Defense Production Act Anti-Hoarding Provisions Invoked for Coronavirus
The Department of Health and Human Services published a notice on March 30, 2020 — effective March 25, 2020 — designating certain COVID-19-related personal protective equipment (“PPE”) and materials as “scarce” or “threatened” materials subject to the Defense Production Act’s (“DPA”) anti-hoarding provisions. As a result of this notice, the DPA now prohibits the accumulation of these materials in excess of reasonable demands of business, personal, or home consumption. The notice also results in a prohibition of the accumulation of these materials for the purpose of resale at prices in excess of the prevailing market rate.
The notice specifically applies to the following types of materials:
- N-95 Filtering Facepiece Respirators, and other types of respirators;
- Portable Ventilators;
- Drug products with active ingredient chloroquine phosphate or hydroxychloroquine HCI;
- Certain sterilization services;
- Certain disinfecting devices;
- Medical gowns or apparel and PPE coveralls; and
- PPE face masks, surgical masks, face shields, and gloves.
Violating the DPA in this manner could result in a fine up to $27,000.00, or up to one year imprisonment. See 50 U.S.C. § 4513.
The notice follows an executive order the White House issued last week on “Preventing Hoarding of Health and Medical Resources To Respond to the Spread of COVID-19.” This order delegated to the Secretary of the Department of Health and Human Services “the authority to prescribe conditions with respect to the accumulation of” COVID-19 related materials, “to designate any material as a scare material,” or to designate “as a material the supply of which would be threatened by persons accumulating the material either in excess of reasonable demands of business, personal, or home consumption, or for the purpose of resale at prices in excess of prevailing market prices.”
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