INSIDE THIS ISSUE: 1) COVID-19 Presents New Opportunities and Challenges for Importers and Exporters of Personal Protective Equipment and Other Medical Devices 2) SENER Issues New Regulation Governing Electrical Reliability 3) ILS Co-Sponsors Two Summer Online CLEs with Austin Bar Association 4) ILS Sponsors Online CLE as part of Texas Bar Annual Meeting On Demand

Importation of PPE and Medical Devices

FDA recognizes that it is in the best interest of the U.S. to facilitate and expedite the importation of products into the U.S. market that address immediate, urgent public health needs. In order to do so, FDA has issued EUAs and new enforcement policies for various medical devices, which, depending on the product, waive certain existing regulatory requirements, such as reducing former standards for product testing, FDA clearance through the premarket approval process, FDA registration and listing, labeling, and post-market compliance. At the same time, there is a sense of urgency due to the need, and due to the opportunity to get in while the getting’s good.

To assist importers and to minimize any entry delays, FDA has also published information for filing imports of PPE and medical devices, which sets forth guidance for reporting import data to U.S. Customs and Border Protection (“CBP”) and FDA and provides links to current FDA requirements for importation of these products under EUAs and new enforcement policies. Additionally, the FDA has set up hotlines for companies to call if products are detained by CBP.

Due to the fluid situation, FDA policy for the importation of PPE and other medical devices is constantly evolving to meet the demand for these products and to deal with the very real issue of counterfeit products or products that lack traceability to show authenticity. Therefore, it is important that importers and distributors of these products closely monitor the status of EUAs and enforcement policy guidance documents to ensure their products comply with the current required testing standards. Most importantly, labeling is a regulator’s first line of defense in spotting inferior products. An importer will have to comply with associated recordkeeping and adverse event reporting requirements in the event FDA issues a product recall or suspension of product sales.

Close monitoring of the regulatory landscape has become all the more important because, throughout the COVID-19 pandemic, FDA has changed importation requirements with little to no notice in order to respond in real time to shortages of critical products and to stymy the influx of counterfeit products. In particular, face masks, FFRs, and diagnostic tests have faced suspension or revocation of previous authorizations when it has been found that products do not meet FDA standards or the chain of suppliers cannot be discerned.

The relaxed regulatory environment also presents opportunities for both inexperienced manufacturers and bad actors to enter the market. This means that, in addition to constantly changing regulations, importers also have to deal with fraud and mislabeling problems when imported products do not actually meet the qualifications claimed and labeled. These issues are not just a problem for contract liability, but also possibly tort liability, and potentially a separate set of FDA and CBP regulatory problems for submitting incorrect import documentation. Therefore, in order for importers to take advantage of new opportunities, while also managing potential liability, it important for importers to carefully vet new suppliers, ensure they have protective contractual terms in agreements with both their suppliers and customers, obtain sufficient product liability insurance coverage, and continue closely monitoring ongoing regulatory changes.

Exports of PPE Limited by FEMA

While FDA and other agencies are taking steps to facilitate the importation of PPE, FEMA is exercising its authority to limit the exportation of PPE. On April 10, 2020, FEMA  issued  a temporary final rule limiting certain types of PPE that can be exported from the United States, including N95 and other FFRs, elastomeric respirators and their filters or cartridges, and PPE surgical masks and gloves. This rule is currently in effect until August 10, 2020. Due to the scarcity of five specified categories of PPE, exports containing subject items, which are not otherwise subject to an exemption, will be temporarily detained by CBP and subject to review by FEMA. FEMA will review the export to determine whether to return the items for domestic use, issue a rated order for the items, or allow the export of part or all of the shipment.

FEMA subsequently issued a notification of exemptions on April 21, 2020, which provides 10 exemptions to the April 10, 2020, rule and sets forth the process for making use of those exemptions. The exemptions cover, among other things, shipments to U.S. commonwealths and territories, certain humanitarian donations by non-profit or non-governmental organizations, and intracompany transfers by U.S. companies to company-owned or affiliated foreign facilities.

As such, potential exporters of PPE must first determine whether the PPE is subject to FEMA review. If it is, the exporter will need to determine whether an exemption is available. To avoid delays, exporters must follow the appropriate procedures to use the exemption. Where PPE is subject to review and not eligible for an exemption, exporters should plan on serious delays in the near term.

In 2011, the International Health Regulations Review Committee for the World Health Organization offered this statement:

“The world is ill-prepared to respond to a severe influenza pandemic or to any similarly global, sustained and threatening public-health emergency.”

Yet, the world is now facing this pandemic, and governments are attempting to respond. The lives of their citizens depend on their success. COVID-19 has created and unprecedented global demand for PPE and diagnostics to test and trace this novel virus with an aim to contain it. So far, the initial response country to country reveals equally unprecedented regulatory challenges while, at the same time, creating new opportunities for manufacturers, distributors, importers, and exporters to enter new markets. The rapidly evolving situation makes it all the more important that parties involved in the sale and distribution of PPE and critical needs medical devices take full advantage of regulations now inviting their participation to provide the products needed globally. Equally important is for them to closely monitor the changes so they can also avoid the potential liabilities, because, at some point, when governments catch-up, there will be ‘looking back’ to identify those who got it right and those who put greed over public safety.

About the Authors

Ali focuses her corporate practice on the commercialization of new companies’ products and services, and emerging technologies. Ali has decades of experience working with a wide variety of corporations, especially in the medical device field as key management, Chief Privacy Officer and in-house legal counsel. She has an extensive background in manufacturing, product labeling, FDA regulatory oversight and post-market compliance for both consumer goods and FDA medical devices. Ali has also managed angel/venture capital financing including preparing for an initial public offering, drafting convertible notes, simple agreements for equity and/or other seed-stage investments.

Lindsey advises clients on export controls, economic and trade sanctions, antiboycott laws, and customs and import laws. She has worked with clients in the oil and gas, hydrographic survey, medical device, chemicals, aerospace, defense, electronics, manufacturing, and not-for-profit sectors. Lindsey regularly assists clients with identifying export licensing requirements; developing export licensing strategies; reviewing technology transfer controls; determining the export jurisdiction and classification of equipment and technology; and responding to government inquiries. She has extensive experience in advising clients on compliance with U.S. sanctions, particularly with respect to Russia, Iran, Cuba, and Venezuela. Lindsey also has considerable experience in conducting internal investigations and making voluntary disclosures to the Commerce, State, and Treasury Departments.

About the Authors

Jorge Sánchez Cubillo is a partner at CCN where he has worked since 2001, and is currently based in Mexico City. He heads the firm’s civil and business litigation area in Mexico. His practice includes civil, business, banking, insurance, surety bond, bankruptcy, administrative, and criminal litigation, in which he has more than 14 years of experience.  

José María Lujambio is a partner at CCN, where he heads the energy practice from his office in Austin, Texas. Since joining the firm in 2014, his work has included regulatory support to utility-scale renewable energy projects; enablement of wholesale electricity market participants; negotiation of several kinds of energy procurement contracts, and advice in the midstream and downstream regulation of natural gas and refined products, for U.S. companies doing business in Mexico.

Speakers:

Description:

United States companies with direct or subsidiary operations in Mexico have long struggled with navigating the intertwining of U.S. and Mexico labor laws when it comes to U.S. citizen or resident employees assigned to work in Mexico. On April 29, 2020, the United States Court of Appeals for the Fifth Circuit issued an important opinion enforcing an employment at-will, choice of law and waiver agreement against a U.S. citizen who worked in Mexico. The Fifth Circuit’s enforcement of a U.S. employer’s employment at-will, choice of law and waiver agreement against a U.S. citizen working in Mexico is an important decision for U.S.-based employers who hire U.S. employees for work assignments in Mexico. The use of an employment at-will, choice of law and waiver agreement in the cross-border employment context requires a fundamental understanding of labor and employment laws in both jurisdictions.

Speaker:

Description:

Most global human resources managers for multi-national corporations are well-aware of the challenges of terminating a poorly performing expatriate employee who has been working at a company affiliate outside of the United States. After all, it’s usually much easier to terminate employees in the United States because most non-union employees in the U.S. are “at-will” employees who can be terminated without cause so long as the decision is not motivated by unlawful discriminatory or retaliatory motives. In many countries, no-cause layoffs are either illegal or the employer is required to pay separated employees a statutory severance. In addition to the usual concerns about the applicability of foreign labor and employment laws that employers must contend with when terminating a single employee, multi-national employers considering layoffs or furloughs of employees assigned to foreign affiliates will also need to think about other countries’ legal requirements for conducting reductions-in-force or mass layoffs. U.S. companies with employees in other countries should also keep in mind that new laws have been enacted in many countries in response to the COVID-19 pandemic that might make it more difficult to terminate employees at this time. Any company considering layoffs or furloughs in another country should also consider whether governmental benefits are available to employers who retain employees, much like the United States Congress provided in the recently enacted CARES Act. Some U.S. companies may want to repatriate expatriate employees for health and safety reasons depending on the extent that COVID-19 has affected, or will affect the countries where their employees are assigned, and on ability of those countries’ health care systems to treat any employee who becomes sick. A further challenge facing employers with employees in countries where the infection rate is growing exponentially is how to bring those employees home.

As part of the State Bar’s Annual Meeting, the ILS will record a CLE presentation in which partners Charles Conrad and Bob Sills of Pillsbury, Winthrop, Shaw & Pittman, LLP, and Juan Alcala and Carlos Vejar of Holland & Knight, LLP, will discuss dispute resolution considerations under current conditions. The session will cover emerging trends and best practices relating to cross-border disputes. The State Bar will make the recording available on June 25, 2020 as part of this year’s virtual Annual Meeting.