Enter to open, tab to navigate, enter to select
FEMA Issues Temporary Rule Prohibiting Exports of Certain PPE Without Its Approval
Practical Law Legal Update w-024-9642 (Approx. 5 pages)
FEMA Issues Temporary Rule Prohibiting Exports of Certain PPE Without Its Approval
by Practical Law Commercial Transactions
| Law stated as of 13 Apr 2020 • USA (National/Federal) |
The Federal Emergency Management Agency (FEMA), an agency under the US Department of Homeland Security (DHS), has issued a temporary final rule prohibiting exports of certain categories of personal protective equipment (PPE) from the US without explicit approval from FEMA in response to the COVID-19 pandemic.
On April 10, 2020, as part of the US government's ongoing response to the 2019 novel coronavirus disease (COVID-19) pandemic, the Federal Emergency Management Agency (FEMA) published a temporary final rule that prohibits the exportation of certain personal protective equipment (PPE) from the US without explicit approval from FEMA. The rule is effective from April 7, 2020, the date on which it was filed for public inspection, until August 10, 2020.
The export restrictions apply to the following PPE:
- N95 Filtering Facepiece Respirators, including devices that are disposable half-face-piece non-powered air-purifying particulate respirators intended for use to cover the nose and mouth of the wearer to help reduce wearer exposure to pathogenic biological airborne particulates.
- Other Filtering Facepiece Respirators (for example, those designated as N99, N100, R95, R99, R100, or P95, P99, P100), including single-use, disposable half-mask respiratory protective devices that cover the user's airway (nose and mouth) and offer protection from particulate materials at an N95 filtration efficiency level per 42 C.F.R. § 84.181.
- Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges.
- PPE surgical masks, including masks that cover the user's nose and mouth and provide a physical barrier to fluids and particulate materials.
- PPE gloves or surgical gloves, including those defined at 21 C.F.R. §§ 880.6250 and 878.4460 (exam gloves and surgical gloves, respectively) and such gloves intended for the same purposes.
Background
On March 23, 2020, the President signed Executive Order 13910, delegating to the Secretary of Health and Human Services (HHS) the President's authority under Section 102 of the Defense Production Act of 1950 (DPA) (50 U.S.C. § 4512) to prevent hoarding of health and medical resources necessary to respond to the spread of COVID-19. The President authorized the HHS Secretary to designate such resources as either:
- A scarce material.
- A material the supply of which would be threatened by persons accumulating the material:
- in excess of the reasonable demands of business, personal, or home consumption; or
- for the purpose of resale at prices in excess of prevailing market prices.
On March 25, 2020, the HHS Secretary designated 15 categories of health and medical resources as scarce or threatened materials, including the five categories of PPE the export of which is now restricted (85 Fed. Reg. 17592-01). For more information on the President's Executive Order and the HHS Secretary's action, see Legal Update, Federal and State Governments Work to Limit Price Gouging and Hoarding of Products Related to COVID-19.
On April 3, 2020, the President signed a memorandum stating that to ensure the materials designated by the HHS Secretary as scarce or threatened remain in the US for use in responding to the spread of COVID-19, it is the policy of the US to prevent domestic brokers, distributors, and other intermediaries from diverting these materials overseas. In furtherance of this policy, the President authorized the Secretary of Homeland Security, through FEMA, to allocate to domestic use, as appropriate, the five categories of PPE the export of which is now restricted (The White House: Memorandum on Allocating Certain Scarce or Threatened Health and Medical Resources to Domestic Use.) FEMA's rule implements this allocation order.
FEMA's Temporary Rule
FEMA's rule provides that any shipments of covered materials intended for export will be temporarily detained by US Customs and Border Protection (CBP) while FEMA reviews the shipment to determine whether to:
- Return the shipment for domestic use.
- Issue a rated order for the shipment, that is, an order placed in support of a national defense program under the DPA.
- Allow the export of all or part of the shipment.
FEMA states that it will make this determination within a reasonable time after CBP notifies it of an intended shipment. In making its determination, FEMA will consider the totality of the circumstances, including the following factors:
- The need to ensure that scarce or threatened items are appropriately allocated for domestic use.
- Minimization of disruption to the supply chain, both domestically and abroad.
- The circumstances surrounding the distribution of the materials and potential hoarding or price gouging concerns.
- The quantity and quality of the materials.
- Humanitarian considerations.
- International relations and diplomatic considerations.
(85 Fed. Reg. 20195-01 (to be codified at 44 C.F.R. § 328.102).)
Exemptions
To limit the impact on pre-existing commercial relationships, the rule exempts shipments made by or on behalf of US manufacturers with continuous export agreements with customers in other countries since at least January 1, 2020, if at least 80 percent of the manufacturer's domestic production of covered materials, on a per item basis, was distributed in the US in the preceding 12 months. If FEMA determines that a shipment falls within this exemption, the shipment may be exported without further review by FEMA. (85 Fed. Reg. 20195-01 (to be codified at 44 C.F.R. § 328.102(d).) FEMA encourages manufacturers to contact it with specific information regarding their status under this exemption.
FEMA may waive this exemption and fully review a shipment if it determines that doing so is necessary or appropriate to promote the national defense. FEMA may also, at any time, add other scarce or threatened materials to its allocation order. For example, it could potentially restrict exports of other PPE that the HHS Secretary has designated as scarce or threatened materials. If FEMA decides to restrict exports of additional materials, it will announce its determination in the Federal Register.
FEMA noted that it may develop additional guidance regarding which exports are covered by the exemption, and that if necessary or appropriate to promote the national defense, it may allow additional exemptions which will be announced in the Federal Register.
According to a guidance memorandum dated April 9, 2020, from CBP's Executive Director for Cargo Conveyance and Security to CBP's Directors of Field Operations, FEMA has conveyed to CBP that the focus is on commercial quantities, which are currently defined as shipments valued at $2,500 and containing more than 10,000 units of the covered PPE. CBP's memorandum further states that the following circumstances are also excluded:
- Exports to Canada or Mexico.
- Exports to US government entities such as US military bases overseas.
- Exports by US government agencies.
- Exports by US charities.
- Exports by critical infrastructure industries for the protection of their workers.
- Exports by the 3M Company.
- Express or mail parcels that do not meet the definition of commercial quantities.
- In-transit shipments.
Enforcement
To administer the temporary rule, FEMA may conduct investigations, request information or testimony, and inspect records or business premises. FEMA may also apply for an injunction, restraining order, or other order to enforce compliance if it determines that a party has engaged in or is about to engage in any act that violates the DPA or FEMA's rule.
A violation of FEMA's rule is a crime punishable by either or both:
- A fine of not more than $10,000.
- Imprisonment for not more than one year.
In addition, any party that fraudulently or knowingly exports or attempts to export merchandise contrary to law, or receives, conceals, buys, sells, or facilitates the transportation, concealment, or sale of such merchandise knowing the goods were intended for export contrary to law, is subject to criminal penalties of either or both:
- A fine.
- Up to 10 years' imprisonment.