Document ID: FEMA-2020-0018-0002
Agency: fema
Document Type: Rule
Title: Prioritization and Allocation of Certain Scarce or Threatened Health and Medical Resources for Domestic Use; Exemptions
Posted Date: 2020-04-21T04:00Z

[Federal Register Volume 85, Number 77 (Tuesday, April 21, 2020)]
[Rules and Regulations]
[Pages 22021-22024]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-08542]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

44 CFR Part 328

[Docket ID FEMA-2020-0018]

Prioritization and Allocation of Certain Scarce or Threatened 
Health and Medical Resources for Domestic Use; Exemptions

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notification of exemptions.

-----------------------------------------------------------------------

SUMMARY: The Federal Emergency Management Agency (FEMA) announces 
exemptions from a temporary final rule that FEMA published in the 
Federal Register on April 10, 2020.

DATES: Applicability date: This notification applies beginning on April 
17, 2020.

ADDRESSES: You may review the docket by searching for Docket ID FEMA-
2020-

[[Page 22022]]

0018, via the Federal eRulemaking Portal: http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Daniel McMasters, Program Analyst, 
Office of Policy and Program Analysis, 202-709-0661, FEMA-DPA@fema.dhs.gov.

SUPPLEMENTARY INFORMATION: 

Background

    On April 10, 2020, the Administrator of the Federal Emergency 
Management Agency Administrator (FEMA Administrator or the 
Administrator) published a temporary final rule (the ``rule'') to 
allocate certain scarce or threatened materials for domestic use, so 
that these materials may not be exported from the United States without 
explicit approval by FEMA.\1\ The rule aids the response of the United 
States to the spread of COVID-19 by ensuring that certain scarce or 
threatened health and medical resources are appropriately allocated for 
domestic use.\2\
---------------------------------------------------------------------------

    \1\ See 85 FR 20195 (Apr. 10, 2020) (codified at 44 CFR part 
328).
    \2\ See 44 CFR 328.101.
---------------------------------------------------------------------------

    The Administrator issued the rule under the authority of the 
Defense Production Act of 1950, as amended (DPA),\3\ and related 
executive orders and delegations.\4\ Most prominently, on April 3, 
2020, the President signed a Memorandum on Allocating Certain Scarce or 
Threatened Health and Medical Resources to Domestic Use 
(Memorandum).\5\ In the Memorandum, the President directed the 
Secretary of Homeland Security, through the Administrator, and in 
consultation with the Secretary of Health and Human Services (HHS), to 
use any and all authority available under section 101 of the DPA to 
allocate to domestic use, as appropriate, five types of personal 
protective equipment (PPE) materials (covered materials).
---------------------------------------------------------------------------

    \3\ 50 U.S.C. 4501 et seq.
    \4\ See 85 FR at 20196-20197.
    \5\ See Memorandum on Allocating Certain Scarce or Threatened 
Health and Medical Resources to Domestic Use for the Secretary of 
Health and Human Services, the Secretary of Homeland Security, and 
the Administrator of the Federal Emergency Management Agency (Apr. 
3, 2020), https://www.whitehouse.gov/presidential-actions/memorandum-allocating-certain-scarce-threatened-health-medical-resources-domestic-use/.
---------------------------------------------------------------------------

    Consistent with the Memorandum, the rule provides that until August 
10, 2020, and subject to certain exemptions, no shipments of covered 
materials may leave the United States without explicit approval by 
FEMA.\6\ The rule requires U.S. Customs and Border Protection (CBP), in 
coordination with such other officials as may be appropriate, to notify 
FEMA of an intended export of covered materials.\7\ CBP must 
temporarily detain any shipment of such covered materials pending the 
Administrator's determination whether to return for domestic use, issue 
a rated order for, or allow the export of part or all of the 
shipment.\8\ In making such determination, the Administrator may 
consult other agencies and will consider the totality of the 
circumstances, including: (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 potential hoarding or price-gouging concerns; (4) the 
quantity and quality of the materials; (5) humanitarian considerations; 
and (6) international relations and diplomatic considerations.\9\
---------------------------------------------------------------------------

    \6\ 44 CFR 328.102(a).
    \7\ 44 CFR 328.102(b).
    \8\ Id.
    \9\ 44 CFR 328.102(c).
---------------------------------------------------------------------------

    In addition to providing for the determination described above, the 
rule includes one exemption to the requirement that covered materials 
not leave the United States without explicit approval by FEMA. In the 
interest of promoting the national defense, the Administrator 
determined to generally allow the export of covered materials from 
shipments made by or on behalf of U.S. manufacturers with continuous 
export agreements with customers in other countries since at least 
January 1, 2020, 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.\10\ If 
FEMA determines that a shipment of covered materials falls within this 
exemption, such materials may be exported without further review by 
FEMA, provided that the Administrator may waive this exemption and 
fully review shipments of covered materials, if the Administrator 
determines that doing so is necessary or appropriate to promote the 
national defense.\11\
---------------------------------------------------------------------------

    \10\ 44 CFR 328.102(d)(1).
    \11\ Id.
---------------------------------------------------------------------------

    Pertinent to this notification, the rule also provides that the 
Administrator may establish, in his discretion, additional exemptions 
that he determines necessary or appropriate to promote the national 
defense and will announce any such exemptions by notice in the Federal 
Register. This notification announces such exemptions.

Notice of Additional Exemptions

    Pursuant to 44 CFR 328.102(d)(2), section 101 of the DPA, and 
related authorities, the Administrator has determined that it is 
necessary and appropriate in order to promote the national defense to 
exempt certain categories of covered materials from the requirements of 
44 CFR 328.102(a) and (b). The Administrator may waive any of these 
exemptions at any time and fully review shipments of covered materials 
under 44 CFR 328.102(b) if the Administrator determines that doing so 
is necessary or appropriate to promote the national defense. In 
addition, if CBP believes 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, diverting materials from the United States market, or 
otherwise trying to circumvent the FEMA review requirements in 44 CFR 
328.102(b) through application of any of the exemptions, CBP may detain 
a shipment and forward information about that shipment (including the 
basis for CBP's belief) to FEMA for determination.
    For exemptions (2), (3), (4), (8), and (9), below, FEMA will 
require a letter of attestation to be submitted to FEMA via CBP's 
document imaging system and placed on file with CBP, certifying to FEMA 
the purpose of the shipment of covered materials. The letter should be 
submitted to CBP with other documentation related to the shipment, and 
contain the following information:
    (1) A description of which exemption(s) the exporter is claiming.
    (2) Details regarding the shipment that are sufficient for the CBP 
and FEMA officials to determine whether the shipment falls under the 
claimed exemption(s).
    (3) 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 DPA, as 
outlined in the allocation order.
    Exporters who have concerns about how to file this letter of 
attestation should reach out to CBP to request additional details.
    The exemptions are as follows.
    (1) 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 Minor Outlying 
Islands). The Administrator issues this exemption to clarify that 
shipments to U.S. territories are not

[[Page 22023]]

considered to be ``exports'' for purposes of the implementation of the 
allocation order. The Administrator believes that this exemption is 
necessary to clarify the scope of the original allocation order and to 
ensure that scarce or threatened items are allocated for the use of all 
Americans, including Americans living in U.S. territories. The 
Administrator believes that ensuring widespread access by Americans to 
covered materials is necessary and appropriate to promote the national 
defense and consistent with the purposes of the Presidential Memorandum 
and the subsequent allocation order to provide for the needs of all 
Americans.
    (2) Exports of Covered Materials 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). 
The Administrator believes that it is necessary and appropriate to 
promote the national defense to support the efforts of domestic and 
international non-profit and non-governmental organizations (NGOs) 
responding to COVID-19 around the world, in response to the 
humanitarian concerns that have arisen as a result of this global 
pandemic, and consistent with the position of the United States as a 
world leader. A key element of national defense is the ability of the 
United States to convey international leadership during times of 
crisis, including the COVID-19 pandemic. This includes our ability to 
exercise moral leadership, help those in need, and to remain stalwarts 
of the international community. Denying shipments of humanitarian goods 
would undermine U.S. diplomacy and messaging internationally, allowing 
strategic competitors to take advantage of our absence. The allocation 
order recognizes the importance of humanitarian considerations by 
specifying it as an explicit factor to be considered in making 
determinations about whether to allow an export to proceed or to 
utilize the purchase domestically. This exemption creates a limited 
definition of what constitutes a humanitarian shipment for purpose of 
the exemption by limiting the exemption both on the exporter side (by 
limiting it to non-profit organizations or NGOs) and on the recipient 
side (foreign governments or charities). Further, the exemption is 
limited by specifying that the goods must be shipped as donations in 
kind and cannot be sold upon receipt. This limited exemption will allow 
FEMA to meet the goals of the allocation order while prioritizing 
review of commercial shipments most likely to be needed for domestic 
use.
    FEMA will require a letter of attestation to be submitted to FEMA 
via CBP's document imaging system and placed on file with CBP, 
certifying to FEMA the purpose of the shipment of covered materials.
    (3) Intracompany Transfers of Covered Materials by U.S. Companies 
from Domestic Facilities to Company-owned or Affiliated Foreign 
Facilities. The Administrator recognizes the international nature of 
many U.S. companies, and believes that allowing these companies to 
continue to produce at a high level is crucial to the functioning of 
the U.S. economy. One of the factors specifically identified in the 
allocation order as being critical for the national defense is 
minimization of disruption of the supply chain, both domestically and 
abroad. The Administrator believes that allowing this exemption would 
minimize disruption to the domestic supply chain, while not causing a 
detrimental shortage of covered materials to Americans.
    FEMA will require a letter of attestation to be submitted to FEMA 
via CBP's document imaging system and placed on file with CBP, 
certifying to FEMA the purpose of the shipment of covered materials.
    (4) Shipments of Covered Materials that are Exported Solely for 
Assembly in Medical Kits and Diagnostic Testing Kits Destined for U.S. 
Sale and Delivery. The Administrator recognizes that, in many 
circumstances, materials destined for domestic use are assembled in 
other countries, prior to being returned to the United States for 
domestic distribution. One of the factors specifically identified in 
the allocation order as being critical for the national defense is the 
minimization of disruption of the supply chain, both domestic and 
abroad. The Administrator believes that allowing the shipments of these 
kits is important to allow for uninterrupted continuation of existing 
supply chains, and is the most expedient means to ensure timely 
delivery and allocation of these materials within the United States to 
respond to the national emergency. Relying on existing supply chains 
where available and efficient will maximize the ability for FEMA and 
CBP to focus limited resources on areas where the supplies are being 
shipped outside the United States for final disposition. As noted 
above, the Administrator believes that ensuring widespread access by 
Americans to covered materials is necessary and appropriate to promote 
the national defense and consistent with the purposes of the 
Presidential Memorandum, and the subsequent allocation order, to 
provide for the needs of Americans.
    FEMA will require a letter of attestation to be submitted to FEMA 
via CBP's document imaging system and placed on file with CBP, 
certifying to FEMA the purpose of the shipment of covered materials.
    (5) 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. The 
Administrator believes that detaining shipments containing these kits, 
and subsequently attempting to separate the covered materials from the 
kits (potentially destroying the kits in the process), is an 
inefficient use of national defense resources. In addition, ready-to-
use sealed, sterile medical kits are vital for the healthcare community 
globally to continue to meet broader urgent healthcare needs in the 
context of the pandemic. Addressing the related healthcare needs 
globally will enable other countries to best respond to and contain the 
pandemic, which will advance the ability of the United States 
Government to best contain the pandemic within the United States. The 
Administrator believes that refraining from needlessly dismantling 
valuable kits is necessary and appropriate to promote the national 
defense and consistent with the purposes of the Presidential 
Memorandum, and the subsequent allocation order, to provide for the 
needs of Americans.
    (6) 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. Pursuant to the diplomatic interests of the 
United States, the Administrator believes that it is necessary and 
appropriate to promote the national defense to allow diplomatic 
shipments to proceed without interruption or delay. One of the factors 
specifically identified in the allocation order as being critical for 
the national defense is international relations and diplomatic 
concerns. The Administrator believes that stopping these types of 
shipments would cause significant international relations and domestic 
concerns, while not providing significantly enhanced access to covered 
materials for Americans. In order to continue to foster positive 
diplomatic relationships with our partners and allies, the 
Administrator has determined to exempt diplomatic shipments from the 
allocation order.

[[Page 22024]]

    (7) Shipments to Overseas U.S. Military Addresses, Foreign Service 
Posts (e.g., Diplomatic Post Offices), and Embassies. The Administrator 
believes the intent of the Presidential Memorandum is to protect 
Americans by ensuring their access to covered materials. The 
Administrator believes this extends to all Americans, including those 
serving our country overseas. For this reason, the Administrator 
believes that it is necessary and appropriate to promote the national 
defense to allow shipments of covered materials to be shipped overseas 
to U.S. government employees working abroad.
    (8) 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. The April 3 Presidential Memorandum states that 
``To ensure that these scarce or threatened PPE materials remain in the 
United States for use in responding to the spread of COVID-19, it is 
the policy of the United States to prevent domestic brokers, 
distributors, and other intermediaries from diverting such material 
overseas'' (emphasis added).\12\ The Administrator believes that 
merchandise merely passing through the United States is outside the 
scope of the Presidential Memorandum. In addition, the Administrator 
believes that diversion of these specific types of materials would 
cause significant impacts to international relations, diplomacy, and 
global supply chains, each of which is a factor that is specifically 
identified in the allocation order as being necessary and appropriate 
to promote the national defense. Therefore, the Administrator is 
explicitly exempting these shipments from the enforcement of the 
allocation order.
---------------------------------------------------------------------------

    \12\ See Memorandum on Allocating Certain Scarce or Threatened 
Health and Medical Resources to Domestic Use for the Secretary of 
Health and Human Services, the Secretary of Homeland Security, and 
the Administrator of the Federal Emergency Management Agency, sec. 1 
(Apr. 3, 2020), https://www.whitehouse.gov/presidential-actions/memorandum-allocating-certain-scarce-threatened-health-medical-resources-domestic-use/.
---------------------------------------------------------------------------

    FEMA will require a letter of attestation to be submitted to FEMA 
via CBP's document imaging system and placed on file with CBP, 
certifying to FEMA the purpose of the shipment of covered materials.
    (9) Shipments for Which the Final Destination is Canada or Mexico. 
The Administrator recognizes the important role our closest neighbors 
play in the national defense interests of the United States. The 
integration of the economies and supply chains among the United States, 
Mexico, and Canada is robust. Many critical sectors--including, for 
example, food and agriculture; communications and energy; automotive 
and industrial; water and wastewater management; and law enforcement 
and first responders--cross national boundaries. Negative impacts to 
workers, including a lack of PPE, in these and other critical sectors 
in Canada and Mexico may cause significant interruptions to the 
corresponding supply chains in the United States, and in turn, may 
disrupt the large flow of cross-border trade with our neighbors. In 
addition, the United States maintains close economic and diplomatic 
ties with these nations, which would be negatively impacted by the 
restriction of exports of covered materials into these countries. In 
the allocation order, the Administrator specifically identified 
minimization of disruption to the supply chain, both domestically and 
abroad, and international relations and diplomatic considerations as 
key elements of promoting the national defense. Each would be 
negatively impacted by slowing or halting the transportation of covered 
materials across country lines to Canada and Mexico. For these reasons, 
the Administrator has determined that this exemption is necessary and 
appropriate to promote the national defense.
    FEMA will require a letter of attestation stating that the items 
being shipped are for use in and not for transshipment through Canada 
or Mexico, to be submitted to FEMA via CBP's document imaging system 
and placed on file with CBP, certifying to FEMA the purpose of the 
shipment of covered materials.
    (10) Shipments by or on behalf of the U.S. Federal Government, 
including its Military. The Administrator recognizes that any shipment 
of covered materials made by or on behalf of the Federal Government, 
including its military, are inherently necessary and appropriate to 
promote the national defense, and so should be exported without delay.

Peter T. Gaynor,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2020-08542 Filed 4-17-20; 4:15 pm]
 BILLING CODE 9111-19-P