FEMA Issues Additional Exemptions to Restrictions on Export of PPE Under the Defense Production Act
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We previously addressed1 the reliance on the Defense Production Act (DPA) by the Federal Emergency Management Agency (FEMA) to issue its April 7, 2020, temporary final rule which, "allocate[s] for domestic use" specific healthcare supplies. The "Prioritization and Allocation of Certain Scarce or Threatened Health and Medical Resources for Domestic Use"2 rule designates products that "may not be exported from the United States without explicit approval by FEMA."3 The rule explains that FEMA will coordinate with Customs and Border Protection (CBP) to detain exports.4
On April 21, 2020, FEMA amended its April 9 temporary final rule to add 10 exemptions to the export restrictions.5
- 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).
- Exports of covered materials by non-profit or non-governmental organizations that are solely for donation to foreign charities or government for free distribution (not sale) at their destinations.
- 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 (logistic providers) but are shipped from and consigned to foreign governments.
- Shipments to overseas US military addresses, foreign service posts (e.g., diplomatic post offices), and embassies.
- 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.
- Shipments for which the final destination is Canada or Mexico.
- Shipments by or on behalf of the US government, including its military.
For exemptions 2, 3, 4, 8, and 9, above, FEMA will require a letter attesting to the shipment's purpose.6
The 10 new exemptions supplement the single exemption in the original FEMA rule for "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."7
We expect FEMA and CBP will continue to update and issue new guidance as their approach to implementing these restrictions on export evolve.8
Arnold & Porter Advisory, For Domestic Use Only: FEMA Issues Temporary Final Rule Implementing Export Restrictions of PPE Under the Defense Production Act. See also our Advisory addressing the Administration's invocation of the DPA to support the COVID-19 response.
FEMA, Docket ID FEMA-2020-0018, RIN 1660-AB01
On April 9, 2020, CBP issued a memorandum to its Field Operations Directors providing additional context that narrowed the scope of the export restrictions. The CBP memo explained "that the focus of this effort is on commercial quantities," currently defined as shipment valued at or above $2,500 and containing more than 10,000 units of covered supplies. The CBP memo also provided a list of exports excluded from the restrictions. The FEMA rule covers some, but not all, of the exemptions identified in the CBP memo.