On April 17, 2020, the Federal Emergency Management Agency (FEMA) filed a notification of exemptions (the “FEMA Notification”) in the Public Inspection List that identifies 10 exemptions from the temporary final rule published on April 10, 2020 (the “FEMA Rule”), which restricts the export from the United States of certain personal protective equipment (“PPE Products”) used in the response to the COVID-19 pandemic. Although the FEMA Notification will not be published in the Federal Register until Tuesday, April 21, 2020, it became effective on April 17.
By way of brief background, the FEMA Rule, which is described in our prior blog post here, imposed export restrictions on PPE Products pursuant to a Presidential Memorandum dated April 3, 2020, which is described in our blog post here. The FEMA Rule directed US Customs and Border Protection (CBP) to detain any shipments of the relevant PPE Products pending FEMA’s determination whether to return such shipments for domestic use, issue a rated order for the products, or allow the export of part of all of the shipment. On April 9, 2020, CBP issued internal guidance (available here as of April 18, 2020 and described in our blog post here) that listed a number of exclusions to the FEMA Rule. As clarified by CBP in recent days, the guidance was not meant to become public, and the criteria for exclusions were then still under discussion, with public guidance forthcoming from FEMA. The FEMA Notification is the public version of the guidance prepared by FEMA and CBP.
Which Shipments Are Exempt From the FEMA Rule?
As described in our blog post, the FEMA Rule contained only one narrow exemption, which was for shipments by or on behalf of US manufacturers with continuous export agreements with foreign customers since at least January 1, 2020 and a track record of distributing at least 80% of their supply of the PPE Products, on a per item basis, in the United States during the preceding 12 months. That said, the FEMA Rule contemplated that FEMA may, in its discretion, establish additional exemptions. The exemptions set out in the FEMA Rule and the FEMA Notification (together, the “Exemptions”) differ in several respects from the exclusions set out in the internal CBP guidance. Exporters should rely on the Exemptions in the FEMA Notification rather than the exclusions in the CBP internal guidance.
The additional Exemptions under the FEMA Notification are as follows:
- 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 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)
- Intracompany transfers by US companies from domestic facilities to company-owned or affiliated foreign facilities
- Exports of materials 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 PPE Products that cannot be easily removed without damaging the kits
- Declared diplomatic shipments from foreign embassies and consulates to their home countries, 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 such as shipments in transit through the United States with a foreign shipper and consignee and 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 federal government, including its military
The FEMA Notification includes additional detail about which types of shipments are eligible for each Exemption.
Will Shipments that Qualify for an Exemption Be Detained by CBP?
The FEMA Notification does not specify how the Exemptions will be applied. In the absence of further guidance, we assume that CBP would still temporarily detain shipments of PPE Products at the US border pending FEMA’s determination. FEMA will make a determination based on the applicable Exemptions and the “totality of circumstances” described in the FEMA Rule, including letters of attestation submitted by exporters to CBP for certain Exemptions.
Which Documentation Should Exporters Submit to Claim an Exemption?
The FEMA Notification provides that exporters should submit a letter of attestation to FEMA via CBP’s document imaging system for exemptions 2, 3, 4, 8, and 9, certifying to FEMA the purpose of the shipment. The letter should be submitted to CBP with other documentation relating to each shipment and should contain:
- a description of which Exemption(s) the exporter is claiming;
- details regarding the shipment sufficient for CBP and FEMA officials to determine whether the shipment falls under the claimed Exemption(s); and
- a statement that the provided information is true and accurate to the best of the exporter’s knowledge, and that the exporter is aware that false information is subject to prosecution under the Defense Production Act.
Exporters interested in a template letter of attestation to satisfy an Exemption should reach out to their usual contacts in Baker McKenzie’s trade compliance group.
What Should Exporters Expect?
Although the FEMA Rule and the FEMA Notification set out a number of exemptions, exporters of PPE Products will likely continue to encounter delays at ports across the country, pending determinations by FEMA. The FEMA Rule does not mandate a specific time for FEMA to decide whether a particular export will be permitted, and it is not clear whether, when, or how exporters will be notified of the status of their shipment. Exporters that believe their shipment may be covered by an Exemption should provide letters of attestation and related transactional documents containing all relevant information through CBP as requested by FEMA to facilitate the process. Authors: Kerry B. Contini,Alexandre (Alex) Lamy and Maria Sergeyeva.