In the April 21, 2020 Federal Register, the Federal Emergency Management Agency (FEMA) will publish additional exemptions and clarifications to its general halt to exports of personal protective equipment (PPE) from the United States. These export restrictions will remain in place until August 10, 2020.
FEMA’s notice seeks to clarify and expand its prior April 10, 2020 notice and exclusions released by U.S. Customs and Border Protection (CBP). For more information on this general halt, please see our previous client alert.
From its original April 10, 2020 general detention order, FEMA initially only exempted exports satisfying existing supply agreements from U.S. manufacturers for the export and sale of covered products provided the agreement was in place prior to January 1, 2020 and “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.” CBP then issued an internal memorandum stating informally that it would exempt, among other things, the following:
- Exports to Canada or Mexico
- Exports to U.S. government entities such as U.S. military bases overseas
- Exports by U.S. government agencies
- Exports by U.S. charities
- Exports by critical infrastructure industries for the protection of their workers
- Express or mail parcels that do not meet the "commercial quantity" (i.e., valued more than $2,500 and containing more than 10,000 units of PPE)
- In-transit shipments
FEMA’s April 21, 2020 clarification formalizes some of the above exemptions by explicitly exempting the following additional exports from detention:
- Shipments to U.S. commonwealths and territories, including Guam, American Samoa, Puerto Rico, U.S. Virgin Islands and the Commonwealth of the Northern Mariana Islands (including the Minor Outlying Islands). The notice clarifies that exports to U.S. territories and not “exports” for purposes of the Order.
- Exports of covered materials by nonprofit or nongovernmental organizations that are solely for donation to foreign charities or governments for free distribution (not sale) at their destination(s). (A letter of attestation that the shipment meets these requirements must be submitted to CBP)
- Intracompany transfers of covered materials by U.S. companies from domestic facilities to company-owned or affiliated foreign facilities. (A letter of attestation that the shipment meets these requirements must be submitted to CBP)
- Shipments of covered materials that are exported solely for assembly in medical kits and diagnostic testing kits destined for U.S. sale and delivery. (A letter of attestation that the shipment meets these requirements must be submitted to CBP)
- 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 are shipped from and consigned to foreign governments.
- Shipments to overseas U.S. 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. (A letter of attestation that the shipment meets these requirements will be required to be submitted to CBP)
- Shipments for which the final destination is Canada or Mexico. (A letter of attestation that the shipment meets these requirements and is not for transshipment through Canada or Mexico will be required to be submitted to CBP)
- Shipments by or on behalf of the U.S. federal government, including its military.
FEMA has reserved the right to waive or amend these exemptions at any time if determined necessary to promote the national defense. Further, CBP retains discretionary authority to refuse application of any of the above exemptions if it determines that an exporter is trying to circumvent the new FEMA review requirements or if it determines “that any manufacturer, broker, distributor, exporter, or shipper of any covered materials is intentionally modifying its shipments in a way to take advantage of one or more of these exemptions.”
It is worth noting that several of the above exemptions require that an attestation be filed with CBP and posted via CBP’s Automated Commercial Environment (ACE) document imaging system. While there is no required format, the attestation should identify the corresponding exemption claimed, provide shipment specific details indicating qualification and the products’ end use, and incorporate a statement that the information is true and accurate to the best of the exporter’s knowledge, including that the exporter is aware of the penalties for providing false information.
As the number of cases around the world grows, Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.