H.R. 4530: Suppressing Tactics of Prohibited Shells Act

This bill, titled the Suppressing Tactics of Prohibited Shells Act or STOP Shells Act, aims to strengthen existing export control regulations. Below is a summary of its key provisions:

Licensing Requirements

The bill mandates the Secretary of Commerce to apply licensing requirements, as dictated by the Export Control Reform Act of 2018, to subsidiaries that are at least 50% owned by entities listed on specific governmental lists. These lists include the Entity List and the Military End User List. The Entity List consists of companies that are restricted due to national security concerns, while the Military End User List comprises those that could contribute to military capabilities that might harm U.S. interests.

Foreign Direct Product Rule Assessment

Before adding any entity to these lists, the Secretary of Commerce is required to evaluate whether applying the Foreign Direct Product Rule would serve U.S. national security or foreign policy interests. This rule assesses how products made using U.S. technology can be sold abroad, especially to specified entities.

Additionally, within two days of adding an entity to these lists, the Secretary must inform relevant congressional committees about this assessment.

Waivers

The bill allows for exemptions from these licensing requirements on a case-by-case basis. The Secretary of Commerce, after consulting with other key government departments (including State, Defense, and Energy), may determine that an exemption is in the national security interest of the United States. If a waiver is granted, the Secretary must notify congressional committees within two days, including an explanation of how this aligns with national security or foreign policy interests.

Definitions

The bill includes definitions for the key terms used:

• Entity List: A list maintained by the Bureau of Industry and Security that identifies companies posing security threats.
• Military End User List: A list that encompasses organizations whose usage of U.S. technologies could enhance military capabilities harmful to U.S. interests.
• Foreign Direct Product Rule: A regulation that pertain to products manufactured outside the U.S. using U.S.-sourced technology.

Relevant Companies

None found