The Bass, Berry & Sims international trade team is actively monitoring the situation in Russia and Ukraine and providing real-time advice to clients on managing the situation. This post summarizes the evolving situation as of Monday, March 21 concerning current U.S. sanctions and export restrictions related to Russia and Ukraine. This post supplements our previous analysis all of which are linked at the end of today’s content.
On March 18, citing publicly available information, the Bureau of Industry and Security (BIS) issued a notice (the Notice) identifying 100 commercial and private aircraft that have flown into Russia in apparent violation of the Export Administration Regulations (EAR) since March 2, 2022. BIS noted that all listed aircraft are owned or controlled by, or under charter or lease to, Russia or Russian nationals. BIS identified the aircraft by owner/operator, tail number, serial number, and aircraft type.
In publicly listing the aircraft, BIS warned that servicing these aircraft without BIS authorization by any person, regardless of location, would violate part 736.2(b)(10) of the EAR. Also known as General Prohibition 10, this EAR provision covers the taking of virtually any action with respect to an item that has been exported in violation of the EAR. BIS emphasized that violations of the EAR can lead to enforcement action and possible criminal and/or civil fines, including jail time and loss of export privileges.
BIS Initially Allowed Russia Exports Related to Aircraft, but Subsequently Limited the Authorization
On February 24, BIS imposed expansive controls on exports, re-exports and in-country transfers of U.S. items and certain foreign-made items to Russia. (Read our February 24 post on the rule here). Yet when imposing those controls, BIS allowed the continued use of license exception AVS related to exports and re-exports of commercial aircraft with certain limited restrictions.
Less than a week later, on March 2, when BIS expanded similar export controls to Belarus, BIS restricted the use of license exception AVS with respect to Russia. In particular, BIS eliminated the exception for aircraft registered in, owned, controlled by, or under charter or lease by Russia or a national of Russia from license exception AVS eligibility. The result was that any flight of such aircraft into Russia required BIS authorization after March 2. (Read our March 3 post on the rule here).
Broad Prohibitions under EAR General Prohibition 10
The Notice is explicit fact that provision of services to a listed aircraft without BIS authorization would be contrary to General Prohibition 10 of the EAR. General Prohibition 10 is entitled “Proceeding with transactions with knowledge that a violation has occurred or is about to occur (Knowledge Violation to Occur).” The language of the prohibition states that a person “may not sell, transfer, export, re-export, 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 … has occurred, is about to occur, or is intended to occur in connection with the item …. There are no License Exceptions to this General Prohibition Ten.” Thus even the most basic maintenance on a listed aircraft, or an attempt to manage any financial or other transaction related to a listed aircraft, would be prohibited under the terms of the General Prohibition. To date, there has been nothing released publicly by BIS about any process for obtaining the de-listing of an aircraft.
If you have any questions or need any assistance related to this evolving situation or other international trade matters, please contact the authors. To read our previous coverage concerning the Russia-Ukraine situation, click the links below: