The rule clearly will have significant implications for entities throughout the international medical supply chain.

As of April 10, 2020, Federal Emergency Management Agency (FEMA) approval will generally be required for the export of certain kinds of personal protective equipment (PPE) from the United States, pursuant to a FEMA temporary final rule. The parameters and procedures established by the temporary final rule and their implications for U.S. and foreign entities are discussed below.

Wide Range of Key PPE Restricted

Invoking his powers under the Defense Production Act (DPA) to combat the COVID-19 pandemic, President Trump issued a Memorandum on Allocating Certain Scarce or Threatened Health and Medical Resources to Domestic Use on April 3, 2020. The memorandum identified several kinds of PPE products as being scarce and critical material essential to the national defense and stated that “it is the policy of the United States to prevent domestic brokers, distributors, and other intermediaries from diverting such materials overseas.” To achieve this policy objective, the president directed the Secretary of Homeland Security, through the FEMA administrator, to use all authority available under Section 101 of the DPA to allocate to domestic uses, as appropriate, the designated materials.

Pursuant to this mandate, FEMA issued the temporary final rule, which is effective from April 10, 2020, to at least August 8, 2020. The following kinds of PPE products are identified as materials covered by the new regulatory regime (covered materials):

• N95 filtering facepiece respirators, including devices that are disposable half-facepiece, nonpowered, air-purifying particulate respirators intended for use to cover the nose and mouth of the wearer to help reduce exposure to pathogenic biological airborne particulates;
• Other filtering facepiece respirators, e.g., those designated as N99, N100, R95, R99, R100, or P95, P99, P100), including single-use, disposable half-mask respiratory protective devices that cover the user’s airway (nose and mouth) and offer protection from particulate materials at an N95 filtration efficiency level per 42 CFR 84.181;
• Elastomeric, air-purifying respirators and appropriate particulate filters/cartridges;
• PPE surgical masks, including masks that cover the user’s nose and mouth and provide a physical barrier to fluids and particulate materials; and
• PPE gloves or surgical gloves, including those defined at 21 CFR 880.6250 (exam gloves) and 878.4460 (surgical gloves) and such gloves intended for the same purposes.

The temporary final rule also authorizes the FEMA administrator to designate additional items as covered materials that the administrator determines to be scarce and necessary for national defense.

U.S. Customs and Border Protection Enforcement

U.S. Customs and Border Protection (CBP) generally will be required to notify FEMA when there is an intended export of covered materials. CBP must then temporarily detain the intended shipment of the covered materials so the FEMA administrator can determine whether to return the shipment for domestic use or issue a rated order for part or all of the shipment. Such determinations must be made by the FEMA administrator “within a reasonable timeframe after notification of an intended export.” Significantly though, what constitutes a “reasonable timeframe” is not a defined under the temporary final rule.

Exemptions

The rule contains an exemption for U.S. manufacturers to continue exporting covered materials if they have had export agreements with foreign customers since at least January 1, 2020, so long as at least 80 percent of their domestic production was distributed in the U.S. during the preceding 12 months. In addition, the administrator may establish additional exemptions as necessary or appropriate to promote the national defense.

Implications for U.S. and Foreign Entities

The rule clearly will have significant implications for entities throughout the international medical supply chain. U.S. manufacturers that wish to export any kind of covered materials that they produce will need to evaluate whether they qualify for the rule’s exemption. Entities that source covered materials from domestic or foreign sources that intend to export such materials from the United States will want to develop strategies for working effectively with FEMA and CBP to minimize or eliminate delays in their shipments. Foreign entities wishing to import covered materials from the United States will need to carefully evaluate and select U.S. suppliers to avoid disruptions in their supply chains. Given the stakes involved, entities with little experience with such matters should consider contacting experienced legal counsel to assist in developing effective strategies to achieve their objectives.

About Duane Morris

Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.

For Further Information

If you have any questions about this Alert, please contact Geoffrey M. Goodale, Delphine O'Rourke, Michael E. Barnicle, any member of the COVID-19 Strategy Team or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.