SUMMARY: The Foreign-Trade Zones Board (the Board) invites public comment on
proposed amendments to its regulations. The amendments are comprehensive, with
all but a few sections of the current regulations proposed for revision. Consequently,
the action constitutes a complete revision of Part 400.
The revision is intended to simplify and update the regulations so that they reflect
contemporary zone practice as it has evolved through interpretations and actions by
the Board and the Customs Service. Included in the changes are more definitive
coverage and criteria for manufacturing activity, subzones, and the "public interest"
provision. Also, procedures are sumplified for applications and decisionmaking.
Because of the growth in the number of zones and subzones, and increases in
manufacturing and other zone activity, it is intended that this proposed rulemaking
also serve as a forum for general comments on the zone program and the policies
reflected in the proposed regulations.
DATE: Comments are invited in writing for 60 days and must be received by April
19, 1983.
ADDRESS: Comments (original and 6 copies) are to be addressed to the: Executive
Secretary, Foreign-Trade Zones Board, International Trade Administration, U.S.
Department of Commerce, 14th Street and Pennsylvania Avenue NW., Room 1872,
Washington, D.C. 20230.
FOR FURTHER INFORMATION CONTACT: John J Da Ponte, Jr., Executive Secretary,
Foreign-Trade Zones Board, 202/377-2862.
TEXT: SUPPLEMENTARY INFORMATION:
Background
Foreign-Trade Zones (zones) are restricted areas in or near ports of entry, which
are licensed by the Board and operated under the supervision of the Customs Service.
They are considered outside of U.S. Customs territory for purposes of Customs entry
procedures. Authority for establishing these facilities is granted to qualified
corporations, usually public, who submit applications under the Board's regulations
showing the need for zone services and a workable plan that includes suitable
facilities and financing.
Zones are operated under public utility principles, with grantees frequently
contracting with private firms to operate facilities and provide services to zone users.
They have as their public policy objective the creation and maintenance of
employment through the encouragement of operations in the United States which,
for Customs cost reasons, would otherwise have been carried on abroad. The
objective is furthered when zones assist exporters and reexporters, or when goods
arrive from abroad in an unfinished condition for processing here rather than overseas.
Foreign and domestic merchandise may be moved into zones for operations not
otherwise prohibited by law involving storage, exhibition, assembly, manufacture or
other processing. The usual formal Customs entry procedure and payment of duties
is not required on the foreign merchandise unless and until it enters Customs
territory for domestic consumption, in which case the importer has a choice of
paying duties either on the original foreign material or the finished product. Quota
restrictions do not normally apply to foreign goods in zones, except that special
procedures may apply when manufacturing is involved. Domestic goods moved
into a zone for export may at the request of the exporter be considered exported
upon entering the zone for purposes of excise tax rebates and drawback.
"Subzones" are a special-purpose type of ancillary zone authorized by the Board,
through grantees of public zones, for operations by individual firms that cannot be
accommodated within an existing zone, when it can be demonstrated that the
activity, usually manufacturing, will result in a significant public benefit.
During the past decade the number of ports of entry with zone projects has grown
from 10 to 75, and the value of goods entering zones and subzones has increased
from just over $100 million to over $3 billion, about 50 percent of which involves
manufacturing activity. About 33 percent of the goods currently entering zones is
of domestic origin and some 30 percent of the goods shipped from zones are exported.
This intensified interest in zones, both on the part of communities providing zone
services as part of their economic development efforts and on the part of firms
using zone procedures to help make their products more competitive, is related to
growth that has occurred in international trade and foreign direct investment in
the United States. While there has been little public controversy concerning the
establishment of public zones, many proposals for manufacturing in zones for the
domestic market have been opposed by competing domestic industries that are
sensitive to imports.
In commenting on zone proposals, firms interested in using zones for
manufacturing have expressed a desire for greater access and flexibility in zone
procedures to help them compete against imports of finished goods and increase
their exports. Those opposing zone manufacturing operations have argued that
zone procedures should be restricted for non-export operations because, in reducing
import costs, zones can adversely affect import-sensitive industries.
The Board and the Customs Service have in recent years interpreted and adapted
their requirements in a way that has allowed zone procedures to become more
widely available at ports of entry throughout the United States,
including the smaller ones. In approving larger zone areas that can be activated
with Customs approval and clearance on manufacturing, flexibility has been injected
into the program so that communities can adapt zones to their local needs and use
them more effectively in their economic development efforts. At the same time, the
Board has been responsive to complaints on certain manufacturing proposals from
adversely affected domestic firms, by imposing restrictions when it is found that
negative economic consequences are threatened.
On October 8, 1980, the Board issued an Advance Notice of Proposed Rulemaking
(45 FR 67681, October 14, 1980), soliciting suggestions for amendments to the
regulations, especially on "subzones" and the "public interest" section. The comments
received have been taken into account in drafting this revision.
Through simplification and consolidation, the number of sections in the existing
regulations has been decreased from 110 to 75, with a resulting reduction in the
overall length of the regulations by some 30 percent. Some of the more important
changes are:
Procedures and criteria for reviewing manufacturing proposals are stated (Sec's.
400.1309; 400.700 (a)(1); 400.807(b)).
The "public interest" provision is expanded to include criteria and procedures (Sec.
400.807).
Subzones are defined and criteria for approval stated (Sec's. 400.101; 400.400(c)).
Distinction made between "approved" zone space and "activated" space, with only the
latter being considered outside Customs territory (Sec's. 400.101; 400.700(a)(5)).
Relationship of grantee and operator clarified (Sec. 400.106).
Examiners Committee would be replaced by a single examiner, assisted by advisers
(Sec's. 400.109, 400.1305(a)).
Locational provisions, including adjacency requirements, clarified
(Sec's. 400.300-400.303).
The criteria for approving zones is outlined in a single provision (Sec. 400.400).
The statement on physical requirements for zones is simplified (Sec. 400.401).
The format for applications and zone schedules are simplified (Sec's. 400.600-604;
400.1002-1003).
General conditions applicable to all grants of authority are stated to permit
incorporation by reference (Sec. 400.700).
The provision on accounts, records and reports is simplified (Sec. 400.1004).
The Committee of Alternates can act as the Board when members present at
quorum meeting have authority to act for their principals (Sec. 400.1302).
Commerce and Treasury attendance is necessary for a quorum at Board meetings
(Sec. 400.1303).
The advisory role of the Department of the Army is recognized, and the Army District
Engineer would no longer be automatically involved in zone proposals, his
involvement to be determined by the Resident Member BERH and Executive Secretary
(Sec's 400.202; 400.1305(a); 400.108).
Authority
This revision is proposed under the authority of section 8 of the Foreign-Trade Zones
Act of June 18, 1934 (48 Stat. 1000; 19 U.S.C. 81h).
Comments
The period for the submission of comments will close April 19, 1983. All comments
received during this period will be considered by the Board in developing the final
regulations. Submissions (original ans six copies) shall be in writing and shall not
contain information of a proprietary nature, as they will be made available for
public inspection and copying, with the exception of those submitted by other
Federal agencies.
The public record concerning these regulations will be maintained in the
International Trade Administration Freedom of Information Records Inspection
Facility, Room 4001B, U.S. Department of Commerce, 14th Street and Pennsylvania
Avenue NW., Washington, D.C. 20230. Written public comments on file at the
facility may be inspected and copied in accordance with 15 CFR Part 4. Information
about the inspection and copying of records at the facility may be obtained from
Patricia L. Mann, International Trade Administration Freedom of Information
Officer, at the above address or by calling (202) 377-3031.
Regulatory Flexibility Act
This proposed rule is not subject to the requirements of sections 603 and 604 of
Title 5, United States Code, added by the Regulatory Flexibility Act (5 U.S.C. 601
et seq. ), because it will not have a significant economic impact on a substantial
number of small entities. There are some 75 zone grantees and 40 firms operating
all or parts of zone facilities for grantees. Of some 1,500 firms using zones, about
600 use them on a full time basis. It is estimated that less than 100 small entities
are included among the above firms. In all cases, however, the impact of the
proposed rules would be favorable, as they reduce the present regulatory burden on
these parties and simplify procedures.
Executive Order 12291
This proposed rulemaking does not involve a major rule as defined in Section
1(b) of E.O. 12291 because it is not likely to result in (1) an annual effect on the
economy of $100 million or more; (2) a major increase in costs or prices for
consumers, individual industries, Federal, State, or local government agencies, or
geographic regions; or (3) significant adverse effects on competition, employment,
investment, productivity, innovation or on the ability of U.S.-based enterprises to
compete with foreign-based enterprises in domestic or export markets.
Paperwork Reduction Act
The proposed rule will impose no additional reporting or record keeping burden on
the public. Existing requirements for zone applicants, grantees, operators, and users,
are simplified and there is an overall reduction of the burden on these parties, which
are the ones mainly affected (Paperwork Reduction Act of 1980, Pub. L. 96-511).
List of Subjects in 15 CFR Part 400
Administrative practice and procedures, Foreign-trade zones, Freedom of information,
Harbors, Penalties, Imports, Customs duties and inspection.
For the reasons set out in the preamble, it is proposed to revise 15 CFR Part 400 as
follows:
PART 400 -- FOREIGN-TRADE ZONES IN THE UNITED STATES
Definitions
Sec.
400.100 Act and regulations.
400.101 Zone, subzone, and zone project.
400.102 Board, Secretary of Commerce.
400.103 State.
400.104 Corporation.
400.105 Applicant.
400.106 Grantee, operator, user.
400.107 Regional Commissioner, District Director.
400.108 Resident Member BERH, District Engineer.
400.109 Examiner.
Jurisdiction and Authority of the Board
400.200 Authority of the Board.
400.201 Cooperation with other agencies.
400.202 Role of the Department of the Army.
Number and Location of Zones
400.300 Ports of entry entitled to at least one zone.
400.301 Multi-state and multi-city ports of entry.
400.302 Additional zones in ports of entry.
400.303 Location in relation to ports of entry.
Economic, Financial, and Physical Requirements for Establishment of Zones
400.400 General criteria: Zones and subzones.
400.401 Operational and physical requirements.
Eligible Applicants
400.500 Eligibility for zone grants of authority.
400.501 State enabling legislation.
Applications for Grants of Authority
400.600 General.
400.601 Form and content.
400.602 Amendments.
400.603 Drafts.
400.604 Formal acceptance, filing, and public notice.
400.605 Applications for zone expansions, subzones, relocations and boundary
modifications.
400.606 Confidential information.
Conditions applicable to Grants of Authority
400.700 Conditions applicable to grants of authority.
400.701 Disposition of grant prohibited.
Operations in Zones
400.800 Operations in zones subject to customs supervision.
400.801 Merchandise permitted in a zone.
400.802 Disposition of Merchandise in a zone.
400.803 Manipulation, manufacture, and exhibition of merchandise.
400.804 Status of merchandise in a zone.
400.805 Use of zone by carriers.
400.806 Subsequent importation of zone merchandise.
400.807 Public interest provision.
400.808 Retail sales.
400.809 Residence within zone.
400.810 Controlled access to zones.
400.811 Reimbursement -- Customs and District Engineer.
400.812 Construction of buildings and facilities.
400.813 Hours of business and service.
Maintenance of Zones
400.900 Structures and facilities to be maintained in good order.
400.901 Penalty for failure to make repairs or alterations.
Administration of Zones by Grantees and Operators
400.1000 Administration of zones.
400.1001 Activation of space within approved zone areas.
400.1002 Zone schedules.
400.1003 Format for zone schedules.
400.1004 Accounts, records and reports.
400.1005 Zones as public utilities.
400.1006 Inspection of zones.
[Reserved]
400.1100 [Reserved]
Violations of Act or Regulations
400.1200 Fine imposed for violation of act or regulations.
400.1201 Revocation of grant.
400.1202 Procedure for revocation.
400.1203 Appeal from revocation order.
Rules of Procedure and Practice
400.1300 Board headquarters.
400.1301 Executive Secretary: Functions and authority.
400.1302 Committee of Alternates.
400.1303 Board meetings and the transaction of Board decision-making.
400.1304 Board decisions.
400.1305 Applications -- processing and decision-making procedure.
400.1306 Reports on proposals or requests for Board decisions.
400.1307 Authorization for investigations and hearings.
400.1308 Revocations, nullifications, and relinquishments of grants.
400.1309 Requests for new manufacturing operations within approved zones and
subzones.
400.1310 Ex parte evidence.
400.1311 Additional or special rules of procedure and practice.
Public Information
400.1400 Policy.
400.1401 Public information activities.
400.1402 Availability of materials for inspection and copying.
400.1403 Requests for identifiable records.
400.1404 Determinations of availability of records.
400.1405 Security information.
Authority: Foreign-Trade Zones Act of June 18, 1934, (48 Stat. 998-1003;
19 U.S.C. 81a-81u), as amended by Pub. L. 566, 81st Congress, approved June 17,
1950, (64 Stat. 246, and Pub. L. 791, 85th Congress, approved August 28, 1958
(72 Stat. 945).
Definitions
@ 400.100 Act and regulations.
(a) "Act" means the Foreign-Trade Zones Act of June 18, 1934 (48 Stat. 998-1003;
19 U.S.C. 81a-81u), as amended by Pub. L. 566, 81st Congress, approved June 17,
1950 (64 Stat. 246, and Pub. L. 791, 85th Congress, approved August 28, 1958
(72 Stat. 945).
(b) "Regulations" means these regulations adopted by the Foreign-Trade Zones
Board pursuant to the Act (15 CFR Part 400).
@ 400.101 Zone, subzone, zone project.
(a) "Zone" means "foreign-trade zone" and might as a general term include
"subzone." Foreign-trade zones are restricted areas, under supervision of the U.S.
Customs Service, which are considered outside the Customs territory of the United
States when activated under zone procedures. They are the U.S. version of what
are generally known internationally as Customs free trade zones. Located in or
near U.S. Customs ports of entry, zones are operated under public utility principles
by qualified corporations. Authority for establishing these facilities is granted by the
Foreign-Trade Zones Board under the Act and
Regulations. If the zone is designed to serve a special type of activity the term
"special-purpose zone" may be used. When a zone consists of more than one site
under the same grantee, the sites shall be considered part of the same zone project.
Foreign and domestic merchandise may be moved into zones for operations not
otherwise prohibited by law involving storage, exhibition, assembly, manufacture or
other processing. The usual formal Customs entry procedures and payment of duties
is not required on the foreign merchandise unless and until it enters Customs
territory for domestic consumption, in which case the improper has a choice of
paying duties either on the original foreign material or the finished product. Quota
restrictions do not normally apply to foreign goods in zones, except that special
procedures may apply when manufacturing is involved. Domestic goods moved
into a zone for export may at the request of the exporter be considered exported
upon entering the zone for purposes of excise tax rebates and drawback.
(b) "Subzones" are special-purpose ancillary zone sites authorized by the Board,
through grantees of public zones, for operations by individual firms that cannot be
accommodated within an existing zone, when it can be demonstrated that the
activity, usually manufacturing, will result in a significant public benefit. They are
considered non-contiguous extensions of zones for single users, usually at their own
facilities and, in this sense, are private rather than public zone facilities. Separate
zone sites within an industrial or commercial complex subject to common
management and convenants may be considered contiguous, and thus a part of a
zone, rather than as subzones.
(c) "Zone Project" means all of the zone and subzone sites under a single grantee,
normally in a single port of entry area.
@ 400.102 Board; Secretary of Commerce.
(a) "Board" means the Foreign-Trade Zone Board established by the Act. The Board
consists of the Secretary of Commerce, who serves as chairman and executive officer,
the Secretary of the Treasury, and the Secretary of the Army. Each Board member
designates an official of his Department, usually an Assistant Secretary, to serve as
his Alternate (see, Section 400.1302).
(b) "Secretary" means the Secretary of Commerce.
@ 400.103 State.
"State" means any State of the United States, the District of Columbia, and Puerto Rico.
@ 400.104 Corporation.
"Corporation" means a public or private corporation. (a) "Public corporation" means
a State, political subdivision thereof, a municipality, a public agency of a State,
political subdivision thereof, or municipality, or a corporate municipal instrumentality
of one or more States.
(b) "Private corporation" means any corporation other than a public corporation.
(1) "Non-profit" private corporations are those organized and chartered for a public
purpose that involves port or economic development and includes that of establishing
zones (see, @ 400.501(a)).
(2) "For-profit" private corporations applying for a grant of authority to establish a
zone shall be organized and chartered for this purpose under a special act of the
State or States in which the zone is to be located (See, @ 400.501(b)).
@ 400.105 Applicant.
"Applicant" means a corporation applying for a grant of authority to establish a
foreign-trade zone or subzone, or a grantee applying for authority concerning an
existing zone project.
@ 400.106 Grantee, operator, user.
(a) "Grantee" means a corporation which has been issued a grant of authority for
establishing a foreign-trade zone or subzone. The authority to establish a zone
includes the authority to operate and the responsibility to maintain it.
(b) "Operator" means a corporation, partnership, or person that operates a zone;
noncontiguous, activated zone site; or, subzone. An operator's responsibilities and
functions are covered in an operating agreement with the grantee, which can
contract for the operation and maintenance of a zone or a zone activity, but cannot
assign the grant of authority itself. Such agreements are subject generally to the Act
and regulations and should include the terms between the parties concerning such
matters as the time length of the agreement and termination provisions, as well as
the responsibilities for dealing with U.S. Customs. The District Director's concurrence
is required for the party designated "operator", to be recognized as such, and an
understanding should be reached with Customs officials concerning bonding and
liability.
(c) "User" means a person or firm using a zone or subzone. The user usually deals
directly with the operator of the zone. A user that is the sole occupant of a
noncontiguous site or a subzone may be designated by the grantee as an operator.
@ 400.107 Regional Commissioner; District Director.
(a) "Regional Commissioner" means the Regional Commissioner of Customs for
the Customs Region in which the zone is located.
(b) "District Director" means the director of Customs for the district in which the
zone or subzone is located.
@ 400.108 Resident Member BERH; District Engineer.
(a) "Resident Member BERH" means the Resident Member, Board of Engineers for
Rivers and Harbors, Department of the Army. This official has been delegated
authority by the Secretary of the Army to act on nondiscretionary zone matters.
(b) "District Engineer" means the engineer of the Department of the Army in whose
district the zone is located.
@ 400.109 Examiner.
"Examiner" means an employee of one of the Board agencies designated under the
regulations to conduct or participate in an investigation concerning the establishment
or expansion of a zone or subzone or other matter requiring a fact-finding
determination and recommendation for Board action.
Jurisdiction and Authority of the Board
@ 400.200 Authority of the Board.
The Board is authorized, subject to the provisions of the Act, and other laws of the
United States applicable to zones to:
(a) Grant to corporations the privilege of establishing foreign-trade zones in or
adjacent to ports of entry of the United States, if it finds that there is a need for zone
services and an adequate plan for facilities and financing.
(b) Prescribes rules and regulations concerning zones.
(c) Approve the rates and charges of zone grantees and operators for zone users,
subject to subject to public utility provisions of the Act and regulations.
(d) Require compliance with its regulations and the legal requirements of other
federal, state and local agencies that are applicable to zones.
(e) Prescribe the form and manner for zone accounts.
(f) Require the submission annually, and at such other times as the Board may
prescribe, of reports containing information on zone operations and finances.
(g) Inspect and examine the premises, operations or accounts of grantees and
operators.
(h) Impose fines of not more than $1,000 per day for violations of the Act or of
the regulations in this part.
(i) Revoke the grant of any corporation, after due notice and a public hearing, for
repeated and willful violations of the Act.
(j) Make an annual report to the Congress on zone operations.
(k) Perform such other duties as may be necessary to administer the provisions of
the Act.
@ 400.201 Cooperation with other agencies.
(a) The Board is authorized to cooperate with other federal, state and local agencies
having jurisdiction in zones.
(b) By authority of the Act and Executive Order No. 7104, July 18, 1935, the
executive departments and other establishments of the Government will furnish such
records, papers, and information in their possession as may be required by the Board,
and temporarily detail to the service of the Board such personnel as may be necessary
to enable the Board to carry out its duties under the Act.
@ 400.202 Role of the Department of the Army.
(a) The role of the Department of the Army on the Board is more specialized than
that of the other members. Through the Corps of Engineers, Army advises the Board
on matters within its areas of expertise and responsibility.
(b) The Executive Secretary shall notify the Resident Member BERH of cases and
matters as they are filed, requesting an advisory opinion or the assistance of a District
Engineer when appropriate.
(c) Based upon his review of applications, the Resident Member BERH may, on
request or at his own initiative, submit advisory opinions and other information to the
Excecutive Secretary when appropriate.
(d) Some of the possible areas for Army's involvement in an advisory capacity are:
(1) Section 10 (Rivers and Harbors Act of 1899) permits for construction in
navigable waters.
(2) Section 103 (Ocean Dumping Act) permits.
(3) Section 404 (Clean Waters Act) permits for fill materials in U.S. Waters.
(4) Advice on floodplain and environmental matters.
Number and Location of Zones
@ 400.300 Ports of entry entitled to at least one zone.
Every port of entry of the United States is entitled to establish at least one zone upon
meeting the requirements of the Act and regulations. The use of zones is considered a
privilege subject to the legal and public interest provisions.
@ 400.301 Multi-state and multi-city ports of entry.
When a port of entry covers more than one State, each of the States in the port of
entry area shall be entitled to a zone, subject to the Act and regulations. When a port
of entry covers more that one city separated by a navigable waterway, each of the cities
shall be entitled to a zone subject to the Act and regulations.
@ 400.302 Additional zones in ports of entry.
(a) Once a zone project has been approved for a port of entry, additional projects
under separate grantees (other than those provided for in @ 400.301) may be
authorized only if the Board finds that the existing project will not adequately serve
the convenience of commerce. The burden of proof in establishing these facts shall be
on the prospective grantee.
(b) When a zone grantee wishes to expand its zone to a noncontiguous site or sites,
the proposal shall be submitted as an application for an expansion or boundary
modification (See, @ 400.605). Zone projects should be consolidated at single
locations within a port of entry as much as possible.
@ 400.303 Location in relation to ports of entry.
Zones and subzones may be located only in or adjacent to ports of entry. The
definition of "adjacent" is a location within 35 statute miles of a Customs port of
entry. Because of the special nature of subzones, a more distant location may be
considered "adjacent" for a proposed subzone if it is within 90 minutes driving time,
as measured by a Customs officer, from the supervising Customs office. For purposes
of this section, a Customs station designated by Customs regulations is considered a
port of entry if it is staffed by at least one full-time Customs officer at the time the
application is filed.
Economic, Financial, and Physical Requirements for Establishment of Zones
@ 400.400 General criteria: zones and subzones.
(a) An applicant for a zone ( @ 400.600) must demonstrate to the satisfaction of
the Board that its establishment will expedite and encourage commerce in a manner
that is consistent with the public interest (See, @ 400.807). In evaluating the
proposed zone, general factors considered by the Board will include:
(1) The need for zone services in the port of entry in question, taking into account
existing as well as projected international trade related activities and anticipated
employment to be generated or sustained.
(2) Whether an adequate operation plan exists, including a suitable site and
facilities, and proof of ability to finance the project.
(3) Local community and State government support, including (i) evidence that the
zone project is compatible with the community's master plan or stated goals for
economic development, (ii) the views of State and local public officials involved in
related economic development programs; and, (iii) the views of persons and firms
likely to be affected by proposed zone activity.
(b) The establishment of a zone shall normally be considered under the criteria
of @ 400.400. Proposals for manufacturing in zones or subzones that involve
"public interest" questions, shall be reviewed under the criteria enumerated in @
400.807.
(c) In reviewing proposals for subzones (See, @ 400.101(b)) the Board will, in
addition to the economic factors for public zones, consider:
(1) Whether the operation can be accommodated in the public zone serving the area.
(2) Whether efforts have been made to accommodate the operation, such as
enlarging the public zone area, the cost of locating in public zone not being a
determining factor.
(3) The specific zone benefits sought, and whether alternative means or remedies
are available.
(4) Whether convincing evidence has been presented as to a resulting significant
public benefit, including export development and displacement or substitution of
imports, usually measured in terms of new or sustained employment.
(d) When appropriate, the Board may approve zones, subzones or zone activity
with restrictions, such as types of activity, procedures, and time.
(e) Proposals for new zones, zone expansions, subzones, or manufacturing, which
involve operations exclusively for export shall be expedited, and there shall be
presumption that such proposals are in the public interest.
(f) Proposals requiring expeditious or special treatment under federal law will be
reviewed with special consideration given to the objectives of the programs involved.
@ 400.401 Operational and physical requirements.
(a) A zone plan shall include proof as to the ability to finance and operate the
proposed zone, and an adequate infrastructure of facilities and services necessary to
carry out the project, including cargo handling and storage/processing facilities,
utilities, physical security, facilities for the U.S. Customs Service, and access to
transportation systems.
(b) Physical security and access requirements shall be determined by the District
Director, who shall consider the latest Customs Standards for Cargo Security in
determining what is adequate under the circumstances. The District Director may
deny admission of goods to any zone in which the security is considered inadequate.
Adequate administrative facilities shall be provided for government officials by the
grantee or operator.
Eligible Applicants
@ 400.500 Eligibility for zone grants of authority.
Public and private corporations, eligible under State law, may apply for grants of
authority to establish and operate zones and subzones; but, the Board shall give
preference to public corporations.
@ 400.501 State enabling legislation.
(a) The eligibility of public and non-profit corporations to apply for a grant of
authority for zones and subzones shall be supported by enabling legislation of the
legislature of the State in which the zone is to be located, indicating that the
corporation, individually or as part of a class, is authorized to so apply.
(b) Private for-profit corporations so applying must be chartered under a special
act of the legislative and organized for the purpose of establishing a zone or subzone.
Applications for Grants of Authority
@ 400.600 General.
Applications for grants of authority for zones shall consist of a cover letter and five
exhibits. Standard letter sized paper (8 1/2 x 11 ) shall be used, and the original
shall be submitted with 12 copies, unless the Executive Secretary determines that
fewer or more copies are needed. The application shall be addressed to the Secretary
of Commerce, Chairman, Foreign-Trade Zone Board, U.S. Department of Commerce,
Washington, D.C. 20230, c/o the Executive Secretary.
@ 400.601 Form and content.
The following requirements shall apply to the cover letter and five exhibits:
(a) Cover letter. The cover letter shall be signed by an authorized officer of the
corporation and bear the corporate seal. The cover letter shall:
(1) Describe the corporation and its eligibility to apply.
(2) Make a specific statement as to the type of authority requested from the Board.
(3) Give a brief description of the proposed site and facilities and the larger project
of which the zone is a part.
(4) Provide a summary as to the project background, including surveys and studies.
(5) Make a brief statement concerning the need for the zone as a service to the
business community.
(6) Make a brief statement as to relationship of the project to the community's and
state's overall economic development plans and objectives.
(7) Make a brief statement as to how the project will be operated and financed.
(8) Provide any additional pertinent information needed for a complete summary
description of the proposal.
(b) Exhibits. Applications for grants of authority shall contain the following exhibits:
(1) Exhibit 1 -- Authority to apply. This exhibit shall include: (i) A certified copy of
State enabling legislation (See, Sec. 400.501). (ii) A copy of pertinent sections of the
applicant's charter or organization papers. (iii) A certified copy of the resolution of
the governing body of the corporation authorizing the official signing the application.
(2) Exhibit 2 -- Site description. This exhibit shall include: (i) A detailed description
of the zone or subzone site, including size, location, address, and a legal description of
the area proposed for approval. (ii) A summary description of the larger project of
which the zone is a part, including type, size, location and address. (iii) A statement
as to whether the zone is within or adjacent (see @ 400.303) to a Customs port of
entry. (iv) A description of zone facilities and services, including dimensions and
types of existing and proposed structures. (v) A description of existing or proposed
site qualifications including: land-use zoning, relationship to floodplain, infrastructure,
utilities, security, and access to transportation services. (vi) A description of current
activities carried on in or contiguous to the project. (vii) If part of a port facility, a
summary of port and transportation services and facilities. If not, description of
transportation systems indicating connections from local and regional points of
arrival to the zone. (viii) A statement as to the possibilities and plans for zone
expansion.
(e) Exhibit 3 -- Operation and financing. This exhibit shall include: (i) A statement
as to site ownership; and, if not owned by the applicant or proposed operator,
evidence as to their legal right to use the site on a long-term basis. (ii) A discussion
of the operational plan; and, when the zone or a portion thereof will be operated by
other than the grantee, the name and qualifications of the proposed operator, a
summary of the process used in selecting the operator, and the type of operating
agreement. (iii) A brief explanation of the plans for providing facilities and physical
security. (iv) A summary of the plans for financing capital and operating costs,
including a statement as to the source and use of funds. (v) The estimated time
schedule for construction and activation. (vi) A summary as to anticipated cash
flow projections on an annual basis for the first three years of operation.
(4) Exhibit 4 -- Economic justification. This exhibit shall include: (i) A statement
of community's overall economic goals and strategies, in relation to those of the
region and state. (ii) A reference to the plan or plans on which the goals are based
and how they relate to the zone project. (iii) An economic profile of the community
including indentification and discussion of dominant sectors in terms of percentage
of employment or income, area resources and problems, economic imbalances,
unemployment rates, area foreign trade statistics, and area port facilities and
transportation networks. (vi) A statement as to the role and objectives of the zone
project. (v) A discussion of the anticipated economic impact, direct and indirect, of
the zone project, including references to public costs and benefits, employment, the
U.S. balance of trade, and environmental impact. (vi) A statement as to the need
for zone services in the community, with information on surveys of business, and
specific expressions of interest from proposed zone users, with letters of intent
from those firms that are considered prime prospects. (vii) Any proposed
manufacturing and processing operations shall be described with information as
to the nature and scope of the operation and production process, materials and
components used, an indication of which will be foreign sourced, zone benefits
anticipated and how they will affect the firm's plans, and the economic impact of
the operation on the community. Because the Board will consider the broader
impact of manufacturing operations in relation to competing domestic industries,
the applicant should also address this area particularly where the operations
involve import-sensitive products.
(5) Exhibit 5 -- Maps. Three full-sized original maps in the three categories listed
below shall be submitted, with letter sized reductions provided when possible for
the copies of application. One of the original sets shall be sent to the district
director of Customs. (i) State and county maps showing the general location of the
zone in terms of the areas transportation network. (ii) A U.S. Geodetic Survey map,
or the equivalent, showing in red the location of the proposed zone. (iii) A detailed
blueprint of the zone or subzone area showing zone boundaries in red, with
dimensions and metes and bounds, or other legal description, and showing existing
and proposed structures. The applicant shall retain the master drawing.
(c) Additional information. The Board or the Executive Secretary may require
additional information needed to adequately evaluate a proposal.
@ 400.602 Amendments.
The Board or the Executive Secretary may authorize amendments to applications.
When substantive changes are made after formal notice has been given, further
public notice shall be given and comments invited when appropriate.
@ 400.603 Drafts.
Prior to the submission of a formal application a draft should be submitted to the
Executive Secretary for review by his office so that comments and suggestions can
be made.
@ 400.604 Formal acceptance, filing, and public notice.
(a) Applications submitted by eligible corporations shall be reviewed for filing
sufficiency by the Executive Secretary. Upon determining that the application is
correct as to form and complete as to information and material required, the
Executive Secretary shall formally accept the application and assign a docket
number and filing date, and the applicant shall be so advised.
(b) Subsequent to the assignment of a docket number, public notice will be given
in the Federal Register. The notice will contain the name and address of the
applicant, a general description of the project and its location, information as to a
public hearing, if one is to be held, and information concerning the open record
period during which interested parties may communicate their views to the Board.
(c) Expeditious and special treatment shall be given to applications required to
receive such treatment under other federal laws. These cases shall not be delayed
because of their numbering sequence.
@ 400.605 Applications for zone expansions, subzones, relocations and
boundary modifications.
(a) Applications that involve a significant expansion of zone operations, including
the establishment of additional zone or subzone sites, shall be submitted and
processed in the same manner as an original application for a grant of authority,
except that the information called for in the various exhibits may be condensed and
reference may be made to information in the original application.
(b) Other applications, not involving a significant expansion of zone operations,
including proposals for minor revisions of zone boundaries or relocations, may be
submitted in a condensed format as determined by the Executive Secretary. Such
proposals may be administratively approved by the Executive Secretary, providing
they have the concurrence of the District Director of Customs, or his representative.
In determining whether the application can be processed under subsection (b), the
Executive Secretary shall consider whether the zone plan approved by the Board is
being significantly revised or that the change is designed to accomplish an
expansion of operations beyond that contemplated in proposals previously approved
by the Board.
@ 400.606 Confidential information.
Information that is considered proprietary or confidential shall not be submitted as
part of an application or for the public record. The Board reserves the right to consider
any submitted information and to include it as part of the public record. When the
Board or the Executive Secretary determines that proprietary or confidential
information is essential for a decision, such information may be requested and given
business confidential treatment. The parties submitting such material shall mark each
page "business confidential" at the top.
Conditions Applicable to Grants of Authority
@ 400.700 Conditions applicable to grants of authority.
(a) Grants of authority issued by the Board for the establishment of zones or
subzones, including those already issued, shall be subject to the Act and regulations;
and, the following general conditions:
(1) The Executive Secretary shall be notified by the grantee or operator for approval
prior to the commencement of any manufacturing operations not approved as part of
the application.
(2) Implementation of the project shall commence within a reasonable time from
the date of issuance of the grant, and prior thereto the Grantee or operator shall
obtain all necessary permits from Federal, State, and municipal authorities; if a zone
project is not activated and in operation within 5 years of the date of the grant of
authority, the grant shall be null and void (for grants outstanding on the date this
regulation is adopted, time shall commence as of the date the regulation is adopted).
(3) Officers and employees of the United States shall have free and unrestricted
access throughout the foreign-trade zone site in the performance of their official duties.
(4) The grant shall not be construed to relieve the Grantee, operator or zone users
from liability for injury or damage to the person or property of others occasioned by
the construction, operation, maintenance, or use of said zone, and in no event shall
the United States be liable therefor.
(5) The approval of the District Director shall be obtained before the commencement
of operations of any portion of the approved zone area or zone facilities. "Activation"
means approval for operations by the grantee and District Director. Areas in a zone
which are not activated shall be considered a part of U.S. Customs territory. The zone
grantee and District Director shall keep a current layout drawing or plan of the
approved zone area showing the portions that are activated, and maintain a file
showing required approvals. Approved areas also may be deactivated or reactivated
pursuant to this approval process. The Executive Secretary shall be advised as changes
occur and furnished with a copy of the current layout.
(6) Should the grantee fail to comply with any of the conditions of a grant of
authority, the Board may declare it null and void. In such cases the Board shall issue
an order to show cause why the action it contemplates should not be taken, and the
grantee shall have 30 days in which to answer.
(b) The Board may also adopt special conditions and restrictions.
@ 400.701 Disposition of grant prohibited.
(a) Grants of authority shall not be sold, conveyed, transferred, set over, or
assigned. This provision does not prevent a zone grantee from contracting with
qualified parties for operation of a zone or zone activities. Also, the provision does
not preclude private ownership of zone land and facilities, providing the grantee
retains the control necessary to carry out the project and its public service aspects.
Should title to land or facilities be transferred after a grant of authority is issued,
the grantee must retain such control by agreement. No consideration shall be paid
over the market value for such land or facilities because of a grant of authority. Any
violation of this section shall be grounds for revocation of the zone grant of authority
or for termination of zone status on transferred land or facilities.
(b) A request shall be made to the Board, supported by appropriate documents,
when a zone grantee wishes to have its zone grant reissued in the name of another
qualified corporation.
Operations in Zones
@ 400.800 Operations in zones subject to customs supervision.
Zone operations are subject to the control of the U.S. Customs Service, exercised
mainly through the District Director who shall be in charge of the zones within his
district for purposes of enforcement of the requirements of the Act and regulations,
the Board, and the Customs Service. Requirements for such matters as zone forms,
inventory control systems, cargo security standards, and physical security shall be
determined by the U.S. Customs Service. Customs regulations on foreign-trade zones
are found in 19 CFR Part 146.
@ 400.801 Merchandise permitted in a zone.
Foreign and domestic merchandise of every description except such as is prohibited
by law, may, without being subject to the customs laws of the United States, except
as otherwise provided in the act and the regulations made thereunder, be brought
into a zone.
(a) Merchandise which is specifically and absolutely prohibited by law shall not
be admitted into a zone. Any merchandise so prohibited by law which is found within
a zone shall be disposed of in the manner provided for in the laws and regulations
applicable to such merchandise. A distinction is made between (i) merchandise which
is specifically and absolutely prohibited by law on the grounds of policy or morals,
such as immoral or subversive literature, obscene articles, or lottery matter, and (ii)
conditionally admissible merchandise which may be imported under certain
conditions, for example, articles which are subject to permits or licenses for the
protection of economic or national security or which may be reconditioned to bring
them into compliance with the laws administered by various Federal agencies. District
Directors of Customs are required to exclude the first class of articles and may not
permit them to be transferred to a zone if they are aware of their prohibited status,
except that the District Director may permit the temporary deposit of any such
merchandise in the zone pending final determination of its status. The transfer of
articles of the second class to a zone is subject to any requirements of the Federal
agency concerned. Unless otherwise prohibited, over-quota merchandise may be
placed in a zone pending its right to transfer to customs territory pursuant to the
applicable quota provisions.
(b) The application for the admission of merchandise into a zone shall be approved
or disapproved by the District Director of Customs, as the representative of the Board,
where the merchandise is not excluded by any other Federal agency having
jurisdiction over the merchandise.
(c) Zone procedures may not be used to circumvent the requirements of U.S.
antidumping and countervailing duty laws and regulations. Upon order of the
Secretary of Commerce, or his designee, the Commissioner of Customs, or his
designee, shall direct that an importer place goods in a specific status for this
purpose, subject to appeal to the Board.
@ 400.802 Disposition of merchandise in a zone.
In general, merchandise lawfully brought into a zone, in accordance with these
and other regulations made under the provisions of the Act, may be exported,
destroyed, or sent into the customs territory of the United States in the original
package or otherwise; but when foreign merchandise, and domestic merchandise
whose identity has been lost, is sent from a zone into the customs territory of the
United States, it shall be subject to the laws and regulations of the United States
affecting imported merchandise.
@ 400.803 Manipulation, manufacture, and exhibition of merchandise.
In general, merchandise, lawfully brought into a zone may in accordance with
these and other regulations made under the provisions of the act, be stored, sold,
exhibited, broken up, repacked, assembled, distributed, sorted, graded, cleaned,
mixed with foreign and domestic merchandise, or otherwise manipulated, or be
manufactured, except as otherwise provided by the act.
(a) Permission for any manipulation, manufacture, or exhibition in a zone shall
be obtained from the District Director of Customs, as the representative of the Board,
subject to such application and procedure prescribed by the Secretary of the Treasury
for the protection of the revenue.
(b) In the event of the denial of any application by the District Director of Customs
for any reason, the applicant, the grantee, or the operator of the zone may appeal
the adverse ruling to the Board. If any revenue-protection considerations are involved
in such an application, the Board shall be guided by the determinations of the
Secretary of the Treasury with respect to them.
@ 400.804 Status of merchandise in a zone.
(a) For the purposes of the act and the regulations of this part, all merchandise
within a zone, except merchandise in transit through a zone as provided in @
146.14 of the customs regulations, and except merchandise temporarily transferred
to a zone for manipulation as provided in paragraph (b) of this section, shall be
given a zone status as: (i) Privileged foreign merchandise. (ii) Privileged domestic
merchandise. (iii) Non-privileged foreign merchandise, (iv) Non-privileged domestic
merchandise, or (v) Zone-restricted merchandise.
(c) Imported merchandise which has been entered and which has remained in
continuous customs custody may be temporarily transferred to a zone for
manipulation under customs supervision pursuant to section 562, Tariff Act of
1930, as amended, and for return to customs territory. Any such merchandise shall
not be considered within the purview of the Foreign Trade Zone Act, but shall be
treated in all respects as though remaining in customs territory. Therefore no zone
form or procedure shall be considered applicable, but the merchandise shall remain
subject in the zone to such requirements as are necessary for the enforcement of
customs laws.
@ 400.805 Use of zone by carriers.
The cargo facilities and services of a zone are intended primarily for the use of
vessels, vehicles, or aircraft lading or unlading zone merchandise, and their use for
other purposes may be terminated by Commissioner of Customs if found to
endanger the revenue, or by the Board if found to interfere with the primary uses
of the zone.
@ 400.806 Subsequent importation of zone merchandise.
Articles produced or manufactured in a zone and exported therefrom shall, on
subsequent importation into the customs territory of the United States, be subject to
the import laws applicable to like articles manufactured in a foreign country, except
that articles produced or manufactured in a zone exclusively with the use of
domestic merchandise, the identity of which has been maintained in accordance
with the second proviso of section 3 of the Act, as amended, may, on such
importation, be entered as American goods returned.
@ 400.807 Public interest provision.
Pursuant to @ 15(c) of the Act the Board has authority to restrict or prohibit any
zone operation "that in its judgment is detrimental to the public interest, health or
safety". (a) Adversely affected parties may submit complaints to the Board under this
section, requesting the prohibition or restriction of a zone activity; or, the Board may
conduct investigations on its own initiative. A complaint must contain information as
to how the zone activity in question is or would be deterimental to the public interest,
health or safety. When good cause is found by the Board or the Executive Secretary,
the matter shall be investigated pursuant to these regulations. In deciding whether
good cause exists special consideration shall be given to conducting investigations
when the zone activity in question involves an "import sensitive" industry. In
determining whether an industry is import sensitive, the Board and the Executive
Secretary shall be guided by references to such industries in trade laws and
regulations, land decisions of federal courts and agencies.
(b) In investigations under this section, either self-initiated or in response to
complaints, the factors considered by the Board shall include:
(1) Whether the adverse effect is significant in relation to actual and potential
public benefits.
(2) Whether additional exports from the U.S. will be created.
(3) Whether zone procedures will encourage activity related to import displacement
or substitution.
(4) Whether employment and investment will be generated or sustained in the U.S.
(5) Whether zone activity will undermine a remedial action or program in effect
because of an unfair trade practice, or materially or substantially harm an existing
domestic industry.
(c) Zone activity may be approved for limited periods, subject to extension after a
review as to whether the anticipated public benefits have materialized.
(d) Zone activity which is exclusively for export shall be presumed to be in the
public interest.
(e) Interested parties shall have an opportunity to submit comments or participate
in any public hearings or proceedings held on such investigations.
@ 400.808 Retail sales.
(a) No retail trade shall be conducted within activated zone space except under
permits issued by the grantee and approved by the Board. Only domestic, duty-paid,
and duty-free goods may be sold in such cases. In considering whether to approve
requests under this section the Board shall consider the economic impact on the
retail trade outside the zone in the port of entry area. No approval is required for
sales involving domestic, or duty-paid food products sold within the zone or
subzone to be consumed on premises by persons working therein. Grantees shall
revoke permits when there is a violation of this restriction. The District Director of
Customs shall determine which sales are to be classified as retail sales under this
section, subject to review by the Board when a question arises. Appeals from his
decision may be made to the Executive Secretary.
(b) Retail sales within non-activated, but approved zone areas, may be prohibited
if found by the Board, the Executive Secretary, or the District Director, to be
incompatible with zone operations.
@ 400.809 Residence within zone.
No person shall be allowed to reside within an activated zone area except federal,
state, or municipal officers or agents whose resident presence is deemed necessary
by the Board or the Customs Service.
@ 400.810 Controlled access to zones.
Plans for the controlled access of persons and vehicles to activated zone areas shall
be subject to the approval of the District Director as part of his review for operational
approval. All persons and vehicles entering such areas shall be subject to the
requirements of the Customs Service and the zone schedule. Business hours shall be
subject to the approval of Customs.
@ 400.811 Reimbursement -- Customs Service and District Engineer.
(a) Zone grantees and operators shall reimburse the Customs Service for the cost
of maintaining the additional services of the agency required in carrying out its
supervisory functions. Reimbursement payments shall be made according to the
regulations and procedures of the Customs Service.
(b) When the District Engineer has been directed by BERH to conduct an
inspection or investigation on a zone matter, the District Engineer shall approve a
plan, from the applicant, grantee, or operator involved, for reimbursement to his
agency for the cost of additional services.
@ 400.812 Construction of buildings and facilities.
Zone grantees, operators and users may construct buildings and facilities necessary
to implement a zone plan approved by the Board, subject to: Uniform procedures
established by the grantee in its zone regulations; these regulations, including the
public utility requirements; and, the requirements of federal, State and local officials.
This permission shall not constitute a vested right against the United States, and the
consideration for the sale of any such buildings or facilities shall not be affected by
zone status. The commencement of operations in any building or facility shall be
subject to approval by the District Director of Customs (See @ 400.700(a)(5)).
@ 400.813 Hours of business and service.
Hours of business and service, for Customs purposes, shall be the same as those
prescribed in Customs regulations. (19 CFR Chapter 1)
Maintenance of Zones
@ 400.900 Structures and facilities to be maintained in good order.
The grantee or operator shall at all times maintain the structures and other
facilities within the zone in good condition and so as not to endanger the life and
health of employees of the United States and others who may be required to enter
the zone.
Administration of Zones by Grantees and Operators
@ 400.1000 Administration of zones.
Zones shall be operated by or under the contractual oversight of zone grantees,
subject to the requirements of the Act and regulations, the Board, the Customs
Service, as well as those of other federal, State and local agencies having jurisdiction
over the site and operation. Grantees are expected to insure that the reasonable zone
needs of the business community are served by their zone projects.
@ 400.1001 Activation of space within approved zone areas.
Prior to the commencement of operations in an activated zone area the grantee
shall obtain the operational approval of the District Director of Customs. This shall
include a review of physical security, inventory control, bonding and documentary
requirements.
@ 400.1002 Zone Schedules.
(a) Prior to the commencement of operations the grantee shall also submit to the
Executive Secretary for approval a zone "schedule" (original and 1 copy) containing
the internal rules and regulations for its zone, as well as the rates and charges
(sometimes hereinafter referred to collectively as fees) for zone users. the Executive
Secretary shall approve and file the schedule if it contains sufficient information for
users concerning the operation of the facility and a statement of rates and charges
that meets the Board's requirements. Upon approval the grantee shall be notified
and shall maintain a copy of the schedule for public inspection at its offices and
those of the operator. A copy shall also be furnished to the District Director of
Customs, who may submit comments to the Executive Secretary.
(b) If a complaint is made by a zone user or prospect, or there is otherwise good
cause to question whether zone or subzone fees are reasonable, fair and uniform,
an investigation shall be directed by the Executive Secretary. The factors considered
in reviewing reasonableness and fairness, shall include: The going rates and charges
for like operations in the area and the extra costs of operating a zone, including
return on investment. The fees for subzones shall be based upon actual services
rendered by the grantee or operator, or reasonable out-of-pocket expenses.
(c) Grantees may assign the responsibility for preparing zone schedules to
operators, but must approve them prior to submission.
(d) Amendments shall be approved and maintained in the same manner.
@ 400.1003 Format for zone schedules.
Zone schedules shall consist of typed, loose-leaf, numbered, letter-sized pages
(approximately 8 1/2 " x 11"), enclosed in covers. As amendments are made and
approved, the newly inserted pages shall show the amendment number. The
following outline format shall be followed:
(a) A title page shall contain such information as, the name of the grantee and
opertor(s), schedule identification information, information as to the sites covered,
the date of the original schedule, and the name of the preparer.
(b) Administrative and organizational information, including the names of grantee
and operating officials.
(c) Table of contents.
(d) Definitions, abbreviations, and symbols.
(e) Zone policy, rules and regulations.
(f) A section with rates and charges shall contain sufficient information so that
rates and charges can be comparted with other like operations in the area, and so
that it can be determined whether there is uniform treatment under like
circumstances among zone users.
(g) A list of amendments and dates.
@ 400.1004 Accounts, records and reports.
(a) Zone accounts shall be maintained in accordance with generally accepted
principles of accounting, and in compliance with the requirements of federal, State
or local agencies having jurisdiction over the site or operation.
(b) Records and forms shall be prepared and maintained in accordance with the
requirements of the Customs Service.
(c) Annual reports shall be made to the Board at the time and in the format
prescribed by the Executive Secretary. These reports are used in the preparation of
the Board's annual report to the Congress. The Board's report shall be prepared
and submitted to the Congress by the Department of Commerce, with copies
furnished to Board members upon its submission. (OMB Clearance 0625-0109)
@ 400.1005 Zones as public utilities.
The rates and charges for space, facilities and services within a zone shall be
fair and reasonable, and the grantee shall afford uniform treatment under like
conditions to all users. Subzone fees shall be related to actual services rendered or
our-of-pocket expenses. When a report is made to the Board under Sec. 400.1002,
the Board shall determine whether the rates and charges are fair and reasonable,
unless an adjustment is made that eliminates the issue.
@ 400.1006 Inspection of zones.
In addition to the supervision of zones by Customs officials, representatives of the
Board may inspect zones to determine whether its requirements are being met. Zone
grantees and operators shall cooperate with such officials in obtaining access to
facilities and records.
[Reserved]
@ 400.1100 [Reserved]
Violations of Act or Regulations
@ 400.1200 Fine imposed for violation of act or regulations.
In case of a violaltion of the Act or of any regulation under the Act by the grantee
or operator, any officer, agent, or employee thereof responsible for permitting any
such violation shall be subject to a fine of not more than $1,000. Each day during
which a violation continues shall constitute a separate offense.
@ 400.1201 Revocation of grant.
In the event of repeated willful violations by the grantee of any of the provisions
of the Act, the Board may revoke the grant after 4 months' notice to the grantee and
after affording it an opportunity to be heard. The testimony taken before the Board
shall be reduced to writing and filed in the records of the Board, together with the
decision reached thereon.
@ 400.1202 Procedure for revocation.
In the conduct of any proceeding for the revocation of a grant the Board may
compel the attendance of witnesses, the giving of testimony, and the production of
documentary evidence; and for such purposes may invoke the aid of the district
courts of the United States.
@ 400.1203 Appeal from revocation order.
An order issued by the Board revoking the grant shall be final and conclusive,
unless within 90 days after its service the grantee appeals to the circuit court of
appeals for the circuit in which the zone is located by filing with the clerk of said
court a written petition praying that the order of the Board be set aside. Such order
shall be stayed pending the disposition of appellate proceedings by the court. The
clerk of court shall notify the Board, which will furnish transcript of the record in
the proceedings held before it, the charges, the evidence, and the order revoking
the grant. The Board record on the matter shall be considered by the court as
evidence.
Rules of Procedure and Practice
@ 400.1300 Board headquarters.
The headquarters and administrative office of the Board is the Office of the
Executive Secretary, Foreign-Trade Zones Board, International Trade Administration,
U.S. Department of Commerce, Washington, D.C. 20230.
@ 400.1301 Executive Secretary: Functions and authority.
The Executive Secretary, who also serves as the principal operating official of the
Board and director of the Commerce Department's Foreign-Trade Zones Staff, shall
have the following functions and authority to:
(a) Represent the Board in administrative, regulatory, and operational matters.
(b) Execute and implement Board Orders and provisions of the Act and regulations.
(c) Make recommendations, and other zone matters requiring Board action.
(d) Provide information on the zone program to public officials, the business
community, and the general public.
(e) Arrange for meetings of the Board.
(f) Maintain custody of the seal, records, files and correspondence of the Board.
(g) Designate an acting Executive Secretary to act in his absence.
(h) Authorize the movement of "zone-restricted merchandise" valued at less than
$50,000 into Customs territory for entry subject to Customs regulations, upon
determining that such entry is in the public interest, if such action is supported by a
recommendation from the Commissioner of Customs, or his designee.
(i) Authorize modifications to zone boundaries not involving significant expansions
of zone operations, with the prior concurrence of the District Director of Customs,
pursuant to Section 400.605(b).
(j) Determine the uniform format and content of annual reports from zone grantees.
(k) Approve manufacturing operations pursuant to @ 400.1309.
(l) Perform such other duties as the Board or its regulations direct.
@ 400.1302 Committee of Alternates.
Each member of the Board shall designate an Alternate, usually an Assistant
Secretary-level official of his Department, to serve on the Committee of Alternates,
with authority to act for him under Departmental delegations of authority. The
Commerce member shall be chairman, and the participation of the Commerce and
Treasury members shall be necessary for a quorum. The Committee may hold
meetings or hearings, open or closed, or otherwise conduct Board business at the
request of the chairman. Meetings of the Committee may be considered Board
meetings under @ 400.1303, when a quorum with "full authority" is present. A
majority of members shall constitute a quorum.
@ 400.1303 Board meetings and the transaction of board decisionmaking.
(a) Meetings of the Board will be held at the call of the chairman. All members
will be informed of meetings, with a majority constituting a quorum. The Commerce
and Treasury members, or their Alternates, must be present for a quorum. Summary
minutes shall be kept of meetings unless the Chairman determines there shall be
detailed or verbatim record.
(b) At the option of the Chairman, the Board may conduct its business, including
voting, without an actual meeting, provided that no Board member has requested
one. When business is so conducted, Board members or their Alternates may
communicate their views and recommendations by such means as telephone and
memorandum, but their votes shall be made in writing and submitted to the
Executive Secretary for entry in the voting record. The Department of the Army's
participation shall be subject to @ 400.202.
(c) Final votes shall be recorded and a voting record maintained.
@ 400.1304 Board decisions.
(a) Board decisions shall be made on the basis of the record developed in the case
or matter under consideration. When public participation has been invited the record
shall be public. The Board's decisions shall be made in the form of Board Orders.
(b) Applications for the establishment of new zones or subzones, or significant
expansions of zone operations pursuant to @ 400.605(a), shall be given public
notice in the Federal Register with an opportunity for comments by the applicant
and from the public. Such comments shall be a part of the record.
@ 400.1305 Applications -- processing and decision-making procedure.
(a) Applications under @@ 400.600 and 400.605(a).
(1) Upon receipt of an application under @@ 400.600 or 400.605(a), the Executive
Secretary shall determine whether it contains the information and is in the format
required by the regulations, and upon making such a determination shall file the
proposal and assign a docket number and date. An examiner, usually a Commerce
employee, shall be designated to investigate the proposal and prepare a report.
(2) Formal notice shall be given in the Federal Register by the Executive Secretary
concerning the filing, inviting comments for the record from the applicant and the
public. Public notice shall be given by applicants in local newspapers once they have
been notified their application has been filed. A copy of the formal notice and
application shall be sent by the Executive Secretary to the District Director of
Customs and the Resident Member BERH.
(3) The Regional Commissioner, or his designee, shall submit a report on the
Customs aspects of the proposal to the examiner to be made a part of the latter's
report within 30 days after the record closes.
(4) The Resident Member BERH in consultation with the Executive Secretary shall
determine whether the involvement of the District Engineer is appropriate, usually
based upon an issue concerning the proposed site or operation over which
Department of the Army has independent jurisdiction; and, when appropriate, the
Resident Member BERH shall instruct the District Engineer as to the functions he
is to perform, reports to be submitted to the Executive Secretary within 30 days of
the closing of the application record.
(5) When the proposal is for a new zone project, a local public hearing will
usually be scheduled as part of the examiner's investigation and announced in the
Federal Register and local newspapers. The Customs adviser and the District
Engineer, when appropriate, shall be invited to participate in such hearings.
(b) Other applications requiring a formal board decision.
(1) Applications, proposals and requests made to the Board for a decision, other
than those referred to in @@ 400.600 or 400.605(a) shall be reviewed by the
Executive Secretary for filing sufficiency, and if found in filing order shall be filed
and assigned a docket number and date.
(2) Public notice shall be given in the Federal Register when public comments are
appropriate, and the District Director and Resident Member BERH notified.
(3) An examiner may be designated, unless a report by the Executive Secretary
or the Foreign-Trade Zones Staff is appropriate. A report shall be prepared for the
Board by the Executive Secretary or the examiner.
(4) The Regional Commissioner or his designee shall submit comments, when
appropriate.
(c) Applications not requiring formal board action.
(1) Applications not requiring formal Board action, such as those submitted under
@ 400.605(b), shall be processed by the Executive Secretary in accordance with these
regulations.
(2) An administrative file of these cases shall be maintained.
@ 400.1306 Reports on proposals or requests for board decisions.
(a) Reports prepared by an examiner or by the Executive Secretary in a case or
matter requiring a Board decision, and any advisory reports submitted as part of the
process, shall contain findings of fact and non-binding recommendations for Board
action.
(b) The reports shall be considered internal documents subject to release under the
provisions of the Freedom of Information Act or by the Chairman of the Committee
of Alternates.
@ 400.1307 Authorization for investigations and hearings.
(a) The Board, the Committee of Alternates, their Chairmen, the Executive Secretary,
or an examiner may conduct or direct reviews, investigations, or hearings, closed or
public, in order to obtain information and evidence needed for decisions or
recommendations. The Board or Committee of Alternates Chairman may order the
presentation of testimony or records when appropriate.
(b) When a public hearing is held, notice shall be given in the Federal Register and
parties having a proper interest in the subject matter shall be given an opportunity to
appear and submit oral or written testimony. Applicants will normally be the first
parties to appear, followed by their witnesses, after which other interested parties
may be called. The presiding officer may adopt time limitations. When appropriate,
such hearings shall be transcribed and the transcript made available for public
inspection as part of the public record.
@ 400.1308 Revocations, nullifications, and relinquishments of grants.
(a) Proceedings by the Board to revoke a zone or subzone grant of authority are
subject to the procedures in @@ 400.1200-400.1203.
(b) Zone or subzone grants of authority may become null and void under @
400.700(a)(2) or be so declared under @ 400.700(a)(6).
(c) Voluntary relinquishments of zone grants may be approved by the Board. If the
zone has been in operation, users will be given an opportunity to comment on the
proposal and the Board will consider the impact on users.
@ 400.1309 Requests for new manufacturing operations within approved zones
and subzones.
(a) Zone grantees or operators, when authorized to do so by grantees, are required
to notify the Executive Secretary pursuant to @ 400.700(a)(1) for approval prior to
the commencement of any manufacturing operations not approved as part of the
application for the zone or subzone in which the operations are to be located. The
guidance of the Customs Service shall be sought in determining whether an
operation involves manufacture, and the factors enumerated in @ 400.807(b)
shall be considered.
(b) The purpose of the review or investigation conducted or directed by the
Executive Secretary in these situations is to determine whether the operation in
question is one that could or is likely to be the subject of a complaint to the Board
under @ 400.807, the "public interest" provision.
(c) If the proposed manufacturing operation involves a product that has been the
subject of a past complaint resulting in restrictive Board action, or involves an
"import sensitives" industry, the proposal shall not be approved without the
concurrence of the Board, unless the manufacturing is for export only. Such
concurrence may be given on a general basis to apply to like cases. In determining
whether an industry is "import-sensitive", trade laws and regulations, and
decisions of federal courts and agencies shall be referred to for guidance. When
appropriate, public notice shall be given inviting comments and a hearing scheduled.
(d) When a product involved is subject a quantitative quota program, such as
textiles, the Executive Secretary shall invite comments from the federal agency that
administers the quota program.
(e) If the product involved is subject to special controls, such as petroleum, or
under any other special circumstances, the Executive Secretary may make his
action subject to the concurrence of the Board.
(f) Approvals or denials in these cases shall be made in a letter to the grantee.
Denials may be appealed to the Board Approvals shall not preclude the filing of a
complaint by an industry under @ 400.807.
@ 400.1310 Ex parte evidence.
In making decisions in cases and on matters involving a public record the Board
shall not consider ex parte evidence and arguments. If new information or
evidence that could substantially affect a decision becomes known after the closing
of the public record, and there is good cause why it was not submitted earlier, the
record may be reopened by the Secretary, his Alternate, or the Executive Secretary
so that interested parties have an opportunity to comment or submit evidence on
the new information or evidence.
@ 400.1311 Additional or special rules of procedure and practice.
Additional or special rules of procedure and practice may be adopted by the
Board when appropriate.
Public Information
@ 400.1400 Policy.
It is the policy of the Foreign-Trade Zones Board, consistent with the purposes of
the Foreign-Trade Zones Act and the role of the Board as a regulatory agency, to
furnish the public with information pertaining to the establishment, operation and
administration of foreign-trade zones in the United States, except such information
as is exempted from disclosure under 5 U.S.C. 552, as amended.
@ 400.1401 Public information activities.
The Executive Secretary of the Board shall conduct the following public
information activities of the Board:
(a) Preparation and release of material published by or for the Board, including
public announcements, items for publication in the Federal Register, news releases,
and reports.
(b) Clearance for release of informational material from other agencies referred to
the Board for review.
(c) Release of general information pertaining to Board activities, rules and
regulations and, at his discretion, information contained in Board records as
necessary to further the regular information dissemination activities of the Board.
@ 400.1402 Availability of materials for inspection and copying.
(a) The Board shall utilize the facilities and services of the International Trade
Administration Freedom of Information Records Inspection Facility, U.S.
Department of Commerce, 14th and Pennsylvania, NW., Washington, D.C. 20230
(FOI facility), to make available for public inspection and copying the materials
required by 5 U.S.C. 552(a)(2).
(b) Rules and procedures concerning the availability of materials and records for
inspection and copying, and requirements for public inspection of records through
the FOI facility are contained in Part 4 of this title.
@ 400.1403 Requests for identifiable records.
The Board will utilize the facilities and services of the FOI facility to make available
for public inspection and copying identifiable records which have been determined to
be disclosable pursuant to 5 U.S.C. 552(a)(3).
@ 400.1404 Determinations of availability of records.
In accordance with the rules and procedures of the FOI facility, a request for the
determination of availability of a record of the Board will be referred to the
Executive Secretary who shall comply with the procedures of Part 4 of this title.
400.1405 Security information.
Nothing in the regulations in @@ 400.1400-400.1405 should be construed to
modify or supersede laws, rules, and regulations governing the release of
information classified as security information.
Dated: December 29, 1982.
Lawrence J. Brady,
Assistant Secretary for Trade Administration, Chairman,
Committee of Alternates Foreign-Trade Zones Board.
[FR Doc. 83-4275 Filed 2-17-83; 8:45 am]
BILLING CODE 3510-25-M