The Federal Emergency Management Agency (FEMA) issued temporary final regulations (FEMA Regulations or Regulations), effective from April 7, 2020 until August 10, 2020, to prohibit exports without FEMA’s explicit approval of five types of Personal Protective Equipment (PPE). The covered PPE are health and medical resources designated by the Department of Health and Human Services as scarce or threatened materials for use in responding to the spread of the Coronavirus Disease 2019 (COVID-19) in the United States. The covered PPE include the following:
The Administrator of FEMA reserved the right to add additional materials to this list.
The FEMA Regulations are based on the allocation authority contained in the Defense Production Act (DPA). They contain an order allocating all shipments of covered materials for domestic use and prohibit exports without FEMA’s explicit approval. The FEMA Regulations establish implementation procedures that bypass the traditional export control mechanisms such as the Export Administration Regulations. Under the procedures established by the FEMA Regulations, U.S. Customs and Border Protection will temporarily detain any shipment of covered materials and notify FEMA of the intended export. The FEMA Administrator will make a determination “within a reasonable timeframe” whether to return the shipment to domestic use or issue a rated order for part or all of the shipment.
The FEMA Administrator will consider a broad range of factors in making a determination, including scarcity, disruption of supply chains, hoarding and price-gouging, and humanitarian and international considerations. The Regulations provide an exemption for shipments made by or on behalf of U.S. manufacturers with continuous agreements for export as of January 1, 2020, provided that 80% of the manufacturer’s domestic production, on a per item basis, was allocated in the United States in the preceding 12 months. FEMA may establish other exemptions in the future. While the Regulations do not provide formal procedures for applications or other submissions by exporters, FEMA encourages manufacturers to contact them with specific information regarding their status under the exemption.
The Administrator has enforcement authority under section 705 of the DPA to conduct investigations, request information or testimony, and inspect records or premises. In addition, the Administrator may apply for a preliminary, temporary or permanent injunction, restraining order or other order to enforce compliance.
Exporters should be aware that information obtained by the FEMA Administrator under the DPA may be made subject to a statutory confidentiality under the DPA and not be disclosed unless a determination is made that withholding of the information is contrary to the interest of the national defense. The privilege may be invoked by the U.S. government. In addition, persons furnishing the information may invoke the privilege by requesting confidential treatment for the information.
The DPA provides penalties for willful violations of fines of not more than $10,000 or imprisonment for up to one year, or both. Also, the preamble to the Regulations in the Federal Register makes reference to a criminal provision in 18 USC Section 554 (smuggling goods from the United States), that provides for fines under Title 18 or imprisonment for 10 years, or both.
If you would like a consultation on matters addressed by the rule or other related issues, please contact the author.
In addition, other members of Foley’s International Trade & National Security Practice also have extensive experience in these matters and can assist you with your issues, including: