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New Export Restrictions Related to PPE

Friday, April 10, 2020

Effective April 7, 2020, the Department of Homeland Security issued a temporary rule that prohibits exports of the following types of personal protective equipment (PPE) being used to treat COVID-19 without explicit approval by the Federal Emergency Management Agency:

Additional materials may be added to this list at any time.

DETENTION AND REVIEW PROCESS: DHS states that before any shipments of these materials may leave the United States, U.S. Customs and Border Protection will detain the shipment temporarily, during which time FEMA will determine whether to return the items for domestic use, issue a rated (purchase) order for, or allow the export of part or all of the shipment. FEMA is supposed to make such determinations within a reasonable time of being notified of an intended shipment and endeavor to minimize disruptions to the supply chain.  Exporters should be aware, however, that delays are likely due to the limited resources and working restrictions applicable to CBP and FEMA in light of COVID-19.

FEMA REVIEW CRITERIA:  The temporary rule states that FEMA will consider the totality of the circumstances in determining how to disposition the shipment. The following factors will be weighed in their determination:

  1. the need to ensure that scarce or threatened items are appropriately allocated for domestic use;
  2. minimization of disruption to the supply chain, both domestically and abroad;
  3. the circumstances surrounding the distribution of the materials and any potential hoarding or price-gouging concerns;
  4. the quantity and quality of the materials;
  5. humanitarian considerations; and
  6. international relations and diplomatic considerations.

EXCEPTION: There is an exception to the Temporary Rule for shipments made by or on behalf of U.S. manufacturers with continuous export agreements with customers in other countries since at least Jan. 1, 2020, so long as at least 80 percent of such manufacturer’s domestic production of covered materials, on a per item basis, was distributed in the U.S. in the preceding 12 months. If FEMA determines that a shipment of covered materials falls within this exemption, such materials may be transferred out of the U.S. without further review by FEMA, although this exemption may be waived if FEMA determines that doing so is necessary or appropriate to promote the national defense. FEMA may also establish additional exemptions in the future.

POTENTIAL PENALTIES: Failure to comply fully with this rule is a crime punishable by a fine of not more than $10,000, imprisonment for not more than one year, or both. In addition, pursuant to 18 USC 554, whoever fraudulently or knowingly exports or sends (or attempts to) from the U.S. any merchandise, article, or object contrary to any U.S. law or regulation, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise, article, or object, prior to exportation, knowing the same to be intended for exportation contrary to any U.S. law or regulation, faces up to 10 years’ imprisonment, a fine, or both if convicted.

WHERE TO GO FOR HELP: For questions and support relating to PPE exports, please reach out to ST&R’s export controls and sanctions leader, Kristine Pirnia, at kpirnia@strtrade.com.

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