CFR Subpart A

CFR Subpart A
in effect

15 C.F.R. § 400.1 Scope.

(a) This part sets forth the regulations, including the rules of practice and procedure, of the Foreign-Trade Zones Board with regard to foreign-trade zones (FTZs or zones) in the United States pursuant to the Foreign-Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u). It includes the substantive and procedural rules for the authorization of zones and for the Board's regulation of zone activity. The purpose of zones as stated in the Act is to “expedite and encourage foreign commerce, and other purposes.” The regulations provide the legal framework for accomplishing this purpose in the context of evolving U.S. economic and trade policy, and economic factors relating to international competition. (b) Part 146 of the customs regulations (19 CFR part 146) governs zone operations, including the admission of merchandise into zones, zone activity involving such merchandise, and the transfer of merchandise from zones. (c) To the extent zones are “activated” under U.S. Customs and Border Protection (CBP) procedures in 19 CFR part 146, and only for the purposes specified in the Act (19 U.S.C. 81c), zones are treated for purposes of the tariff laws and customs entry procedures as being outside the customs territory of the United States. Under zone procedures, foreign and domestic merchandise may be admitted into zones for operations such as storage, exhibition, assembly, manufacture and processing, without being subject to formal customs entry procedures and payment of duties, unless and until the foreign merchandise enters customs territory for domestic consumption. At that time, the importer ordinarily has a choice of paying duties either at the rate applicable to the foreign material in its condition as admitted into a zone, or if used in production activity, to the emerging product. Quota restrictions do not normally apply to foreign goods in zones. The Board can deny or limit the use of zone procedures in specific cases on public interest grounds. Merchandise moved into zones for export (zone-restricted status) may be considered exported for purposes such as federal excise tax rebates and customs drawback. Foreign merchandise (tangible personal property) admitted to a zone and domestic merchandise held in a zone for exportation are exempt from certain state and local ad valorem taxes (19 U.S.C. 81o(e)). Articles admitted into zones for purposes not specified in the Act shall be subject to the tariff laws and regular entry procedures, including the payment of applicable duties, taxes, and fees.

15 C.F.R. § 400.2 Definitions.

(a) Act means the Foreign-Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u). (b) Activation limit is the size of the physical area of a particular zone or subzone authorized by the Board to be simultaneously in activated status with CBP pursuant to 19 CFR 146.6. The activation limit for a particular zone/subzone is a figure explicitly specified by the Board in authorizing the zone (commonly 2,000 acres) or subzone or, in the absence of a specified figure, the total of the sizes of the approved sites of the zone/subzone. (c) Alternative site framework (ASF) is an optional approach to designation and management of zone sites allowing greater flexibility and responsiveness to serve single-operator/user locations. The ASF was adopted by the Board as a matter of practice in December 2008 (74 FR 1170, January 12, 2009; correction 74 FR 3987, January 22, 2009) and modified by the Board in November 2010 (75 FR 71069, November 22, 2010). (d) Board means the Foreign-Trade Zones Board, which consists of the Secretary of the Department of Commerce (chairman) and the Secretary of the Treasury, or their designated alternates. (e) Board Order is a type of document that indicates a final decision of the Board. Board Orders are generally published in the Federal Register after issuance. (f) CBP means U.S. Customs and Border Protection. (g) Executive Secretary is the Executive Secretary of the Foreign-Trade Zones Board. (h) Foreign-trade zone (FTZ or zone) includes all sites/subzones designated under the sponsorship of a zone grantee, in or adjacent (as defined by § 400.11(b)(2)) to a CBP port of entry, operated as a public utility (within the meaning of § 400.42), with zone operations under the supervision of CBP. (i) Grant of authority is a document issued by the Board that authorizes a zone grantee to establish, operate and maintain a zone, subject to limitations and conditions specified in this part and in 19 CFR part 146. The authority to establish a zone includes the responsibility to manage it. (j) Magnet site means a site intended to serve or attract multiple operators or users under the ASF. (k) Modification: A major modification is a proposed change to a zone that requires action by the FTZ Board; a minor modification is a proposed change to a zone that may be authorized by the Executive Secretary. (l) Person includes any individual, corporation, or entity. (m) Port of entry means a port of entry in the United States, as defined by part 101 of the customs regulations (19 CFR part 101), or a user fee airport authorized under 19 U.S.C. 58b and listed in part 122 of the customs regulations (19 CFR part 122). (n) Private corporation means any corporation, other than a public corporation, which is organized for the purpose of establishing, operating and maintaining a zone and which is chartered for this purpose under a law of the state in which the zone is located. (o) Production, as used in this part, means activity involving the substantial transformation of a foreign article resulting in a new and different article having a different name, character, and use, or activity involving a change in the condition of the article which results in a change in the customs classification of the article or in its eligibility for entry for consumption. (p) Public corporation means a state, a political subdivision (including a municipality) or public agency thereof, or a corporate municipal instrumentality of one or more states. (q) Service area means the jurisdiction(s) within which a grantee proposes to be able to designate sites via minor boundary modifications under the ASF. (r) State includes any state of the United States, the District of Columbia, and Puerto Rico. (s) Subzone means a site (or group of sites) established for a specific use. (t) Usage-driven site means a site established for a single operator or user under the ASF. (u) Zone grantee is the corporate recipient of a grant of authority for a zone. Where used in this part, the term “grantee” means “zone grantee” unless otherwise indicated. (v) Zone operator is a person that operates within a zone or subzone under the terms of an agreement with the zone grantee (or third party on behalf of the grantee), with the concurrence of CBP. (w) Zone participant is a current or prospective zone operator, zone user, or property owner. (x) Zone plan includes all the zone sites that a single grantee is authorized to establish. (y) Zone site (site) means a physical location of a zone or subzone. A site is composed of one or more generally contiguous parcels of land organized and functioning as an integrated unit, such as all or part of an industrial park or airport facility. (z) Zone user is a party using a zone under agreement with a zone operator.

15 C.F.R. § 400.3 Authority of the Board.

(a) In general. In accordance with the Act and procedures of this part, the Board has authority to: (1) Prescribe rules and regulations concerning zones; (2) Issue grants of authority for zones, and approve subzones and modifications to the original zone; (3) Authorize production activity in zones and subzones as described in this part; (4) Make determinations on matters requiring Board decisions under this part; (5) Decide appeals in regard to certain decisions of the Commerce Department's Assistant Secretary for Enforcement and Compliance or the Executive Secretary; (6) Inspect the premises, operations and accounts of zone grantees, operators and users (and persons undertaking zone-related functions on behalf of grantees, where applicable); (7) Require zone grantees and operators to report on zone operations; (8) Report annually to the Congress on zone operations; (9) Restrict or prohibit zone operations; (10) Terminate reviews of applications under certain circumstances pursuant to § 400.36(g); (11) Authorize under certain circumstances the entry of “zone-restricted merchandise” (19 CFR 146.44) into the customs territory pursuant to § 400.48; (12) Impose fines for violations of the Act and this part; (13) Instruct CBP to suspend activated status pursuant to § 400.62(h); (14) Revoke grants of authority for cause; (15) Determine, as appropriate, whether zone activity is or would be in the public interest or detrimental to the public interest, health or safety; and (16) Issue and discontinue waivers pursuant to § 400.43(f). (b) Authority of the Chairman of the Board. The Chairman of the Board (Secretary of the Department of Commerce) has the authority to: (1) Appoint the Executive Secretary of the Board; (2) Call meetings of the Board, with reasonable notice given to each member; and (3) Submit to the Congress the Board's annual report as prepared by the Executive Secretary. (c) Alternates. Each member of the Board shall designate an alternate with authority to act in an official capacity for that member. (d) Authority of the Assistant Secretary for Enforcement and Compliance (Alternate Chairman). The Commerce Department's Assistant Secretary for Enforcement and Compliance has the authority to: (1) Terminate reviews of applications under certain circumstances pursuant to § 400.36(g); (2) Mitigate and assess fines pursuant to §§ 400.62(e) and (f) and instruct CBP to suspend activated status pursuant to § 400.62(h); and (3) Restrict the use of zone procedures under certain circumstances pursuant to § 400.49(c). (e) Determinations of the Board. Determinations of the Board shall be by the unanimous vote of the members (or alternate members) of the Board, which shall be recorded.

15 C.F.R. § 400.4 Authority and responsibilities of the Executive Secretary.

The Executive Secretary has the following responsibilities and authority: (a) Represent the Board in administrative, regulatory, operational, and public affairs matters; (b) Serve as director of the Commerce Department's Foreign-Trade Zones staff; (c) Execute and implement orders of the Board; (d) Arrange meetings and direct circulation of action documents for the Board; (e) Arrange with other sections of the Department of Commerce and other governmental agencies for studies and comments on zone issues and proposals; (f) Maintain custody of the seal, records, files and correspondence of the Board, with disposition subject to the regulations of the Department of Commerce; (g) Issue notices on zone matters for publication in the Federal Register; (h) Direct processing of applications and reviews, including designation of examiners and scheduling of hearings, under various sections of this part; (i) Make determinations on questions pertaining to grantees' applications for subzones as provided in § 400.12(d); (j) Make recommendations in cases involving questions as to whether zone activity should be prohibited or restricted for public interest reasons, including proceedings and reviews under § 400.5; (k) Determine questions of scope under § 400.14(d); (l) Determine whether additional information is needed for evaluation of applications and other requests for decisions under this part, as provided for in various sections of this part, including §§ 400.21-400.25; (m) Issue instructions, guidelines, forms and related documents specifying time, place, manner and formats for applications, notifications, application fees and zone schedules in various sections of this part, including §§ 400.21(b), 400.29, 400.43(f), and 400.44; (n) Determine whether proposed modifications are major modifications or minor modifications under § 400.24(a)(2); (o) Determine whether applications meet pre-docketing requirements under § 400.31(b); (p) Terminate reviews of applications under certain circumstances pursuant to § 400.36(g); (q) Authorize minor modifications to zones under § 400.38, commencement of production activity under § 400.37(d) and subzone designation under § 400.36(f); (r) Review notifications for production authority under § 400.37; (s) Direct monitoring and reviews of zone operations and activity under § 400.49; (t) Review zone schedules and determine their sufficiency under § 400.44(c); (u) Assess potential issues and make recommendations pertaining to uniform treatment under § 400.43 and review and decide complaint cases under § 400.45; (v) Make certain determinations and authorizations pertaining to retail trade under § 400.47; (w) Authorize under certain circumstances the entry of “zone-restricted merchandise” into the customs territory under § 400.48; (x) Determine the format and deadlines for the annual reports of zone grantees to the Board and direct preparation of an annual report from the Board to Congress under § 400.51(c); (y) Make recommendations and certain determinations regarding violations and fines, and undertake certain procedures related to the suspension of activated status, as provided in § 400.62; and (z) Designate an acting Executive Secretary.

15 C.F.R. § 400.5 Authority to restrict or prohibit certain zone operations.

The Board may conduct a proceeding, or the Executive Secretary a review, to consider a restriction or prohibition on zone activity. Such proceeding or review may be either self-initiated or in response to a complaint made to the Board by a person directly affected by the activity in question and showing good cause. After a proceeding or review, the Board may restrict or prohibit any admission of merchandise or process of treatment in an activated FTZ site when it determines that such activity is detrimental to the public interest, health or safety.

15 C.F.R. § 400.6 Board headquarters.

The headquarters of the Board are located within the U.S. Department of Commerce (Herbert C. Hoover Building), 1401 Constitution Avenue NW., Washington, DC 20230, within the office of the Foreign-Trade Zones staff.

15 C.F.R. § 400.7 CBP officials as Board representatives.

CBP officials with oversight responsibilities for a port of entry represent the Board with regard to the zones adjacent to the port of entry in question and are responsible for enforcement, including physical security and access requirements, as provided in 19 CFR part 146.

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