On April 10, 2020, the Federal Emergency Management Agency (FEMA) issued a temporary final rule (TFR), pursuant to the Defense Protection Act (DPA) and related authorities, to require explicit approval for exports of certain personal protective equipment (PPE). This TFR is aimed at allocating certain scarce or threatened materials for domestic use as needed for national defense during the COVID-19 pandemic. The TFR took effect April 7, 2020, and remains effective until August 10, 2020. This date could be extended.
Five Types of PPE Currently Covered:
Pursuant to this TFR, shipments of the following five types of PPE, determined by the Secretary of Health and Human Services (HHS) to be “scarce or threatened materials”, may NOT leave the United States without explicit FEMA approval:
- 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 to reduce exposure to pathogenic biological airborne particulates;
- 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 and offer protection from particulate materials at an N95 filtration efficiency level;
- 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; and
- PPE gloves or surgical gloves, including exam and surgical gloves, as well as gloves intended for the same purposes.
Note that this list is not exhaustive, and that the FEMA Administrator may add other materials if they are determined to be scarce and critical materials essential for national defense. Other such materials would be added to this allocation order, and there would be a Federal Register notice.
FEMA Approval Process
Pursuant to this TFR, before any shipments of these materials may leave the United States, the U.S. Customs and Border Patrol (CBP) will detain the shipment temporarily, so that FEMA may determine in a reasonable time period, which is not defined, and acting based on promoting national defense how to proceed. They could either issue a rated order for all or part of the shipment and return the merchandise for domestic use (i.e., not allowing the export at all), or they could allow the export in whole or in part.
In making its determination, FEMA may consult other agencies and will consider the totality of the circumstances, including the following factors: (1) ensuring that scarce or threatened items are appropriately allocated for domestic use; (2) minimizing supply chain disruption, both in the U.S. and abroad; (3) facts surrounding the distribution of the materials and potential for price-gouging or hoarding; (4) humanitarian concerns; (5) the quality and quantity of the materials; and (6) diplomatic considerations and international relations.
Exemptions Necessary or Appropriate to Promote National Defense
The TFR also sets forth an exemption where the Administrator determines that the export is necessary or appropriate to promote the national defense. For example, FEMA will not purchase covered materials from shipments made by or on behalf of U.S. manufacturers with continuous export agreements with customers outside the United States since at least January 1, 2020, if at least 80 percent of such manufacturer’s domestic production of covered materials (on a per item basis) was distributed in the United States in the previous 12 months. The Administrator recognized the importance of these pre-existing commercial relationships to the international supply chain and for humanitarian reasons, in light of the global nature of the pandemic. In each case where an exemption applies, the materials may leave the United States without further review by FEMA. Exemptions can waived by the Administrator if determined to no longer be necessary or appropriate to promote the national defense.
Customs and Border Protection (CBP) issued internal guidance for ports or entry. There will likely be additional public guidance forthcoming clarifying these exemptions. For example, CBP will be focusing its efforts on shipments involving “commercial quantities,” currently defined as shipments valued at $2,500 or more and containing more than 10,000 units. The guidance indicates that CBP will not be focusing on the following categories of shipments:
- Exports to Canada or Mexico;
- Exports to U.S. government entities such as U.S. military bases overseas;
- Exports by U.S. Government agencies;
- Exports by U.S. 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 commercial quantity definition above;
- In-transit shipments.
The guidance does not provide additional information on how CBP will coordinate with FEMA to make a decision on whether the materials may leave the United States.
Again, there will likely be more guidance on categories for exclusion, and FEMA encourages manufacturers to contact them with specific information regarding their status under this exemption. Additionally, the Administrator may announce other exemptions by notice in the Federal Register.
FEMA may conduct investigations and issue requests for information to enforce the Defense Production Act. They may seek an injunction or other order to prevent a person from engaging in acts that will violate the Act or any TFR or order issued pursuant to the Act. Failure to comply fully with this TFR is a crime punishable by a fine of not more than $10,000 or imprisonment for not more than one year, or both. Moreover, whoever fraudulently or knowingly exports, or attempts to export/send from the United States, any item contrary to any U.S. law or regulation, or receives, conceals, buys, sells, or facilitates the transportation, concealment, or sale of such an item before it leaves the United States, knowing it is intended to leave the United States in violation of U.S. laws and regulations, faces up to 10 years’ imprisonment, a fine, or both.
We are continuing to monitor developments regarding these requirements for the five categories of PPE and potentially others to be subject to certain restrictions before leaving the United States, as well as any other exemptions and additional guidance. Please let us know if you have questions.
Kelley Drye has been closely monitoring the federal government response to the COVID-19 pandemic. Our goal is to help clients face current challenges and address questions that impact business operations as information becomes available to us. We have been providing up-to-date information including daily advisories, blog posts and frequent webinars about the legal and business implications related to the pandemic, all of which can be found on the firm’s COVID-19 Resource Center.
 The TFR is issued pursuant to the following authorities: The Defense Production Act of 1950, as amended (“DPA” or “the Act”), and specifically sections 101 and 704 of the Act, 50 U.S.C. 4511, 4554; Executive Order (E.O.) 13909, 85 FR 16227 (Mar. 23, 2020); E.O. 13910, 85 FR 17001 (Mar. 26, 2020); E.O. 13911, 85 FR 18403 (Apr. 1, 2020); DHS Delegation Number 09052 Rev. 00.1, “Delegation of Defense Production Act Authority to the Administrator of the Federal Emergency Management Agency” (Apr. 1, 2020); and The Presidential Memorandum on Allocating Certain Scarce or Threatened Health and Medical Resources to Domestic Use (April 3, 2020).