The Federal Emergency Management Agency (FEMA) left many important questions unanswered as a result of a notification of exemptions action published for public inspection on 17 April 2020. The final action was published on 21 April 2020.
In the notice, FEMA published a list of exemptions ("Prioritisation and Allocation of Certain Scarce or Threatened Health and Medical Resources for Domestic Use; Exemptions") to its requirement for prior approval to export previously identified scarce medical personal protective equipment (PPE). Key among these exemptions are:
- exports by companies to non-US affiliates;
- exports to Canada and Mexico; and
- certain diplomatic, military and humanitarian donation exports.
Despite its attempt to clarify previous rules and guidance, FEMA's notice has raised nearly as many questions as it answers.
On 7 April 2020 FEMA issued a temporary final rule ("Prioritisation and Allocation of Certain Scarce or Threatened Health and Medical Resources for Domestic Use", published in the Federal Register on 10 April 2020), banning the export of five types of medical PPE that the US government had previously identified as scarce and threatened material during the COVID-19 pandemic (for further details please see "FEMA temporarily halts exports of certain PPE").(1)
On 9 April 2020 US Customs and Border Protection (CBP) followed up with a memorandum ("Updated Guidance for the Presidential Memorandum Regarding Allocating Certain Scarce or Threatened Health and Medical Resources to Domestic Use") addressed to "Directors, Field Operations" with guidance on the scope of FEMA's temporary final rule. According to the CBP memo, FEMA had conveyed to CBP that the export prohibition is focused on commercial quantities that are valued over $2,500 and contain more than 10,000 units of scarce material. The memo 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 to protect their workers;
- exports by the 3M Company;
- express or Mail Parcels that do not meet the commercial quantity definition above; and
- in-transit shipments.
It is understood that CBP issued this as interim guidance while FEMA worked to issue a formal Federal Register notice. While CBP and FEMA are working together, FEMA is the lead agency with responsibility for determining exemptions and CBP is responsible for implementation.
On 17 April 2020 FEMA issued a public inspection copy of a Federal Register notice setting out additional exemptions to the export ban. The notice was published in the Federal Register on 21 April 2020 but took effect on the "date of filing for publication in the Federal Register", which is believed to be 17 April 2020. These exemptions are in addition to the original exemption allowing for exports to continue if the US party has had continuous export agreements in place since at least 1 January 2020 and 80% of the manufacturer's domestic production of the scarce materials, on a per-item basis, was distributed in the United States in the preceding 12 months (as set out in the temporary final rule).
However, the notice's exemptions are not exactly the same as those stated in the CBP memo. The notice does not mention the CBP memo, which was directed to aid CBP field offices in the enforcement of the export ban until FEMA issued additional guidance. Consequently, it is unclear whether CBP field offices will continue to follow the CBP memo or whether exemptions identified in that memo are now superseded by the FEMA notice. CBP may issue further guidance to replace the 9 April 2020 memorandum and align with the FEMA notice.
The FEMA exemptions are:
- shipments to US commonwealths and territories, including Guam, American Samoa, Puerto Rico, the US Virgin Islands and the Commonwealth of the Northern Mariana Islands (including the Minor Outlying Islands);
- exports of covered materials by non-profit or non-governmental organisations that are solely for donation to foreign charities or governments for free distribution (not sale) at their destination;
- intracompany transfers of covered materials by US companies from domestic facilities to company-owned or affiliated foreign facilities;
- shipments of covered materials that are exported solely for assembly in medical kits and diagnostic testing kits destined for US sale and delivery;
- sealed, sterile medical kits and diagnostic testing kits where only a portion of the kit is made up of one or more covered materials that cannot be easily removed without damaging the kits;
- declared diplomatic shipments from foreign embassies and consulates to their home countries. These may be shipped via intermediaries (logistics providers) but reshipped from and consigned to foreign governments;
- shipments to overseas US military addresses, foreign service posts (eg, diplomatic post offices) and embassies;
- in-transit merchandise (ie, shipments in transit through the United States with a foreign shipper and consignee, including shipments temporarily entered into a warehouse or temporarily admitted to a foreign trade zone);
- shipments for which the final destination is Canada or Mexico; and
- shipments by or on behalf of the US government, including its military.
The FEMA notice also warns that if CBP suspects that a manufacturer, broker, distributor, exporter or shipper of any covered materials is intentionally modifying or diverting its shipments to take advantage of these exemptions or otherwise trying to circumvent the FEMA review requirements, CBP may detain the shipment and forward information about such shipments to FEMA for determination.
For exemptions two, three, four, eight and nine above, FEMA will require a letter of attestation to be submitted to it via CBP's Document Imaging System within CBP's Automated Commercial Environment, certifying the purpose of the proposed shipment. The FEMA notice also notes that:
[t]he Administrator may waive any of these exemptions at any time and fully review shipments of covered materials under [the FEMA regulations] if the Administrator determines that doing so is necessary or appropriate to promote the national defense.
While exemption 10 does not require a letter of attestation, if a shipment is being made by a contractor on behalf of the US government and this may not be clear on the face of this shipment (eg, it is not being made to a US government base or facility, but is being made at the direction of the US government to another location), the exporter may also want to include a letter of attestation anyway to explain the details to avoid the detention of the goods and associated delays.
While the FEMA notice thankfully confirms that shipments to a US commonwealth or territory such as Puerto Rico are exempt, the following questions remain unanswered.
How do you get FEMA to approve anything else?
A key question left unanswered by FEMA is what about all other exports? This was an opportunity for FEMA to explain how an export that is not included on the approved list can be approved. This question has been open since FEMA's temporary final rule was issued (for further details please see "FEMA temporarily halts exports of certain PPE"). How do exporters apply? Do they have to continue to try to export and hope for the best? Are all exports other than the 10 exemptions simply banned until the FEMA temporary rule expires on 10 August 2020?
What happened to critical infrastructure industries?
The CBP memo stated that exports by critical infrastructure industries for the protection of their workers would be exempt, leading to confusion as to the definition of 'critical infrastructure'. FEMA has now exempted intracompany transfers of covered materials by US companies from domestic facilities to company-owned or affiliated foreign facilities. This is at once broader (all intracompany transfers) and narrower (exports of covered materials to unrelated companies intended to protect critical workers abroad).
What about exports of materials for the manufacture of covered material that will be imported back into the United States?
FEMA has included a new exemption for shipments of covered materials that are exported solely for assembly in medical kits and diagnostic testing kits destined for US sale and delivery. This makes sense; if gloves are exported to Mexico to be included in a medical kit to be brought back into the United States, that export is now exempt.
But why limit this to items going into medical kits and diagnostic testing kits? For example, why not include items going into the covered materials itself if the covered materials are being reimported back into the United States? And what does 'solely' mean? Does every single glove exported from the United States have to go into a medical kit that is coming back into the United States?
Exporters should carefully review their proposed exports to determine whether any of the above exemptions apply, prepare a letter of attestation for certain exemptions and build in extra time for any shipments of items identified as scarce materials.
- N95 filtering facepiece respirators, including devices that are disposable half-facepiece non-powered air-purifying particulate respirators intended to cover the nose and mouth of the wearer to help reduce wearer exposure to pathogenic biological airborne particulates;
- other filtering facepiece respirators (eg, those designated as N99, N100, R95, R99, R100, P95, P99 or 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 as per 42 CFR 84.181;
- elastomeric air-purifying respirators and appropriate particulate filters and 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 and 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.