On April 7, 2020, the Federal Emergency Management Agency (FEMA) issued a temporary rule restricting exports of certain personal protection equipment (PPE) in response to the COVID-19 pandemic. See Sidley’s previous Update on that temporary rule here.
The export restrictions cover five categories of PPE (the “covered materials”) for which export from the United States is restricted absent explicit approval from FEMA. Under the temporary rule, U.S. Customs and Border Protection (CBP) is tasked with identifying and detaining shipments of covered materials for review by FEMA prior to export.
On April 17, 2020, FEMA issued a notice containing 10 exemptions from the PPE export restrictions.1 Specifically, the FEMA notice exempts from the PPE export restrictions the following types of shipments:
- shipments to U.S. commonwealths and territories, including Guam, American Samoa, Puerto Rico, the U.S. Virgin Islands and the Commonwealth of the Northern Mariana Islands (including Minor Outlying Islands)
- exports by nonprofit or nongovernmental organizations for donation (not sale) to foreign charities or governments for free distribution
- intracompany transfers by U.S. companies from domestic facilities to company-owned or affiliated foreign facilities
- shipments exported solely for assembly into medical and diagnostic testing kits destined for U.S. sale and delivery
- shipments of sealed, sterile medical and diagnostic testing kits that include covered materials, as well as other materials, where the covered materials cannot be easily removed without damaging the kit
- diplomatic shipments from foreign embassies and consulates to their home countries
- shipments to overseas U.S. military addresses, foreign service posts and embassies
- in-transit shipments, including shipments temporarily entered into a warehouse or admitted into a Foreign Trade Zone
- shipments ultimately destined for Canada or Mexico
- shipments by or on behalf of the U.S. federal government, including the military
As discussed in Sidley’s previous Update, the export of covered materials from shipments made by or on behalf of U.S. manufacturers with continuous export agreements with customers in other countries since at least January 1, 2020, are also exempt, 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. FEMA and CBP have stated that they are working to establish a process to identity the manufacturers that qualify for this exemption.
The FEMA guidance follows an internal CBP memorandum released on April 9, 2020, and eliminates some of the exclusions mentioned in the earlier memorandum, such as a de minimis exemption for smaller shipments.
If CBP suspects an exporter is “intentionally modifying its shipments” to take advantage of the exemptions, CBP may detain the shipment and alert FEMA. For certain of the above exemptions,2 FEMA requires that exporters submit a letter of attestation with FEMA, via CBP, certifying to FEMA the purpose of the shipment of covered materials and that the shipment meets the terms of the exemption. A working group composed of officials from FEMA, CBP, the Commerce Department and the State Department will review the letters of attestation and notify exporters once the shipments are cleared or denied. While FEMA has stated that it expects to be able to review most shipments within one to two days, exporters should still plan for processing delays.
This is a developing area of law, and companies should continue to monitor these and other regulatory developments related to the export of PPE.
1 See “Prioritization and Allocation of Certain Scarce or Threatened Health and Medical Resources for Domestic Use; Exemptions,” 85 Fed. Reg. 22021 (Apr. 21, 2020), https://www.govinfo.gov/content/pkg/FR-2020-04-21/pdf/2020-08542.pdf.
2 FEMA Exemptions nos. 2, 3, 4, 8, 9.
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