It’s one thing to have your name in the news as part of a settlement agreement for export control violations. It’s quite another to be publicly called out by the government for apparently ignoring the new Russia sanctions. That’s exactly what happened earlier this month, when the Commerce Department issued a press release identifying dozens of commercial and private aircraft that have flown into Russia in apparent violation of the EAR.
First, some background. On February 24, in response to Russia’s invasion of Ukraine, the Commerce Department’s Bureau of Industry and Security (BIS) imposed sweeping new controls on aviation items going to Russia. This includes a new license requirement for certain aircraft or aircraft parts. On March 2, similar controls were placed on Belarus.
The scope of these new rules is broad. Any aircraft manufactured in the United States, or any aircraft manufactured in a foreign country with more than 25% U.S.-origin content, now requires an export license if it is destined for Russia. So does any form of service to these aircraft including, for example, providing spare parts, repairs or other services. Without these authorizations, any person anywhere – including within Russia – risks violating the EAR. These controls are designed to effectively ground international flights from Russia on these aircraft.
Earlier this month, based on publicly available information, BIS identified dozens of commercial and private flights into Russia. All of these aircraft are either owned or controlled by Russia or Russian nationals. In making this public announcement, the agency is effectively putting everyone on notice that providing assistance to these aircraft will be viewed as a violation of the EAR. This includes, but is not limited to, refueling, maintenance, repair or providing any spare parts or services to these aircraft. All of these activities are subject to General Prohibition 10 of the EAR, found in Section 736.2(b)(10).
From the press release:
“Today, the Department of Commerce is demonstrating the power and reach of the actions we took over the past few weeks in response to Russia’s brutal war of choice against Ukraine,” said Secretary of Commerce Gina M. Raimondo. “We are publishing this list to put the world on notice—we will not allow Russian and Belarusian companies and oligarchs to travel with impunity in violation of our laws.”
Violations of the EAR can result in fines, penalties, imprisonment, loss of export privileges and other restrictions. Aircraft companies and related aerospace service/parts providers should take extra steps to ensure they are not violating any of these new rules in the course of their business.
This action by BIS can be viewed as a “shot across the bow” – not just for aerospace companies, but for anyone who is doing business in this part of the world. The agency is taking an aggressive stance to enforce Russia-related export controls. We can expect to see more actions like this, as well as strong enforcement of the new rules in the months and years ahead. If you need help understanding these new rules and applying them to your business, schedule a no-charge consultation with one of our team members today.
Tom Reynolds is the Vice President of Operations for Export Solutions, a consultancy firm which specializes in helping companies with import/export compliance.