15 C.F.R. Subpart C—Establishment and Modification of Zone Projects
Title 15 - Commerce and Foreign Trade
(a) Number of zone projects—port of entry entitlement. (1) Provided that the other requirements of this subpart are met: (i) Each port of entry is entitled to at least one zone project; (ii) If a port of entry is located in more than one state, each of the states in which the port of entry is located is entitled to a zone project; and (iii) If a port of entry is defined to include more than one city separated by a navigable waterway, each of the cities is entitled to a zone project. (2) Zone projects in addition to those approved under the entitlement provision of paragraph (a)(1) of this section may be authorized by the Board if it determines that existing project(s) will not adequately serve the public interest (convenience of commerce). (b) Location of zones and subzones—port of entry adjacency requirements. (1) The Act provides that the Board may approve “zones in or adjacent to ports of entry” (19 U.S.C. 81b). (2) The “adjacency” requirement is satisfied if: (i) A general-purpose zone is located within 60 statute miles or 90 minutes' driving time from the outer limits of a port of entry; (ii) A subzone meets the following requirements relating to Customs supervision: (A) Proper Customs oversight can be accomplished with physical and electronic means; and (B) All electronically produced records are maintained in a format compatible with the requirements of the U.S. Customs Service for the duration of the record period; and (C) The grantee/operator agrees to present merchandise for examination at a Customs site selected by Customs when requested, and further agrees to present all necessary documents directly to the Customs oversight office. (a) In general. Subject to the other provisions of this section, public or private corporations may apply for a grant of authority to establish a zone project. The board will give preference to public corporations. (b) Public and non-profit corporations. The eligibility of public and non-profit corporations to apply for a grant of authority shall be supported by an 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. (c) Private for-profit corporations. The eligibility of private for-profit corporations to apply for a grant of authority shall be supported by a special act of the state legislature naming the applicant corporation and by evidence indicating that the corporation is chartered for the purpose of establishing a zone. (d) Applicants for subzones—(1) Eligibility. The following entities are eligible to apply for a grant of authority to establish a subzone: (i) The zone grantee of the closest zone project in the same state; (ii) The zone grantee of another zone in the same state, which is a public corporation, if the Board, or the Executive Secretary, finds that such sponsorship better serves the public interest; or (iii) A state agency specifically authorized to submit such an application by an act of the state legislature. (2) Complaints. If an application is submitted under paragraph (d)(1) (ii) or (iii) of this section, the Executive Secretary will: (i) Notify, in writing, the grantee specified in paragraph (d)(1)(i) of this section, who may, within 30 days, object to such sponsorship, in writing, with supporting information as to why the public interest would be better served by its acting as sponsor; (ii) Review such objections prior to filing the application to determine whether the proposed sponsorship is in the public interest, taking into account: (A) The complaining zone's structure and operation; (B) The views of State and local public agencies; and (C) The views of the proposed subzone operator; (iii) Notify the applicant and complainants in writing of the Executive Secretary's determination; (iv) If the Executive Secretary determines that the proposed sponsorship is in the public interest, file the application (see §400.47 regarding appeals to decisions of the Executive Secretary). (a) Zones. The Board will consider the following factors in determining whether to issue a grant of authority for a zone project: (1) The need for zone services in the port of entry area, taking into account existing as well as projected international trade related activities and employment impact; (2) The adequacy of the operational and financial plans and the suitability of the proposed sites and facilities, with justification for duplicative sites; (3) The extent of state and local government support, as indicated by the compatibility of the zone project with the community's master plan or stated goals for economic development and the views of State and local public officials involved in economic development. Such officials shall avoid commitments that anticipate outcome of Board decisions; (4) The views of persons and firms likely to be affected by proposed zone activity; and (5) If the proposal involves manufacturing or processing activity, the criteria in §400.31. (b) Subzones. In reviewing proposals for subzones the Board will also consider: (1) Whether the operation could be located in or otherwise accommodated by the multi-purpose facilities of the zone project serving the area; (2) The specific zone benefits sought and the significant public benefit(s) involved supported by evidence to meet the requirement in §400.31(c); and (3) Whether the proposed activity is in the public interest, taking into account the criteria in §400.31. (a) In general. An application for a grant of authority to establish a zone project shall consist of a transmittal letter, an executive summary and five exhibits. (b) Letter of transmittal. The transmittal letter shall be currently dated and signed by an authorized officer of the corporation and bear the corporate seal. (c) Executive summary. The executive summary shall describe: (1) The corporation's legal authority to apply; (2) The type of authority requested from the Board; (3) The proposed zone site and facilities and the larger project of which the zone is a part; (4) The project background, including surveys and studies; (5) The relationship of the project to the community's and state's overall economic development plans and objectives; (6) The plans for operating and financing the project; and (7) Any additional pertinent information needed for a complete summary description of the proposal. (d) Exhibits. (1) Exhibit One (Legal Authority for the Application) shall consist of: (i) A certified copy of the state enabling legislation described in §400.22; (ii) A copy of pertinent sections of the applicant's charter or organization papers; and (iii) A certified copy of the resolution of the governing body of the corporation authorizing the official signing the application. (2) Exhibit Two (Site Description) shall consist of: (i) A detailed description of the zone site, including size, location, address, and a legal description of the area proposed for approval; a table with site designations shall be included when more than one site is involved; (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 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 flood-plain, 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, a summary description of transportation systems indicating connections from local and regional points of arrival to the zone; and (viii) A statement as to the possibilities and plans for zone expansion. (3) Exhibit Three (Operation and Financing) shall consist of: (i) A statement as to site ownership (if not owned by the applicant or proposed operator, evidence as to their legal right to use the site); (ii) A discussion of the operational plan (if the zone or a portion thereof is to be operated by other than the grantee, a summary of the selection process used or to be used, the type of operation agreement and, if available, the name and qualifications of the proposed operator); (iii) A brief explanation of the plans for providing facilities, physical security, and for satisfying the requirements for Customs automated systems; (iv) A summary of the plans for financing capital and operating costs, including a statement as to the source and use of funds; and (v) The estimated time schedule for construction and activation. (4) Exhibit Four (Economic Justification) shall include: (i) A statement of the 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 identification 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; (iv) A statement as to the role and objective of the zone project, and a justification for each of the proposed sites; (v) A discussion of the anticipated economic impact, direct and indirect, of the zone project, including references to public costs and benefits, employment, U.S. international 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; and (vii) A description of proposed manufacturing and processing operations, if applicable, with information covering the factors described in §400.31(b), including the nature and scope of the operation and production process, materials and components used, items to be foreign sourced with relevant tariff information, zone benefits anticipated and how they will affect the firm's plans, and the economic impact of the operation on the community and on related domestic industries. (5) Exhibit Five (Maps) shall consist of: (i) The following maps and drawings: (A) State and county maps showing the general location of the zone in terms of the area's transportation network; (B) A local community map showing in red the location of the proposed zone; and (C) 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. (ii) Proposals involving existing zones shall include a drawing showing existing zone sites and the proposed changes. (e) Additional information. The Board or the Executive Secretary may require additional information needed to adequately evaluate a proposal. (f) Amendment of application. The Board or the Executive Secretary may allow amendment of the application. (g) Drafts. Applicants may submit a draft application to the Executive Secretary for review. (h) Format and number of copies. Unless the Executive Secretary alters the requirements of this paragraph, submit an original and 8 copies of the application on 8 (i) Where to file. Address and mail the application to the Secretary of Commerce, Attention: Executive Secretary, Foreign-Trade Zones Board, U.S. Department of Commerce, Pennsylvania Avenue and 14th Street, NW., Washington, DC 20230. [56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997] (a) In general. An application to establish a subzone as part of a proposed or existing zone shall be submitted in accordance with the format in §400.24, except that the focus of the information provided in Exhibit Four shall be on the specific activity involved and its net economic effect. The information submitted in Exhibit Four shall include: (1) A summary as to the reasons for the subzone and an explanation of its anticipated economic effects; (2) Identity of the subzone user and its corporate affiliation; (3) Description of the proposed activity, including: (i) Products; (ii) Materials and Components; (iii) Sourcing plans (domestic/foreign); (iv) Tariff rates and other import requirements or restrictions; (v) Information to assist the Board in making a determination under §§400.31(b)(1)(iii) and 400.31(b)(2); (vi) Benefits to subzone user; (vii) Information required in §400.24(d)(4)(vii); (viii) Information as to whether alternative procedures have been considered as a means of obtaining the benefits sought; (ix) Information on the industry involved and extent of international competition; and (x) Economic impact of the operation on the area; (4) Reason operation cannot be conducted within a general-purpose zone; (5) Statement as to environmental impact; and (6) Any additional information requested by the Board or the Executive Secretary in order to conduct the review. The Executive Secretary may issue guidelines as to the kind of detailed information needed for various types of subzone cases. (b) Burden of proof. An applicant for a subzone must demonstrate to the Board that the proposed operation meets the criteria in §400.23(b).
Title 15: Commerce and Foreign Trade
PART 400—REGULATIONS OF THE FOREIGN-TRADE ZONES BOARD
Subpart C—Establishment and Modification of Zone Projects
§ 400.21 Number and location of zones and subzones.
§ 400.22 Eligible applicants.
§ 400.23 Criteria for grants of authority for zones and subzones.
§ 400.24 Application for zone.
§ 400.25 Application for subzone.
§ 400.26 Application for expansion or other modification to zone project.
(a) In general. (1) A grantee may apply to the Board for authority to expand or otherwise modify its zone project.
(2) The Executive Secretary, in consultation with the Port Director, will determine whether the proposed modification involves a major change in the zone plan and is thus subject to paragraph (b) of this section, or is minor and subject to paragraph (c) of this section. In making this determination the Executive Secretary will consider the extent to which the proposed modification would:
(i) Substantially modify the plan originally approved by the Board; or
(ii) Expand the physical dimensions of the approved zone area as related to the scope of operations envisioned in the original plan.
(b) Major modification to zone project. An application for a major modification to an approved zone project shall be submitted in accordance with the format in §400.24, except that:
(1) Reference may be made to current information in an application from the same applicant on file with the Board; and
(2) The content of Exhibit Four shall relate specifically to the proposed change.
(c) Minor modification to zone project. Other applications or requests under this subpart, including those for minor revisions of zone boundaries, grant of authority transfers, or time extensions, shall be submitted in letter form with information and documentation necessary for analysis, as determined by the Executive Secretary, who shall determine whether the proposed change is a minor one subject to this paragraph (c) instead of paragraph (b) of this section (see, §400.27(f)).
(d) Applications for other revisions to grants of authority. Applications or requests for revisions to grants of authority, such as restriction modifications, shall be submitted in letter form with information and documentation necessary for analysis, as determined by the Executive Secretary. If the change involves removal or significant modification of a restriction included by the Board in a grant of authority, the review procedures of §400.32 shall apply. If not, the procedure set forth in §400.27(f) shall apply.
(Approved by the Office of Management and Budget under control number 0625–0139)[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]
§ 400.27 Procedure for processing application.
(a) In general. This section outlines the procedure followed in processing applications submitted under §§400.24–400.26. In addition, it sets forth the time schedules which will normally be applied in processing applications. The schedules will provide guidance to applicants with respect to the time frames for each of the procedural steps involved in the Board's review. Under these schedules, applications involving manufacturing or processing activity would be processed within 1 year, and those not involving such activity, within 10 months. While the schedules set forth a standard time frame, the Board may determine that it requires additional time based on special circumstances, such as when the public comment period must be reopened pursuant to paragraphs (d)(2)(v)(B) and (d)(3)(vi)(B) of this section.
(b) Prefiling review. Applications subject to §400.29 shall be accompanied with a check in accordance with that section, and will be dated upon receipt at the headquarters of the Board. The Executive Secretary will determine whether the application satisfies the requirements of §§400.22–400.24, 400.25, 400.26, 400.32, and other applicable provisions of this part.
(1) If the application is deficient, the Executive Secretary will notify the applicant within 20 days of receipt of the application, specifying the deficiencies. The applicant shall correct the deficiencies and submit the correct application within 30 days of notification. Otherwise, the application (original) will be returned.
(2) If the application is sufficient, the Executive Secretary will within 45 days of receipt of the application:
(i) Formally file the application, thereby initiating the proceeding or review;
(ii) Assign a case docket number in cases requiring a Board order; and
(iii) Notify the applicant.
(c) Procedure—Executive Secretary responsibilities. After initiating a proceeding based on an application under §§400.24–400.25, or 400.26(b), the Executive Secretary will:
(1) Designate an examiner to conduct a review and prepare a report with recommendations for the Board;
(2) Publish in the
(3) Send copies of the filing and initiation notice and the application to the Commissioner of Customs and the Port Director, or a designee;
(4) Arrange for hearings, as appropriate;
(5) Transmit the reports and recommendations of the examiner and of the officials identified in paragraph (c)(3) of this section to the Board for appropriate action; and
(6) Notify the applicant in writing and publish notice in the
(d) Case reviews—procedure and time schedule—(1) Customs review. The Port Director, or a designee, in accordance with agency regulations and directives, will submit a technical report to the Executive Secretary within 45 days of the conclusion of the public comment period described in paragraph (c)(2) of this section.
(2) Examiners reviews—non-manufacturing/processing. Examiners assigned to cases not involving manufacturing or processing activity shall conduct a review taking into account the factors enumerated in §400.23 and other appropriate sections of this part, which shall include:
(i) Conducting or participating in necessary hearings scheduled by the Executive Secretary;
(ii) Reviewing case records, including public comments;
(iii) Requesting information and evidence from parties of record;
(iv) Developing information and evidence necessary for evaluation and analysis of the application in accordance with the criteria of the Act and this part;
(v) Preparing a report with recommendations to the Board and submitting it to the Executive Secretary within 120 days of the close of the period for public comment (see, paragraph (c)(2) of this section).
(A) If the report is unfavorable to the applicant, it shall be considered a preliminary report and the applicant shall be notified within 5 days (in writing or by phone) and given 30 days from the date of notification in which to respond to the report and submit additional evidence.
(B) If the response contains new evidence on which there has not been an opportunity for public comment, the Executive Secretary will publish notice in the
(C) The Customs adviser shall be notified when necessary for further comments, which shall be submitted within 45 days after notification.
(D) The examiners report in a situation under paragraph (d)(2)(v)(A) of this section shall be completed and submitted to the Executive Secretary within 30 days after receipt of additional evidence or notice from the applicant that there will be none; except that, if paragraph (d)(2)(v)(B) of this section applies, the report will be submitted within 30 days of the close of the period for public comment.
(3) Examiners reviews—cases involving manufacturing or processing activity. Examiners shall conduct a review taking into account the factors enumerated in §400.23, §400.31, and other appropriate sections of this part, which shall include:
(i) Conducting or participating in hearings scheduled by the Executive Secretary;
(ii) Reviewing case records, including public comments;
(iii) Requesting information and evidence from parties of record;
(iv) Developing information and evidence necessary for analysis of the threshold factors and the economic factors enumerated in §400.31;
(v) Conducting an analysis to include:
(A) An evaluation of policy considerations pursuant to §§400.31(b)(1)(i) and 400.31(b)(1)(ii);
(B) An evaluation of the economic factors enumerated in §§400.31(b)(1)(iii) and 400.31(b)(2), which shall include an evaluation of the economic impact on domestic industry, considering both producers of like products and producers of components/materials used in the manufacture/processing or assembly of the products. The evaluation will take into account such factors as market conditions, price sensitivity, degree and nature of foreign competition, effect on exports and imports, and the net effect on U.S. employment;
(vi) Conducting appropriate industry surveys when necessary; and
(vii) Preparing a report with recommendations to the Board and submitting it to the Executive Secretary within 150 days of the close of the period for public comment:
(A) If the report is unfavorable to the applicant, it shall be considered a preliminary report and the applicant shall be notified (in writing or by phone) and given 45 days from the date of notification in which to respond to the report and submit additional evidence pertinent to the factors considered in the report.
(B) If the response contains new evidence on which there has not been an opportunity for public comment, the Executive Secretary will publish notice in the
(e) Procedure—Completion of review—(1) The Executive Secretary will circulate the examiners report with recommendations to Board members for their review and votes (by resolution).
(2) The Treasury and Army Board members will return their votes to the Executive Secretary within 30 days, unless a formal meeting is requested (see, §400.11(d)).
(3) The Commerce Department will complete the decision process within 15 days of receiving the votes of both other Board members, and the Executive Secretary will publish the Board decision.
(f) Procedure—Application for minor modification of zone project. (1) The Executive Secretary, with the concurrence of the Port Director, will make a determination in cases under §400.26(c) involving minor changes to zone projects that do not require a Board order, such as boundary modifications, including certain relocations, and will notify the applicant in writing of the decision within 30 days of the determination that the application or request can be processed under §400.26(c).
(2) The Port Director shall provide the decision as to concurrence within 20 days after being notified of the request or application.
[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]
§ 400.28 Conditions, prohibitions and restrictions applicable to grants of authority.
(a) In general. Grants of authority issued by the Board for the establishment of zones or subzones, including those already issued, are subject to the Act and this part and the following general conditions or limitations:
(1) Approvals from the grantee and the Port Director, pursuant to 19 CFR part 146, are required prior to the activation of any portion of an approved zone project; and
(2) Approval of the Board or the Commerce Department's Assistant Secretary for Import Administration pursuant to subpart D of this part is required prior to the commencement of manufacturing beyond the scope of that approved as part of the application or pursuant to reviews under this part (e.g., new end products, significant expansions of plant production capacity), and of similar changes in processing activity which involves foreign articles subject to quantitative import controls (quotas) or results in articles subject to a lower (actual or effective) duty rate (inverted tariff) than any of their foreign components.
(3) Sourcing changes—(i) Notification requirement. The grantee or operator of a zone or subzone shall notify the Executive Secretary when there is a change in sourcing for authorized manufacturing or processing activity which involves the use of new foreign articles subject to quotas or inverted tariffs, unless—
(A) Entries for consumption are not to be made at the lower duty rate; or
(B) The product in which the foreign articles are to be incorporated is being produced for exportation.
(ii) Notification procedure. Notification shall be given prior to the commencement of the activity, when possible, otherwise at the time the new foreign articles arrive in the zone or are withdrawn from inventory for use in production. Requests may be made to the Executive Secretary for authority to submit notification of sourcing changes on a quarterly federal fiscal year basis covering changes in the previous quarter.
(iii) Reviews. (A) Upon notification of a sourcing change under paragraph (a)(3)(i) of this section, within 30 days, the Executive Secretary will conduct a preliminary review of the changes in relation to the approved activity to determine whether they could have significant adverse effects, taking into account the factors enumerated in §400.31(b), and will submit a report and recommendation to the Commerce Department's Assistant Secretary for Import Administration, who shall determine whether review is necessary. The procedures of §400.32(b) shall be used in these situations when appropriate.
(B) The Board or the Commerce Department's Assistant Secretary for Import Administration may, based on public interest grounds, prohibit or restrict the use of zone procedures in regard to the change in sourcing, including requiring that items be placed in privileged foreign status (19 CFR 146.41) upon admission to a zone or subzone.
(C) The Executive Secretary shall direct reviews necessary to ensure that activity involved in these situations continues to be in the public interest.
(4) Prior to activation of a zone, the zone grantee or operator shall obtain all necessary permits from federal, state and local authorities, and except as otherwise specified in the Act or this part, shall comply with the requirements of those authorities.
(5) A grant of authority for a zone or a subzone shall lapse unless the zone project (in case of subzones, the subzone facility) is activated, pursuant to 19 CFR part 146, and in operation not later than five years from:
(i) A Board order (authorizing the zone or subzone) issued after November 7, 1991; or
(ii) November 7, 1991.
(6) A grant of authority approved under this subpart includes authority for the grantee to permit the erection of buildings necessary to carry out the approved zone project subject to concurrence of the Port Director.
(7) Zone grantees, operators, and users shall permit federal government officials acting in an official capacity to have access to the zone project and records during normal business hours and under other reasonable circumstances.
(8) A grant of authority may not be sold, conveyed, transferred, set over, or assigned (FTZ Act, section 17; 19 U.S.C. 81q). Private ownership of zone land and facilities is permitted provided the zone grantee retains the control necessary to implement the approved zone project. Should title to land or facilities be transferred after a grant of authority is issued, the zone grantee must retain, by agreement with the new owner, a level of control which allows the grantee to carry out its responsibilities as grantee. The sale of a zone site or facility for more than its fair market value without zone status could, depending on the circumstances, be subject to section 17 of the Act.
(9) A grant of authority will not be construed to make the zone grantee automatically liable for violations by operators, users, or other parties.
(b) Additional conditions, prohibitions and restrictions. Other requirements, conditions or restrictions under Federal, State or local law may apply to the zone or subzone authorized by the grant of authority.
(c) Revocation of grants of authority—(1) In general. As provided in this section, the Board can revoke in whole or in part a grant of authority for a zone or subzone whenever it determines that the zone grantee or, in the case of subzones, the subzone operator, has violated, repeatedly and willfully, the provisions of the Act.
(2) Procedure. When the Board has reason to believe that the conditions for revocation, as described in paragraph (a) of this section, are met, the Board will:
(i) Notify the zone or subzone grantee in writing stating the nature of the alleged violations, and provide the grantee an opportunity to request a hearing on the proposed revocation;
(ii) Conduct a hearing, if requested or otherwise if appropriate;
(iii) Make a determination on the record of the proceeding not earlier than 4 months after providing notice to the zone grantee under paragraph (b)(1) of this section; and
(iv) If the Board's determination is affirmative, publish notice of revocation of the grant of authority in the
(3) As provided in section 18 of the Act (19 U.S.C. 81r(c)), the zone or subzone grantee may appeal an order of the Board revoking the grant of authority.
[56 FR 50798, Oct. 8, 1991; 56 FR 65833, Dec. 19, 1991, as amended at 62 FR 53535, Oct. 15, 1997]
§ 400.29 Application fees.
(a) In general. This section sets forth a uniform system of charges in the form of fees to recover some costs incurred by the Foreign-Trade Zones staff of the Department of Commerce in processing the applications listed in paragraph (b) of this section. The legal authority for the fees is 31 U.S.C. 9701, which provides for the collection of user fees by agencies of the Federal Government.
(b) Uniform system of user fee charges. The following graduated fee schedule establishes fees for certain types of applications and requests for authority based on their average processing time. Applications combining requests for more than one type of approval are subject to the fee for each category.
(1) Additional $3,200 general-purpose zones (§ 400.24; § 400.21(a)(2))(2) Special- purpose subzones (§ 400.25): (i) Non- 4,000 manufacturing/ processing or less than three products (ii) 6,500 Manufacturing/ processing_thr ee or more products......(3) Expansions 1,600 (§ 400.26(b))
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(c) Applications submitted to the Board shall include a check drawn on a national or state bank or trust company of the United States or Puerto Rico in the amount called for in paragraph (b) of this section. Uncertified checks must be acceptable for deposit by a Federal Reserve bank or branch. (d) Applicants shall make their checks payable to the U.S. Department of Commerce ITA. The checks will be deposited by ITA into the Treasury receipts account. If applications are found deficient under §400.27(b)(1), or withdrawn by applicants prior to formal filing, refunds will be made. Browse Previous | Browse Next |
