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FEMA Temporarily Halts Exports of Certain PPE
April 8, 2020
The Federal Emergency Management Agency (FEMA) has exercised its delegated authority under the Defense Production Act (DPA) to issue a temporary final rule (Prioritization and Allocation of Certain Scarce or Threatened Health and Medical Resources for Domestic Use) to prohibit the export of five types of medical personal protective equipment (PPE) that the US government previously identified as scarce and threatened material in the COVID-19 pandemic.
We previously reported on this possibility in our April 6, 2020, alert, which discussed the US Administration’s use of the DPA during the pandemic. Many countries already have issued similar export prohibitions.
The temporary final rule allocates five types of PPE for domestic use, effectively prohibiting their export from the United States without explicit approval by FEMA. These items were previously identified in the President’s April 3, 2020, memorandum. The same memorandum delegated to FEMA, via the Department of Homeland Security, authority under the DPA to allocate the resources for domestic use.
The rule is effective on the “date of filing for publication in the Federal Register,” which we believe is April 7, 2020, although we are confirming the effective date with FEMA. The temporary rule amends FEMA’s preparedness regulations and is in effect for 120 days after publication, though it can easily be renewed or expanded.
What does the FEMA Rule do?
The rule orders that all shipments of the covered materials be allocated for domestic use and prohibits their export without explicit approval by FEMA.
What products are covered?
The following five products are covered, as well as anything else the FEMA Administrator designates and publishes in the Federal Register:
1. 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;
2. Other Filtering Facepiece Respirators (e.g., 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 CFR 84.181;
3. Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges;
4. PPE surgical masks, including masks that cover the user’s nose and mouth and provide a physical barrier to fluids and particulate materials; and
5. PPE gloves or surgical gloves, including those defined at 21 CFR 880.6250 (exam gloves) and 878.4460 (surgical gloves) and such gloves intended for the same purposes.
How do you get a license to export?
Currently, there is no license mechanism, which is not surprising since none of the agencies involved are export control agencies of the US government. However, as set forth below, there is a process whereby FEMA can authorize the export to proceed.
How will the rule be enforced?
The rule states that the process will be as follows: Customs and Border Protection (CBP) will notify FEMA of an intended export of the covered materials. CBP is then required to temporarily detain the export while the FEMA Administrator decides “whether to return for domestic use or issue a rated order for part or all of the shipment.” The FEMA Administrator will make the determination “within a reasonable timeframe” after CBP notifies it of an intended export. If allocated for domestic use, FEMA will purchase the products.
In our previous alert, we predicted that enforcement of any export prohibition would fall on CBP. We expect that CBP will establish a mechanism for exporters to inform CBP of an intended export together with the necessary facts to support the request for export. Ideally, this would be in the form of an application that could be submitted and reviewed prior to making an actual shipment so that goods do not need to be unnecessarily detained.
Violations of the DPA are criminal and carry the potential of a $10,000 fine and/or one year of imprisonment. In addition, the rule provides for penalties pursuant to 18 U.S.C. 554 (Smuggling Goods from the United States), also criminal. That law carries a penalty of 10 years’ imprisonment and/or a fine.
What criteria will FEMA use to allocate PPE for domestic use?
After CBP notifies FEMA of a potential export of the specified PPE, the FEMA Administrator will potentially consult with other agencies and consider the totality of circumstances, including the following factors:
1. the need to ensure that scarce or threatened items are appropriately allocated for domestic use;
2. minimization of disruption to the supply chain, both domestically and abroad;
3. the circumstances surrounding the distribution of the materials and potential hoarding or price-gouging concerns;
4. the quantity and quality of the materials;
5. humanitarian considerations; and
6. international relations and diplomatic considerations.
Are There Any Exemptions?
Yes, currently there is one exemption, and FEMA may establish additional exemptions. Critically, FEMA has to decide whether an export qualifies for the exemption; exporters cannot make the determination on their own. However, once FEMA has determined that the exemption applies to a shipment of covered materials, FEMA will notify CBP and the materials may be exported without further review by FEMA.
The exemption allows “the export of covered materials from shipments made by or on behalf of US manufacturers with continuous export agreements with customers in other countries since at least January 1, 2020, so long as at least 80 percent of such manufacturer’s domestic production of such covered materials, on a per-item basis, was distributed in the United States in the preceding 12 months.” However, the FEMA Administrator may waive this exemption “if the Administrator determines that doing so is necessary or appropriate to promote the national defense.” At this time, it is unclear how an exporter provides FEMA information to support the use of the exemption for a particular export.
Exporters should carefully review their export agreements and the scope/duration of their export relationships to determine whether the above exemption applies as well as build in extra time for any potential shipments of covered PPE.