Important Export Control Update: Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities
On September 29, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) put into effect a rule known as the “Affiliates Rule” (also referred to as a 50% ownership rule).
This rule expands the scope of BIS export controls by applying restrictions not just to entities expressly listed on restricted party lists, but also to certain foreign affiliates that are 50% or more owned (directly or indirectly, individually or in aggregate) by those listed entities.
Below is a high-level overview of what you should know about this new rule, potential impacts, and recommended actions.
What Does the Affiliates Rule Do?
- BIS now automatically extends the export control restrictions that apply to entities on the Entity List, the Military End-User (MEU) List, and certain SDN (Specially Designated Nationals) entities (as defined under EAR § 744.8) to non-listed foreign affiliates that are 50% or more owned (directly or indirectly) by one or more of those listed or restricted parties.
- When multiple listed entities (or restricted parties) each hold part of the ownership interest, BIS will aggregate those interests and apply the most restrictive export control requirements among them to the affiliate—even if the most restrictive owner has only a small stake.
- BIS has introduced a new “Red Flag” mechanism (Red Flag 29) under which if an exporter knows or has reason to know that a foreign entity is partially owned by a listed party but cannot determine with certainty the ownership percentage, one must (a) conduct additional due diligence or (b) submit a BIS license application (or rely on a license exception, if eligible), before proceeding.
- BIS has issued a limited 60-day Temporary General License (TGL) (valid through November 28, 2025) to permit certain transactions with affiliates otherwise captured by the rule—principally those in U.S. allied or partner countries.
Why This Matters to Faculty & Research
While many research activities may not directly engage with export-controlled technologies, the new Affiliates Rule does heighten risk in scenarios such as:
- Collaborations or subcontracts with foreign entities whose ownership or control structure includes parties on restricted lists.
- Transfers of controlled software, hardware, or data to foreign collaborators, where the destination is (or includes) an entity that may now be captured by BIS via the affiliate rule.
The expanded reach of the Affiliates Rule means that some entities that may have previously been considered “safe” partners or recipients may now be subject to additional oversight and restrictions.
What You Should Do Now
- Engage early with the Export Control Office (ECO): Before initiating transfers of potentially controlled items, software, or data to foreign collaborators, please involve ECO in assessing whether export licensing is needed.
- Watch for Red Flags: If you suspect that a collaborator has ties (e.g. partially owned or controlled, or board overlap) with restricted entities but you lack clarity on ownership percentages, treat this as a trigger for further diligence and reach out to the Export Control Office.
- Share your Comments and Questions: The Export Control Office is working closely with the University of California Office of the President (UCOP) to develop processes that ensure compliance with this new rule. These efforts may include enhancing and expanding our current due diligence tools. We welcome any questions or feedback you may have regarding this new regulation.
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The Office of Research Integrity Issue Final Rule on Public Health Service Policies on Research Misconduct
On September 12th, 2024, the Office of Research Integrity (ORI) issued the 2024 Final Rule on Research Misconduct to promote the responsible conduct of research across PHS-Funded agencies and organizations. The new regulation can be found here.
This chart summarizes the changes in the regulations. Key revisions to the regulations are provided below.
The revised regulations go into effect on January 1st, 2026. In the coming months, we will update our local research misconduct policy to reflect the revisions in the regulations.
