On April 9, 2020, US Customs and Border Protection (“CBP”) issued internal guidance (available here as of April 14, 2020) (“Guidance”) to CBP Field Operations Directors on CBP’s implementation of the new temporary final rule published by the Federal Emergency Management Agency (“FEMA”) imposing export restrictions on certain personal protective equipment products (“PPE Products”) used in the response to the COVID-19 pandemic (the “FEMA Rule”). Specifically, the Guidance describes which products and shipments are targeted by the export restrictions and which are excluded, expanding on the exemption previously outlined by FEMA. We understand that CBP, FEMA, and other relevant US government agencies are in the process of revising the Guidance and expect revised guidance to become available to the public in the next few days. In the meantime, as a practical matter, CBP ports may be using the Guidance to inform their activities in connection with the PPE Products. The exporters should bear in mind that the exclusions described below could change if and when revised CBP guidance becomes available.
Our blog post on the FEMA Rule, which was published on April 10, 2020, but effective as of filing on April 7, 2020, is available here. The FEMA Rule implemented a Presidential Memorandum dated April 3, 2020, which is described in our blog post here.
What Does the Guidance Say?
The Guidance essentially functions as instructions to CBP on how to enforce the export restrictions set out in the FEMA Rule. By way of brief background, the FEMA Rule mandates that CBP temporarily detain exports of PPE Products at the border, pending a determination by FEMA whether to (1) return the shipment for domestic use (i.e., prohibit the export), (2) issue a rated order for part or all of the shipment that the seller would be required to prioritize, or (3) allow the export of part or all of the shipment. Please see our prior blog post for more detailed background on the scope of the FEMA Rule, including a list of the targeted PPE Products.
Which Shipments are Excluded from the Export Restrictions?
The Guidance lists certain types of export shipments that, for now, will be excluded from the focus of CBP’s efforts:
- Shipments in “commercial quantities,” currently defined as shipments valued at $2,500 and containing more than 10,000 units, and
- Shipments that are not:
- 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 (the Guidance does not define “critical infrastructure industries,” but the Advisory Memorandum published by the U.S. Department of Homeland Security Cybersecurity & Infrastructure Security Agency on March 28, 2020 may be instructive);
- Exports by the 3M Company;
- Express or Mail Parcels that do not meet the commercial quantity definition above;
- In-transit shipments.
The exclusions set out above may be revised in full or in part in the public guidance that we understand is forthcoming from CBP.
How Will CBP Identify Which Shipments Are Subject to the FEMA Rule?
In accordance with the Guidance, CBP ports will identify shipments exported in commercial quantities that do not meet any exclusions described above based on the Automated Export System (“AES”) filings.
Currently, the ports are instructed to only detain shipments pending further instructions from FEMA. The Guidance does not clarify further details on the process that FEMA will take to reach its determinations on whether to allow the exports to proceed.
What to Expect
While public guidance on the implementation of the FEMA Rule is expected to be published by the CBP in the coming days, CBP expects its offices to exercise discretion and encourages exporters to file AES information as early as possible if it involves products covered by the FEMA Rule.
Although the Guidance sets out a series of exclusions, exporters of PPE Products should nonetheless expect detentions and resulting delays at ports across the country, pending further instructions from 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. Anyone who is considering the export of PPE Products should first consider whether any exclusions described in the Guidance may apply. If an exclusion appears to apply, exporters should consider whether the fact that the shipment qualifies for the exclusion is clear from the face of the information and documents included in the shipment and, if not, consider including supplemental documentation with the shipment identifying which exclusion should apply and why.