[Federal Register Volume 85, Number 154 (Monday, August 10, 2020)]
[Rules and Regulations]
[Pages 48113-48119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17467]


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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

44 CFR Part 328

[Docket ID FEMA-2020-0018]
RIN 1660-AB01


Prioritization and Allocation of Certain Scarce and Critical 
Health and Medical Resources for Domestic Use

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Temporary final rule; extension of effective date with 
modifications.

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SUMMARY: In April, the Federal Emergency Management Agency (FEMA) 
issued a temporary final rule to allocate certain health and medical 
resources for domestic use, so that these resources may not be exported 
from the United States without explicit approval by FEMA. The rule 
covered five types of personal protective equipment (PPE), outlined 
below. While this rule remains in effect, and subject to certain 
exemptions stated below, no shipments of such designated materials may 
leave the United States without explicit approval by FEMA. Through this 
extension, FEMA modifies the types of PPE covered and extends the 
duration of the temporary final rule.

DATES: Effective date: This rule is effective from August 10, 2020 
until December 31, 2020.

ADDRESSES: You may review the docket by searching for Docket ID FEMA-
2020-0018, via the Federal eRulemaking Portal: http://www.regulations.gov.

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

SUPPLEMENTARY INFORMATION:

I. Background

    On April 10, 2020, FEMA published a temporary final rule in the 
Federal Register allocating certain health and medical resources for 
domestic use, so that these resources 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 Coronavirus Disease 2019 
(COVID-19) by ensuring that certain health and medical resources are 
appropriately allocated for domestic use. On April 21, 2020, FEMA

[[Page 48114]]

published a notification of exemptions to the rule.\2\ With the 
continued goal of ensuring that such materials are appropriately 
allocated for domestic use, FEMA is extending the temporary final rule 
and modifying the list of covered materials to reflect current domestic 
supply needs. The temporary final rule will remain in effect until 
December 31, 2020, unless sooner modified or terminated by the 
Administrator.
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    \1\ 85 FR 20195 (Apr. 10, 2020). See also 85 FR 22622 (Apr. 23, 
2020) (correcting the date filed from ``4-8-20'' to'' 4-7-20'').
    \2\ 85 FR 22021 (Apr. 21, 2020).
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A. The Current COVID-19 Pandemic

    COVID-19 is a communicable disease caused by severe acute 
respiratory syndrome coronavirus 2 (SARS-CoV-2), that was first 
identified as the cause of an outbreak of respiratory illness that 
began in Wuhan, Hubei Province, People's Republic of China. On January 
30, 2020, the Director-General of the World Health Organization (WHO) 
declared that the outbreak of COVID-19 is a Public Health Emergency of 
International Concern under the International Health Regulations.\3\ 
The following day, the Secretary of Health and Human Services (HHS) 
declared COVID-19 a public health emergency under Section 319 of the 
Public Health Service (PHS) Act.\4\ On March 11, 2020, the WHO declared 
COVID-19 a pandemic. On March 13, 2020, the President issued a 
Proclamation on Declaring a National Emergency Concerning the Novel 
Coronavirus Disease (COVID-19) Outbreak under sections 201 and 301 of 
the National Emergencies Act, 50 U.S.C. 1601 et seq., and consistent 
with section 1135 of the Social Security Act, 42 U.S.C. 1320b-5.\5\ On 
March 13, 2020, the President declared a nationwide emergency under 
section 501(b) of the Robert T. Stafford Disaster Relief and Emergency 
Assistance Act, authorizing FEMA to provide assistance for emergency 
protective measures to respond to the COVID-19 pandemic.\6\ FEMA 
subsequently issued 57 major disaster declarations in response to 
COVID-19 in every State, 5 territories, the Seminole Tribe of Florida, 
and the District of Columbia.\7\
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    \3\ Statement on the second meeting of the International Health 
Regulations (2005) Emergency Committee regarding the outbreak of 
novel coronavirus (2019-nCoV) (January 30, 2020), available at 
https://www.who.int/news-room/detail/30-01-2020-statement-on-the-second-meeting-of-the-international-health-regulations-(2005)-
emergency-committee-regarding-the-outbreak-of-novel-coronavirus-
(2019-ncov).
    \4\ HHS, ``Determination that a Public Health Emergency 
Exists,'' available at https://www.phe.gov/emergency/news/healthactions/phe/Pages/2019-nCoV.aspx (Jan. 31, 2020).
    \5\ ``Proclamation on Declaring a National Emergency Concerning 
the Novel Coronavirus Disease (COVID-19) Outbreak,'' March 13, 2020, 
available at https://www.whitehouse.gov/presidential-actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/.
    \6\ COVID-19 Emergency Declaration available at https://www.fema.gov/news-release/2020/03/13/covid-19-emergency-declaration 
(accessed July 28, 2020).
    \7\ See https://www.fema.gov/disasters/ (accessed July 28, 
2020).
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    Within the United States, widespread transmission of COVID-19 has 
occurred. Widespread transmission of COVID-19 has resulted and will 
continue to result in large numbers of people needing medical care at 
the same time. Public health and healthcare systems have become 
overwhelmed in some areas, with elevated rates of hospitalizations and 
deaths, as well as elevated demand for PPE, including the PPE covered 
by this rule.

B. Legal Authorities

    FEMA is extending and modifying this temporary final rule as part 
of its response to the COVID-19 pandemic. The rule is issued pursuant 
to the following authorities, among others:
     The Defense Production Act of 1950, as amended (``DPA'' or 
``the Act''), and specifically sections 101 and 704 of the Act, 50 
U.S.C. 4511, 4554;
     Executive Order 13909, 85 FR 16227 (Mar. 23, 2020);
     Executive Order 13911, 85 FR 18403 (Apr. 1, 2020);
     Department of Homeland Security (DHS) Delegation Number 
09052 Rev. 00.1, ``Delegation of Defense Production Act Authority to 
the Administrator of the Federal Emergency Management Agency'' (Apr. 1, 
2020); and
     The Presidential Memorandum on Allocating Certain Scarce 
or Threatened Health and Medical Resources to Domestic Use (April 3, 
2020).\8\
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    \8\ 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/ (last visited July 28, 2020).
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    Under subsection 101(a) of the Act, 50 U.S.C. 4511(a), the 
President may (1) require that performance under contracts or orders 
(other than contracts of employment) which he deems necessary or 
appropriate to promote the national defense shall take priority over 
performance under any other contract or order, and, for the purpose of 
assuring such priority, require acceptance and performance of such 
contracts or orders in preference to other contracts or orders by any 
person he finds to be capable of their performance. The President may 
also (2) allocate materials, services, and facilities in such manner, 
upon such conditions, and to such extent as he shall deem necessary or 
appropriate to promote the national defense. FEMA refers to these 
authorities as relating to ``priority ratings'' and ``allocation,'' 
respectively.
    Under subsection 101(b) of the Act, 50 U.S.C. 4511(b), the 
President may not use the aforementioned authorities to control the 
general distribution of any material in the civilian market unless the 
President finds (1) that such material is a scarce and critical 
material essential to the national defense, and (2) that the 
requirements of the national defense for such material cannot otherwise 
be met without creating a significant dislocation of the normal 
distribution of such material in the civilian market to such a degree 
as to create appreciable hardship.
    Under subsection 101(d) of the Act, 50 U.S.C. 4511(d), the head of 
each Federal agency to which the President delegates authority under 
section 101 of the Act (1) shall issue, and annually review and update 
whenever appropriate, final rules, in accordance with 5 U.S.C. 553, 
that establish standards and procedures by which the priorities and 
allocations authority under section 101 is used to promote the national 
defense, under both emergency and nonemergency conditions; and (2) as 
appropriate and to the extent practicable, consult with the heads of 
other Federal agencies to develop a consistent and unified Federal 
priorities and allocations system.
    On March 18, 2020, the President signed Executive Order 13909, 
which (among other things) contained a finding that health and medical 
resources needed to respond to the spread of COVID-19, including 
personal protective equipment and ventilators, meet the criteria 
specified in section 101(b) of the Act (50 U.S.C. 4511(b)).\9\
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    \9\ Executive Order 13909 also delegated to the Secretary of HHS 
authority under the DPA for the prioritization and allocation of 
health and medical resources to respond to the spread of COVID-19. 
Further, on March 23, 2020, the President signed Executive Order 
13910, in which the President delegated to the Secretary of HHS the 
authority under section 102 of the Act to prevent hoarding and price 
gouging with respect to health and medical resources necessary to 
respond to the spread of COVID-19. On March 25, 2020, the Secretary 
of Health and Human Services designated under section 102 of the Act 
15 categories of health and medical resources as scarce materials or 
materials the supply of which would be threatened by accumulation in 
excess of the reasonable demands of business, personal, or home 
consumption, or for the purpose of resale at prices in excess of 
prevailing market prices (``anti-hoarding designation''). See 85 FR 
17592 (Mar. 30, 2020). The Secretary of HHS later modified and 
extended this designation. See 85 FR 45895 (July 30, 2020). The 
anti-hoarding designation relates to domestic hoarding and price-
gouging activity, and is conceptually distinct from, and serves 
different purposes than, this rulemaking.

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[[Page 48115]]

    On March 27, 2020, the President signed Executive Order 13911, 
which (among other things) delegated to the Secretary of Homeland 
Security the President's authority under section 101 of the Act with 
respect to health and medical resources needed to respond to the spread 
of COVID-19 within the United States. The Executive Order provides that 
the Secretary of Homeland Security may use the authority under section 
101 of the Act to determine, in consultation with the heads of other 
executive departments and agencies as appropriate, the proper 
nationwide priorities and allocation of health and medical resources, 
including by controlling the distribution of such materials (including 
applicable services) in the civilian market, for responding to the 
spread of COVID-19 within the United States.\10\ The Secretary of 
Homeland Security has delegated his authorities under Executive Order 
13911 to FEMA. See DHS Delegation 09052, Rev. 00.1 (Apr. 1, 2020).
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    \10\ The Executive Order also delegated to the Secretary of 
Homeland Security the authority under section 102 of the Act to 
prevent hoarding and price gouging with respect to such resources, 
and requires that before exercising the authority under section 102 
of the Act, the Secretary of Homeland Security shall consult with 
the Secretary of Health and Human Services.
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    Additionally, on April 3, 2020, the President signed a Memorandum 
on Allocating Certain Scarce or Threatened Health and Medical Resources 
to Domestic Use (the Memorandum). The Memorandum reaffirmed the 
delegations and findings contained in Executive Orders 13909 and 13911, 
including that health and medical resources needed to respond to the 
spread of COVID-19, including personal protective equipment (PPE), meet 
the criteria specified in section 101(b) of the Act, i.e., that (1) 
such material is a scarce and critical material essential to the 
national defense, and (2) that the requirements of the national defense 
for such material cannot otherwise be met without creating a 
significant dislocation of the normal distribution of such material in 
the civilian market to such a degree as to create appreciable hardship. 
The Memorandum identified certain categories of PPE materials that the 
Secretary of HHS had previously designated as ``scarce or threatened'' 
for purposes of section 102 of the DPA, and further stated that to 
ensure that these 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 PPE materials overseas.
    In furtherance of such policy, the President directed the Secretary 
of Homeland Security, through the FEMA Administrator, and in 
consultation with the Secretary of HHS, to use any and all authority 
available under section 101 of the Act to allocate to domestic use, as 
appropriate, the five types of PPE identified in the Memorandum. On 
April 10, 2020, FEMA executed this direction by issuing the allocation 
order as a temporary final rule pursuant to the Memorandum, and with 
the authority delegated to the Secretary of Homeland Security in E.O. 
13911 and re-delegated to the FEMA Administrator in DHS Delegation 
09052 Rev. 00.1.\11\
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    \11\ See 85 FR 20195 (Apr. 10, 2020).
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    Finally, on May 13, 2020, FEMA published an interim final rule to 
establish standards and procedures by which the priorities and 
allocations authority under section 101 is used to promote the national 
defense, under both emergency and nonemergency conditions.\12\
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    \12\ See 85 FR 28500 (May 13, 2020) (codified at 44 CFR part 
333). In that interim final rule, FEMA noted that although FEMA 
effectuated the April allocation order via a temporary rule that 
predated the interim final rule, FEMA retains authority to 
administer and enforce that allocation order according to its terms, 
and to issue future allocation orders consistent with the procedures 
announced in the interim final rule. See 85 FR at 28505. FEMA has 
opted to extend the April allocation, with modifications, consistent 
with the form of the April order.
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    As the COVID-19 pandemic continues in the United States, the FEMA 
Administrator, in consultation with other agencies as appropriate, has 
determined that it must continue to allocate some materials contained 
in the April 10, 2020 temporary final rule for domestic use, but that 
it is no longer appropriate to continue the allocation of certain 
covered materials listed in the Memorandum due to changes in domestic 
supply and demand. In addition, FEMA has determined, consistent with 
the Memorandum and FEMA's authorities under section 101 of the DPA, 
that it is appropriate to designate an additional category of such 
materials. In short, FEMA has determined that the original temporary 
final rule must be extended, but the list of covered materials under 
such rule must be modified.
    Consistent with the authority delegated to the Secretary of 
Homeland Security in E.O. 13911 and re-delegated to the FEMA 
Administrator in DHS Delegation 09052 Rev. 00.1, FEMA now issues this 
temporary final rule to extend and modify the allocation order.

II. Provisions of the Temporary Final Rule

    Following consultation with the appropriate Federal agencies; 
pursuant to the President's direction; and as an exercise of the 
Administrator's priority order, allocation, and regulatory authorities 
under the Act, the Administrator has determined that the April 10, 2020 
temporary final rule (``covered materials'') shall be extended 
temporarily, and that the list of scarce and critical materials 
identified in such temporary final rule shall be modified to reflect 
current domestic needs. The materials identified in this rule will 
continue to be allocated for domestic use, and may not be exported from 
the United States without explicit approval by FEMA. See 44 CFR 
328.102(a).
    The rule is necessary and appropriate to promote the national 
defense with respect to the covered materials because the domestic need 
for them exceeds the supply. Under this temporary final rule extension, 
before any shipments of such covered materials may leave the United 
States, U.S. Customs and Border Protection (CBP) will continue to 
detain the shipment temporarily, during which time FEMA will determine 
whether to return for domestic use, issue a rated order for, or allow 
the export of part or all of the shipment under section 101(a) of the 
Act, 50 U.S.C. 4511(a). FEMA will continue to make such a determination 
within a reasonable time of being notified of an intended shipment and 
will make all decisions consistent with promoting the national defense. 
See 44 CFR 328.102(b). FEMA will work to review and make determinations 
quickly and will endeavor to minimize disruptions to the supply chain.
    In determining whether it is necessary or appropriate to promote 
the national defense to purchase covered materials, or allocate 
materials for domestic use, FEMA may continue to consult other agencies 
and will consider the totality of the circumstances, including the 
following factors: (1) The need to ensure that these 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.

[[Page 48116]]

    This extension to the rule continues the eleven exemptions that the 
Administrator has determined to be necessary or appropriate to promote 
the national defense. See 44 CFR 328.102(c).
    Specifically, the Administrator has determined that FEMA will not 
purchase 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 covered 
materials, on a per item basis, was distributed in the United States in 
the preceding 12 months. The Administrator decided that this exemption 
is necessary or appropriate to promote the national defense because it 
would limit the impact of this order on pre-existing commercial 
relationships, in recognition of the importance of these commercial 
relationships to the international supply chain, and for humanitarian 
reasons, in consideration of the global nature of the COVID-19 
pandemic. If FEMA determines that a shipment of covered materials falls 
within this exemption, such materials may be transferred out of the 
United States without further review by FEMA, provided that the 
Administrator may waive this exemption and fully review shipments of 
covered materials subject to this exemption for further action by FEMA, 
if the Administrator determines that doing so is necessary or 
appropriate to promote the national defense. FEMA may develop 
additional guidance regarding which exports are covered by this 
exemption and encourages manufacturers to contact FEMA with specific 
information regarding their status under this exemption.
    On April 21, 2020, FEMA published notification of ten additional 
exemptions to the original temporary final rule.\13\ These exemptions 
will remain in effect for the new effective period of this rule, 
subject to the Administrator's discretion to waive, modify, or 
terminate such exemptions at any time in the future. The Administrator 
has determined that it continues to be necessary and appropriate in 
order to promote the national defense to exempt these categories of 
covered materials from the requirements of 44 CFR 328.102(a) and (b). 
The Administrator may establish, in his discretion, additional 
exemptions that he determines are necessary or appropriate to promote 
the national defense and will announce any such exemptions by notice in 
the Federal Register.
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    \13\ 85 FR 22021 (Apr. 21, 2020).
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    FEMA will continue to implement this rule with the cooperation and 
assistance of other U.S. Government agencies, including CBP, and will 
work with manufacturers, brokers, distributors, exporters, and shippers 
to ensure that the applicable requirements are carried out. Any covered 
materials intended for export may be detained by CBP while FEMA 
conducts its review of the shipment. FEMA will review the shipment and 
provide notification as soon as possible regarding the disposition of 
the covered materials under this order, provided that any goods that 
have been detained by CBP and are subsequently made subject to a DPA-
rated order will be consigned to FEMA pending further distribution or 
agency direction. FEMA may provide additional guidance regarding the 
application of any exemptions to this temporary final rule, as 
appropriate.
    FEMA is modifying the original temporary final rule at section 
328.103(a) to update the designation of covered materials under the 
rule. FEMA is reducing the list of covered materials to four types of 
PPE as these modifications reflect current domestic demand, as 
indicated by the number of open requests for such materials from State, 
local, Tribal, and territorial (SLTT) jurisdictions. Specifically--
     FEMA is continuing the designation of N95 Filtering 
Facepiece Respirators as covered materials, with one modification. In 
the original temporary final rule, FEMA designated ``N95 Filtering 
Facepiece Respirators, including devices that are disposable half-face-
piece non-powered air-purifying particulate respirators intended for 
use to cover the nose and mouth of the wearer to help reduce wearer 
exposure to pathogenic biological airborne particulates.'' This 
temporary final rule modifies the existing language by adding the word, 
``surgical'' to clarify the types of N95 Filtering Facepiece 
Respirators subject to this order. N95 respirators for medical use are 
still subject to high demand within the United States, and supply is 
not expected to catch up with demand until January 2021. As of August 
4, 2020, FEMA had open requests for over 6 million N95 respirators from 
SLTT jurisdictions. Because this demand is specific to surgical N95 
respirators and does not include industrial respirators, FEMA is 
clarifying that the list only covers surgical N95 respirators.
     FEMA is continuing the designation of PPE surgical masks 
as covered materials due to the continued inability of domestic supply 
to meet current demands. As of August 4, 2020, FEMA had open requests 
for over 28 million surgical masks from SLTT jurisdictions.
     FEMA is also continuing the designation of PPE gloves or 
surgical gloves as covered materials, with modification. FEMA is 
narrowing the scope of the materials covered to PPE nitrile gloves, 
specifically those defined at 21 CFR 880.6250 (exam gloves) and 
878.4460 (surgical gloves) and other such nitrile gloves intended for 
the same purposes. Domestic supply for latex and vinyl examination and 
surgical gloves has largely caught up with demand, but there is still a 
significant shortage of nitrile gloves. As of August 4, 2020, FEMA had 
open requests for over 139 million nitrile gloves from SLTT 
jurisdictions.
     FEMA is adding designations for Level 3 and 4 Surgical 
Gowns and Surgical Isolation Gowns that meet all of the requirements in 
ANSI/AAMI PB70 \14\ and ASTM F2407-06 \15\ and are classified by 
Surgical Gown Barrier Performance based on AAMI PB70 to the covered 
materials list at this time as domestic supply is not meeting demand. 
As of August 4, 2020, FEMA had open requests for over 11 million of 
these gowns from SLTT jurisdictions.
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    \14\ ANSI/AAMI PB70 is the second edition of the standard for 
liquid barrier performance of protective apparel.
    \15\ The American Society for Testing and Material (ASTM) F2407 
is an umbrella document which describes testing for surgical gowns: 
Tear resistance, seam strength, lint generation, evaporative 
resistance, and water vapor transmission.
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     FEMA is eliminating two items from the covered materials 
list as there are currently no indications that supply is not meeting 
domestic demand to require these items to continue to be subject to 
this order. FEMA is removing other filtering facepiece respirators as 
this category of respirator has seen a significant drop in the number 
of orders received from SLTT jurisdictions and the current supply is 
sufficient to fill demand from these jurisdictions. FEMA is also 
removing elastomeric, air-purifying respirators and appropriate 
particulate filters/cartridges from the list of covered materials as 
these items have seen low demand from SLTT jurisdictions and FEMA has 
been able to fill all orders that have been placed for these items in 
the past 45 days, as of July 16, 2020.
    Note that this rule covers only those PPE items described above; it 
does not cover other forms of PPE not described in the rule, such as 
cloth-based masks.
    Consistent with the DPA and the original temporary final rule, FEMA 
may continue to conduct such

[[Page 48117]]

investigations and issue such requests for information as may be 
necessary for the enforcement of the Act, including this rule. See 44 
CFR 328.104(a); see also section 705 of the Act, 50 U.S.C. 4555; 
Executive Order 13911, 85 FR 18403 (Apr. 1, 2020). FEMA may seek an 
injunction or other order whenever, in the Administrator's judgment, a 
person has engaged or is about to engage in any acts or practices which 
constitute or will constitute a violation of the Act or any rule or 
order issued thereunder. See 44 CFR 328.104(b); see also section 706 of 
the Act, 50 U.S.C. 4556. In addition to an injunction, failure to 
comply fully with this rule is a crime punishable by a fine of not more 
than $10,000 or imprisonment for not more than one year, or both. See 
44 CFR 328.104(c); see also section 103 of the Act, 50 U.S.C. 4513. In 
addition, pursuant to 18 U.S.C. 554, whoever fraudulently or knowingly 
exports or sends from the United States, or attempts to export or send 
from the United States, 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.
    At any point in time, and to the extent consistent with United 
States policy, the FEMA Administrator may determine additional 
materials to be subject to this allocation order. Upon a determination 
under section 101(b) of the DPA that an additional material is a scarce 
and critical material essential for national defense, and that being 
allocated to domestic use under this allocation order is the only way 
to meet national defense requirements without significant disruption to 
the domestic markets, the Administrator will include these additional 
materials in this allocation order, and will provide notification of 
this decision through publication in the Federal Register.

III. Regulatory Procedure and Analyses

A. Temporary Final Rule With Immediate Effective Date

    As explained in the original temporary final rule,\16\ agency 
rulemaking is generally governed by the agency rulemaking provisions of 
the Administrative Procedure Act (APA). See 5 U.S.C. 553. Such 
provisions generally require that, unless the rule falls within one of 
a number of enumerated exceptions, or unless another statute exempts 
the rulemaking from the requirements of the APA, FEMA must publish a 
notice of proposed rulemaking in the Federal Register that provides 
interested persons an opportunity to submit written data, views, or 
arguments, prior to finalization of regulatory requirements. Section 
553(b)(B) authorizes a department or agency to dispense with the prior 
notice and opportunity for public comment requirement when the agency, 
for ``good cause,'' finds that notice and public comment thereon are 
impracticable, unnecessary, or contrary to the public interest.
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    \16\ 85 FR 20195 (Apr. 10, 2020).
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    This rule is exempt from the APA under section 709(a) of the Act, 
50 U.S.C. 4559(a). Instead, this rule is issued subject to the 
provisions of section 709(b). Pursuant to section 709(b)(2) of the Act, 
the Administrator has concluded, based on the facts related to the 
COVID-19 pandemic, which already have been summarized in this document, 
that, with respect to this temporary final rule, urgent and compelling 
circumstances make compliance with the notice and comment requirements 
of section 709(b)(1) of the Act, 50 U.S.C. 4559(b)(1), impracticable. 
If final regulations become necessary, an opportunity for public 
comment will be provided for not less than 30 days before such 
regulations become final, pursuant to section 709(b)(2)(C) of the Act, 
50 U.S.C. 4559(b)(2)(C).
    Furthermore, the same facts that warrant waiver under section 
709(b)(2) of the Act would constitute good cause for FEMA to determine, 
under the APA, that notice and public comment thereon are impractical, 
unnecessary, or contrary to the public interest, and that the temporary 
final rule should become effective on August 10, 2020, the date on 
which the original temporary final rule would expire. The exigent need 
for this rule is related to the COVID-19 pandemic.
    Although the Federal Government, along with State and local 
governments, have taken preventative and proactive measures to slow the 
spread of COVID-19, and to treat those affected, the ongoing spread of 
COVID-19 within the Nation's communities is straining the Nation's 
healthcare systems. It is imperative that health and medical resources 
needed to respond to the spread of COVID-19, including the PPE affected 
by this rule, continue to be allocated for domestic use as appropriate. 
Given the evolving nature of this pandemic and the frequently changing 
supply of and demand for the health and medical resources needed to 
combat it, full public notice and comment proceedings are 
impracticable. As explained earlier in the preamble, the volume of 
requests for certain health and medical resources continues to outpace 
domestic supply in some cases, while the domestic supply of other 
health and medical resources is now sufficient to meet the requests of 
SLTT jurisdictions. In addition, the number of requests fluctuates 
widely from day-to-day as FEMA receives the requests, evaluates them, 
and satisfies them.
    FEMA is continuously monitoring SLTT jurisdictions' demand for 
these scarce and critical health and medical resources. This immediate 
action is needed to continue to ensure that such resources are 
appropriately allocated for domestic use, and to tailor the scope of 
such allocation to current needs as of the prior TFR's scheduled end-
date.
    In short, given the national and international emergency caused by 
COVID-19 and the continuously evolving nature of the situation, FEMA 
finds that urgent and compelling circumstances have made it 
impracticable and contrary to the public health--and, by extension, the 
public interest--to delay these implementing regulations until a full 
public notice-and-comment process is completed. This temporary final 
rule modification and extension is needed to appropriately allocate 
scarce and critical materials for domestic use, based on current needs.
    The measures described in this rule are being issued on a temporary 
basis. This temporary final rule will cease to be in effect on December 
31, 2020, unless sooner modified or terminated by the Administrator.

B. Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, and public 
health and safety effects; distributive impacts; and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Section 3(f) of Executive Order 12866 defines a ``significant 
regulatory action'' as an action that is likely to result in a 
regulation (1) having an annual effect on the economy of $100 million 
or more in any one year, or adversely and materially affecting a sector 
of the

[[Page 48118]]

economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or Tribal governments or communities 
(also referred to as ``economically significant''); (2) creating a 
serious inconsistency or otherwise interfering with an action taken or 
planned by another agency; (3) materially altering the budgetary 
impacts of entitlement grants, user fees, or loan programs or the 
rights and obligations of recipients thereof; or (4) raising novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.
    The Office of Management and Budget has designated this temporary 
final rule as an economically significant regulatory action. Given that 
the temporary final rule is a significant regulatory action, FEMA 
proceeds under the emergency provision of Executive Order 12866, 
section 6(a)(3)(D) based on the need for immediate action, as described 
above, based on the need for immediate action to ensure these health 
and medical resources are appropriately allocated for domestic use.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires that when 
an agency issues a proposed rule, or a final rule that the agency 
issues under 5 U.S.C. 553 after being required by that section or any 
other law to publish a general notice of proposed rulemaking, the 
agency must prepare a regulatory flexibility analysis that meets the 
requirements of the RFA and publish such analysis in the Federal 
Register. 5 U.S.C. 603, 604.
    This is neither a proposed rule, nor a final rule that the agency 
has issued under 5 U.S.C. 553 of this title after being required by 
that section or any other law to publish a general notice of proposed 
rulemaking. This is a temporary final rule issued without a prior 
proposed rule, under the separate authority of the Defense Production 
Act of 1950. Accordingly, a regulatory flexibility analysis is not 
required.

D. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded 
Mandates Act), 2 U.S.C. 1532, requires that covered agencies prepare a 
budgetary impact statement before promulgating a rule that includes any 
Federal mandate that may result in the expenditure by State, local, and 
Tribal governments, in the aggregate, or by the private sector, of $100 
million in 1995 dollars, updated annually for inflation. Currently, 
that threshold is approximately $172 million. If a budgetary impact 
statement is required, section 205 of the Unfunded Mandates Act also 
requires covered agencies to identify and consider a reasonable number 
of regulatory alternatives before promulgating a rule. DHS has 
determined that this rule is not expected to result in expenditures by 
State, local, and Tribal governments, or by the private sector, of $172 
million or more in any one year. This rule imposes no requirements on 
State, local, and Tribal governments and, therefore, cannot require 
them to expend any funds, let alone $172 million. To the extent that 
this rule affects the private sector, it only prohibits conduct, namely 
certain exports. It does not require any private sector expenditures 
within the meaning of the Unfunded Mandates Act. Further, the rule is 
excluded from the Unfunded Mandates Act under 2 U.S.C. 1503(4) and (5).

E. National Environmental Policy Act (NEPA)

    Under the National Environmental Policy Act of 1969 (NEPA), as 
amended, 42 U.S.C. 4321 et seq., an agency must prepare an 
environmental assessment or environmental impact statement for any 
rulemaking that significantly affects the quality of the human 
environment. FEMA has determined that this rulemaking does not 
significantly affect the quality of the human environment and 
consequently has not prepared an environmental assessment or 
environmental impact statement.
    Rulemaking is a major Federal action subject to NEPA. Categorical 
exclusion A3 included in the list of exclusion categories at Department 
of Homeland Security Instruction Manual 023-01-001-01, Revision 01, 
Implementation of the National Environmental Policy Act, Appendix A, 
issued November 6, 2014, covers the promulgation of rules, issuance of 
rulings or interpretations, and the development and publication of 
policies, orders, directives, notices, procedures, manuals, and 
advisory circulars if they meet certain criteria provided in A3(a-f). 
This temporary final rule meets Categorical Exclusion A3(a), ``Those of 
a strictly administrative or procedural nature''.

F. Executive Order 13132: Federalism

    This rule has been reviewed under Executive Order 13132, 
Federalism, 64 FR 43255 (August 4, 1999). That Executive Order imposes 
certain requirements on agencies formulating and implementing policies 
or regulations that preempt State law or that have federalism 
implications. DHS has determined that this temporary final rule will 
not have a substantial direct effect on the States, on the relationship 
between the National Government and the States, or on the distribution 
of power and responsibilities among the various levels of Government. 
Furthermore, there are no provisions in this rule that impose direct 
compliance costs on State and local governments. Accordingly, DHS 
believes that the rule does not warrant additional analysis under 
Executive Order 13132.

G. Congressional Review Act

    Under the Congressional Review Act (CRA), 5 U.S.C. 801-808, before 
a rule can take effect, the Federal agency promulgating the rule must: 
Submit to Congress and to the Government Accountability Office (GAO) a 
copy of the rule; a concise general statement relating to the rule, 
including whether it is a major rule; the proposed effective date of 
the rule; a copy of any cost-benefit analysis; descriptions of the 
agency's actions under the Regulatory Flexibility Act and the Unfunded 
Mandates Reform Act; and any other information or statements required 
by relevant executive orders.
    FEMA has sent this rule to the Congress and to GAO pursuant to the 
CRA. The Office of Information and Regulatory affairs has determined 
that this rule is a ``major rule'' within the meaning of the CRA. As 
this rule contains FEMA's finding for good cause that notice and public 
procedure are impracticable, unnecessary, or contrary to the public 
interest, there is not a required delay in the effective date. See 5 
U.S.C. 808.

List of Subjects in 44 CFR Part 328

    Administrative practice and procedure, Business and industry, 
Government contracts, Health or medical resource, Hoarding, 
Investigations, Materials, National defense, Scarce materials, 
Strategic and critical materials, Threatened materials.


0
Accordingly, for the reasons set forth in the preamble, and effective 
from August 10, 2020 until December 31, 2020, chapter I of title 44 of 
the Code of Federal Regulations is amended by revising part 328 to read 
as follows:

PART 328--COVID-19 ALLOCATION ORDERS AND PRIORITY ORDER REVIEW 
UNDER THE DEFENSE PRODUCTION ACT

Sec.
328.101 Basis and purpose.
328.102 Requirements.
328.103 Designation of covered materials.
328.104 Investigations and injunctions; penalties.


[[Page 48119]]


    Authority: Sections 101 et seq. of the Defense Production Act of 
1950, 50 U.S.C. 4511, et seq.; Executive Order 13909, 85 FR 16227 
(Mar. 23, 2020); Executive Order 13911, 85 FR 18403 (Apr. 1, 2020); 
DHS Delegation 09052, Rev. 00.1 (Apr. 1, 2020); Presidential 
Memorandum on Allocating Certain Scarce or Threatened Health and 
Medical Resources to Domestic Use (April 3, 2020).


Sec.  328.101   Basis and purpose.

    (a) Basis. These rules are issued pursuant to section 101 of the 
Defense Production Act of 1950, as amended, 50 U.S.C. 4511, and 
complementary authorities, including such authorities as are contained 
in subchapter III of chapter 55 of title 50, United States Code (50 
U.S.C. 4554, 4555, 4556, and 4559), which have been delegated to FEMA.
    (b) Purpose. The purpose of these rules is to aid the response of 
the United States to the spread of COVID-19 by ensuring that scarce or 
threatened health and medical resources are appropriately allocated for 
domestic use.


Sec.  328.102   Requirements.

    (a) Allocation Order and Requirement for the Administrator's 
Approval. All shipments of covered materials, as designated in Sec.  
328.103, shall be allocated for domestic use, and may not be exported 
from the United States without explicit approval by FEMA.
    (b) Procedures. U.S. Customs and Border Protection (CBP), in 
coordination with such other officials as may be appropriate, will 
notify FEMA of an intended export of covered materials. CBP must 
temporarily detain any shipment of such covered materials, pending the 
Administrator's determination whether to return for domestic use or 
issue a rated order for part or all of the shipment, pursuant to the 
Administrator's delegated authorities. The Administrator will make such 
a determination within a reasonable timeframe after notification of an 
intended export.
    (c) Administrator's Determination. In making the determination 
described in paragraph (b) of this section, the Administrator may 
consult other agencies and will consider the totality of the 
circumstances, including the following factors:
    (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.
    (d) Exemption. (1) The Administrator has determined in the interest 
of promoting the national defense 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. 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 
under paragraph (b) of this section, if the Administrator determines 
that doing so is necessary or appropriate to promote the national 
defense. FEMA will communicate to CBP regarding the application of this 
exemption to shipments identified by CBP.
    (2) 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.
    (e) Exportations prohibited. The exportation of covered materials 
other than in accordance with this section is prohibited.


Sec.  328.103   Designation of covered materials.

    (a) The Administrator has designated the following materials as 
``covered materials'' under this part:
    (1) Surgical N95 Filtering Facepiece Respirators, including devices 
that are disposable half-face-piece non-powered air-purifying 
particulate respirators intended for use to cover the nose and mouth of 
the wearer to help reduce wearer exposure to pathogenic biological 
airborne particulates;
    (2) PPE surgical masks, including masks that cover the user's nose 
and mouth and provide a physical barrier to fluids and particulate 
materials;
    (3) PPE nitrile gloves, including those defined at 21 CFR 880.6250 
(exam gloves) and 878.4460 (surgical gloves) and such nitrile gloves 
intended for the same purposes; and
    (4) Level 3 and 4 Surgical Gowns and Surgical Isolation Gowns that 
meet all of the requirements in ANSI/AAMI PB70 and ASTM F2407-06 and 
are classified by Surgical Gown Barrier Performance based on AAMI PB70.
    (b) Upon determination that additional items are scarce and 
necessary for national defense, and that consideration under this 
allocation order is the only way to meet national defense requirements 
without significant disruption to the domestic markets, the 
Administrator may designate additional materials as ``covered 
materials'' in the list provided above. The Administrator will publish 
notice of these additional ``covered materials'' in the Federal 
Register.


Sec.  328.104   Investigations and injunctions; penalties.

    (a) To administer or enforce this subpart, the Administrator may 
exercise the authorities available under section 705 of the Defense 
Production Act of 1950, as amended, 50 U.S.C. 4555, including the 
conduct of investigations, requests for information or testimony, and 
inspections of records or premises. Before such authorities are 
utilized, the Administrator will determine the scope and purpose of the 
investigation, inspection, or inquiry, and be assured that no adequate 
and authoritative data are available from any Federal or other 
responsible agency.
    (b) Whenever, in the judgment of the Administrator, any person has 
engaged or is about to engage in any acts or practices that constitute 
or will constitute a violation of any provision of this subpart, or 
order issued thereunder, the Administrator may exercise the authorities 
available under section 706 of the Defense Production Act of 1950, as 
amended, 50 U.S.C. 4556, including applying for a preliminary, 
permanent, or temporary injunction, restraining order, or other order 
to enforce compliance with this subpart.
    (c) Any person who willfully engages in violations of this part is 
subject to penalties available under section 103 of the Defense 
Production Act of 1950, as amended, 50 U.S.C. 4513, or other available 
authority.

Pete Gaynor,
Administrator, Federal Emergency Management Agency.
[FR Doc. 2020-17467 Filed 8-6-20; 11:15 am]
BILLING CODE 9111-19-P


