling them for use in the urgent repair of grounded aircraft.\4\ He 
stated that he stored aircraft parts at a property he owned in Moscow, 
Russia and admitted he purchased a Boeing 737 and tore it down for 
parts. The EE personnel informed Badr that the failure to secure export 
licenses prior to exporting controlled items, such as aircraft parts, 
could result in criminal prosecution. The EE personnel also advised 
Badr to conduct due diligence by obtaining end-user statements from his 
customers. Badr replied that he would lose customers if he required 
them to provide end-user statements.
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    \4\ During the May 2019 meeting, Badr informed the OEE personnel 
that his business' name changed from Turboshaft to Black Metal FZE 
due to debts incurred under the Turboshaft name.
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B. Badr/Turboshaft/Treetops/Balingit Conduct After the February 2022 
Russian Invasion of Ukraine

    In February 2023, the head of the transportation department for S7 
Engineering, an arm of Siberian Airlines,\5\ contacted a U.S. freight 
forwarder regarding the status of an aircraft part--a hydromechanical 
fuel unit used in Airbus aircraft--it ordered from Turboshaft.\6\ The 
communication included a Turboshaft invoice billed to S7 Engineering at 
a Russian Federation address. The communication established that the 
item was shipped from the United States, through the UAE, and along to 
Russia.
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    \5\ Siberia Airlines, doing business as S7 Airlines, is itself 
the subject of a TDO. The first TDO against Siberia Airlines was 
effective upon its issuance on June 24, 2022, and published in the 
Federal Register on June 29, 2022 (87 FR 38709). The TDO has been 
renewed three times and the last renewal, which is effective for one 
year, was published in the Federal Register on December 14, 2023 (88 
FR 86626).
    \6\ During an August 2023 meeting, Badr informed OEE personnel 
that he changed his business name from Black Metal FZE back to 
Turboshaft due to customer and bank familiarity with the Turboshaft 
name.
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    A social media profile associated with Elaine Balingit lists her as 
Turboshaft's logistics officer. Additionally, U.S. export records 
indicate that Balingit was listed as the ultimate consignee contact 
person for 18 shipments of aircraft parts and equipment to Turboshaft 
between January and July 2023. Balingit was likewise listed as the 
ultimate consignee contact person for 18 shipments of aircraft parts 
and equipment to Treetops between September and November 2023.

D. Ongoing and Pending Exports

    As detailed in OEE's request and related information, Badr, 
Turboshaft, Treetops, Black Metal, and Balingit continue to engage in 
prohibited conduct. Import data reveals that 502 separate shipments, at 
least some of which consisted of aircraft parts, arrived in Russia 
between April 2022 and December 2023 in the name of Turboshaft, 
Treetops, or Black Metal.
    Import data shows that between January 2, 2023 and December 29, 
2023, Turboshaft was listed as the supplier on 136 imports of goods 
into Russia worth a claimed $1.6 million. Moreover, Turboshaft received 
89 exports from the United States, worth almost $2.1 million since the 
implementation of enhanced licensing requirements imposed on exports to 
Russia on February 24, 2022. Throughout November and December 2023, 
Turboshaft attempted to purchase two Air Data Inertial Reference Units, 
valued at nearly $400,000 each, from a U.S. supplier. The most recent 
shipment occurred on May 8, 2024.
    Import data shows that between January 2, 2023 and December 29, 
2023, Treetops was listed as the supplier on 244 imports of goods into 
Russia worth a claimed $4.46 million. Siberia Airlines, an entity 
subject to a TDO, received many of these shipments--which included 
items produced by U.S. aerospace manufacturers. Additionally, Treetops 
received 29 exports from the United States worth a claimed $626,755 
between September 12, 2023 and April 23, 2024. On April 26, 2024, U.S. 
Customs and Border Protection seized a shipment of aircraft parts meant 
for Treetops due to the submission of false Electronic Export 
Information (EEI) through the Automated Export System (AES). Lastly, 
Treetops is listed as the intermediate consignee of a September 2023 
shipment of aircraft parts to Turboshaft.
    Import data shows that between March and December 2022, Black Metal 
was listed as the supplier on 122 imports of goods into Russia. 
Moreover, Black Metal received 16 exports from the United States, worth 
almost $461,000 since the implementation of enhanced licensing 
requirements imposed on exports to Russia on February 24, 2022. As 
indicated above, Badr toggles between operating as Black Metal or 
Turboshaft to facilitate his procurement efforts.

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 the 
Respondents have acted in violation of the Regulations; that such 
violations have been significant and deliberate; and that given the 
foregoing and the nature of the matters under investigation, there is a 
likelihood of imminent violations. Therefore, the TDO is necessary in 
the public interest to prevent imminent

[[Page 51307]]

violation of the Regulations and to give notice to companies and 
individuals in the United States and abroad that they should avoid 
dealing with the Respondents, in connection with export and reexport 
transactions involving items subject to the Regulations and in 
connection with any other activity subject to the Regulations.

IV. Order

    It is therefore ordered:
    First, Turboshaft FZE, Q3-117 Saif Zone 9732, Sharjah, UAE; 
Treetops Aviation, Office #4801, Marina Pinnacle Tower, Dubai, UAE and 
#1575 New Agents Bldg., Cargo Village P.O. Box 62369, Dubai, UAE; Black 
Metal FZE, Q3-117 Saif Zone 9732, Sharjah, UAE; Timur Badr, Q3-117 Saif 
Zone 9732, Sharjah, UAE; and Elaine Balingit, Office #4802, Marina 
Pinnacle Tower, Dubai, UAE and Q3-117 Saif Zone 9732, Sharjah, UAE, 
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 
the Respondents 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 the Respondents 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 the Respondents 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 the Respondents 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 the Respondents 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 the Respondents, or service any item, 
of whatever origin, that is owned, possessed or controlled by the 
Respondents 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 Respondents 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, 
the Respondents 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 the Respondents 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 the Respondents and shall 
be published in the Federal Register.
    This Order is effective immediately and shall remain in effect for 
180 days.

Matthew S. Axelrod,
Assistant Secretary of Commerce for Export Enforcement.
[FR Doc. 2024-13257 Filed 6-14-24; 8:45 am]
BILLING CODE 3510-DT-P