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This final rule makes targeted amendments to three locations in the EAR to ensure that Entity List license requirements attach to a listed entity based on its presence in a transaction — regardless of what transaction role it occupies:
§744.11 (License requirements that apply to entities acting contrary to US national security or foreign policy interests): The introductory text was amended to specify that the license requirements apply whenever a listed entity is "a party to the transaction" as defined in §748.5(e)–(h) of the EAR, which covers: the purchaser, the intermediate consignee, the ultimate consignee, and the end-user. Prior text was read narrowly by some practitioners as applying the Entity List license requirements only when the listed entity appeared in the end-user or ultimate-consignee box of the shipping documentation.
§744.16 (Entity List license requirements): Parallel amendment to the subsection that specifically governs Entity List-specific licensing conditions, removing ambiguity about whether the supplemental per-entity licensing conditions in the list's footnotes (e.g., footnote 1 for Huawei) apply when the listed entity is a purchaser or intermediate consignee rather than the named ultimate consignee or end-user.
Supplement No. 4 to Part 744 (the Entity List itself): The introductory text was amended to reflect the clarified four-role scope — ensuring the list's own preamble language is consistent with the amended regulatory sections.
FR Doc 2020-17908 was published in the same Federal Register issue (Vol. 85 No. 162, 20 August 2020) as FR Doc 2020-18213, the major Huawei rule that: (a) added 38 Huawei non-US affiliates to the Entity List under footnote 1; (b) removed the Temporary General License; and (c) expanded the Huawei Foreign-Produced Direct Product Rule (FDPR) to cover "party to a transaction" triggers. The two rules are conceptually complementary: the Huawei rule established the extraterritorial FDPR "party to a transaction" doctrine for foreign-produced items; this rule established the domestic-EAR "party to a transaction" doctrine for Entity List license requirements — ensuring that the Entity List could not be circumvented by inserting a non-listed intermediary between an exporter and a listed entity that was acting as the actual purchaser or arranger.
The rule is issued under the Export Control Reform Act of 2018 (ECRA, Pub. L. 115-232, §§ 1741–1781, codified at 50 U.S.C. §§ 4801–4861), which provides BIS with permanent statutory authority to issue the EAR.
parties in a transaction against the Entity List — not only the ultimate consignee and end-user blocks, but also the purchaser and all intermediate consignees. This aligned the Entity List compliance requirement with the broader EAR "red flags" due-diligence doctrine, which had always required looking at all parties to determine whether a suspicious-party inquiry was required.
been inserted as a "purchaser" (holding the payment obligation) while routing shipments through an unlisted intermediary as the technical importer. This rule ensures that Entity List license requirements attach at the transaction level, not merely at the shipping- documentation end-user level.
the geographic and role-based scope of an existing control architecture — became a recurring BIS approach. Later rules (e.g., the 2022 FDP reorganization rule) used similar "clarifying amendments" to ensure that new FDPR variants did not inherit interpretive gaps from the legacy regulatory text.
controlled items to listed entities who appeared only as purchasers is not established in the public record; BIS did not cite any specific enforcement case that prompted the clarification.
(rather than the entity itself) participates in a transaction as an agent or purchaser — that gap is addressed under the deemed-export framework rather than this rule.