FEMA: Certain Exports of Respirators, Masks, and Gloves (PPE) Exempt From Ban

In a Nutshell

Late Friday afternoon, FEMA published a list of exemptions (“Prioritization 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 the attempt to clarify previous rules and guidance, FEMA’s notice raises nearly as many questions as it answers.

Background

As we reported in our April 8 alert, FEMA issued a temporary final rule (“Prioritization and Allocation of Certain Scarce or Threatened Health and Medical Resources for Domestic Use”) on April 7, published in the Federal Register on April 10, banning the exports of five types of medical PPE[1] that the US Government previously identified as scarce and threatened material in the COVID-19 pandemic.

US Customs and Border Protection (CBP) followed up with a memorandum on April 9 (“Updated Guidance for the Presidential Memorandum Regarding Allocation Certain Scarce or Threatened Health and Medical Resources to Domestic Use”) addressed to Directors, Field Operations with guidance on the scope of the 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 the following:

• 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 commercial quantity definition above; and
• In-transit shipments

We understand 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.

New Action: FEMA Issues List of Exemptions

As discussed, on April 17, 2020, FEMA issued a public inspection copy of a Federal Register Notice setting forth additional exemptions to the export ban. The Notice will be published in the Federal Register on April 21 but is effective on the “date of filing for publication in the Federal Register,” which we believe is April 17. These exemptions are in addition to the original exemption allowing for exports to continue if the US party has continuous export agreements in place since at least January 1, 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, which was set forth 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 if CBP field offices will continue to follow the CBP Memo or if exemptions identified in that Memo are now superseded by the FEMA Notice. We expect CBP may issue further guidance to replace the April 9 memorandum and align with the FEMA notice.

What Are the FEMA Exemptions?

The FEMA exemptions are as follows:

1. Shipments to US Commonwealths and Territories, Including Guam, American Samoa, Puerto Rico, US Virgin Islands, and the Commonwealth of the Northern Mariana Islands (Including Minor Outlying Islands).
2. Exports of covered materials by non-profit or non-governmental organizations that are solely for donation to foreign charities or governments for free distribution (not sale) at their destination(s).
3. Intracompany transfers of covered materials by us companies from domestic facilities to company-owned or affiliated foreign facilities.
4. Shipments of covered materials that are exported solely for assembly in medical kits and diagnostic testing kits destined for US sale and delivery.
5. 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.
6. Declared diplomatic shipments from foreign embassies and consulates to their home countries. These may be shipped via intermediaries (logistics providers) but re-shipped from and consigned to foreign governments.
7. Shipments to overseas us military addresses, foreign service posts (e.g., diplomatic post offices), and embassies.
8. In-transit merchandise: 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.
9. Shipments for which the final destination is Canada or Mexico.
10. Shipments by or on behalf of the US Government, including its military.

The FEMA notice also warns that if CBP suspects a manufacturer, broker, distributor, exporter, or shipper of any covered materials to be 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.

Using an Exemption

For exemptions (2), (3), (4), (8), and (9), above, FEMA will require a letter of attestation to be submitted to FEMA via CBP’s Document Imaging System within CBP’s Automated Commercial Environment (ACE), 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 (for example, 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), then the exporter may also want to include a letter of attestation anyway to explain the details to avoid potential detention of the goods and associated delays.

What Are the Questions?

First, let’s thank FEMA for confirming shipments to a US commonwealth or territory such as Puerto Rico are exempt. None of us should have had to spend any time last week on a question like that (but we did, didn’t we?).

But the FEMA notice creates some other questions, such as:

• 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 does not fall on the approved list can be approved. As we previously discussed, this question has been open since FEMA’s Temporary Final Rule was issued. 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 August 10?

• 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 many of us to spend days trying to define “critical infrastructure” to our clients. 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 intra-company transfers) and narrower (one can imagine 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 US?  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 we export gloves to Mexico to be included in a medical kit to be brought back into the US, 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 that “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?

Bottom Line

Exporters should carefully review their proposed exports to determine whether any of the above exemptions apply, prepare a letter of attestation for certain of the exemptions, and build in extra time for any shipments of items identified as scarce materials.

[1] The five types of PPE that are restricted are:

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.