STOP Shells Act

This bill would extend U.S. export license rules to cover subsidiaries that are 50% or more owned, directly or indirectly, by any company on the “Entity List” or the “Military End User List.” In short, if a parent company is restricted, its majority-owned affiliates would also face the same license requirements for U.S.-controlled items.

Before adding any company to those lists, the Commerce Department would have to check whether applying the “Foreign Direct Product Rule” would help U.S. national security or foreign policy, and then share that assessment with Congress within two days after the company is added. The Commerce Secretary could grant case-by-case waivers if doing so is in the national security interest, after consulting the Secretaries of State, Defense, and Energy, and must explain any waiver to Congress within two days. The bill defines the lists and the rule by reference to existing federal regulations.

• Who is affected: Companies on the Entity List or Military End User List, and their majority-owned subsidiaries; U.S. businesses that sell or ship controlled items to them.
• What changes: Export license requirements would apply to those subsidiaries; added reviews and quick notice to Congress; limited, case-by-case waivers with explanation.
• When: These steps would take effect if the bill becomes law; the two-day notices apply after listings or waivers occur.