PART 400—REGULATIONS OF THE FOREIGN-TRADE ZONES BOARD Authority: Foreign-Trade Zones Act of June 18, 1934, as amended (Pub. L. 73-397, 48 Stat. 998-1003 (19 U.S.C. 81a-81u)). Source: 77 FR 12139, Feb. 28, 2012, unless otherwise noted. Editorial Note: Nomenclature changes to part 400 appear at 78 FR 69289, Nov. 19, 2013. Subpart A—Scope, Definitions and Authority § 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 § 400.2 Definitions. (a) Act (b) Activation limit (c) Alternative site framework (d) Board (e) Board Order Federal Register (f) CBP (g) Executive Secretary (h) Foreign-trade zone (i) Grant of authority (j) Magnet site (k) Modification: (l) Person (m) Port of entry (n) Private corporation (o) Production, (p) Public corporation (q) Service area (r) State (s) Subzone (t) Usage-driven site (u) Zone grantee (v) Zone operator (w) Zone participant (x) Zone plan (y) Zone site (z) Zone user [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8527, Feb. 8, 2024] § 400.3 Authority of the Board. (a) In general. (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. (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. (d) Authority of the Assistant Secretary for Enforcement and Compliance (Alternate Chairman). (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. § 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. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8527, Feb. 8, 2024] § 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. § 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. § 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. Subpart B—Ability To Establish Zone; Limitations and Restrictions on Authority Granted § 400.11 Number and location of zones and subzones. (a) Number of zones—port of entry entitlement. (i) Each port of entry is entitled to at least one zone; (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; 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. (2) Applications pertaining to zones in addition to those approved under the entitlement provision of paragraph (a)(1) of this section may be approved by the Board if it determines that the existing zone(s) will not adequately serve the convenience of commerce. (b) Location of zones and subzones—port of entry adjacency requirements. (2) The “adjacency” requirement is satisfied if: (i) A zone site is located within 60 statute miles or 90 minutes' driving time (as determined or concurred upon by CBP) from the outer limits of a port of entry boundary as defined in 19 CFR 101.3. (ii) A subzone meets the following requirements relating to CBP supervision: (A) Proper CBP oversight can be accomplished with physical and electronic means; (B) All electronically produced records are maintained in a format compatible with the requirements of CBP for the duration of the record period; and (C) The operator agrees to present merchandise for examination at a CBP site selected by CBP when requested, and further agrees to present all necessary documents directly to the relevant CBP oversight office. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8527, Feb. 8, 2024] § 400.12 Eligible applicants. (a) In general. (b) Public corporations and private non-profit corporations. (c) Private for-profit corporations. (d) Applicants for subzones (except pursuant to § 400.24(c)) Eligibility. (i) The grantee of the closest zone in the same state; (ii) The grantee of another zone in the same state, which is a public corporation (or a non-public corporation if no such other public corporation exists), 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) Notification of closest grantee. (i) Notify, in writing, the grantee specified in paragraph (d)(1)(i) of this section, which 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 docketing the application to determine whether the proposed sponsorship is in the public interest, taking into account: (A) The objecting 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 objecting zone in writing of the Executive Secretary's determination; (iv) If the Executive Secretary determines that the proposed sponsorship is in the public interest, docket the application (see § 400.63 regarding appeals of decisions of the Executive Secretary). § 400.13 General conditions, prohibitions and restrictions applicable to authorized zones. (a) In general. (1) 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. (2) A grant of authority approved under this part includes authority for the grantee to permit the erection of buildings necessary to carry out the approved zone (subject to concurrence of CBP for an activated area of a zone). (3) Approvals from the grantee (or other party acting on behalf of the grantee, where applicable) and CBP, pursuant to 19 CFR part 146, are required prior to the activation of any portion of an approved zone. (4) Authority for a zone or a subzone shall lapse unless the zone (in case of subzones, the subzone facility) is activated, pursuant to 19 CFR part 146, and in operation not later than five years from the authorization of the zone or subzone, subject to the provisions of Board Order 849 (61 FR 53305, October 11, 1996). (5) Zone grantees, operators, and users (and persons undertaking zone-related functions on behalf of grantees, where applicable) shall permit federal government officials acting in an official capacity to have access to the zone and records during normal business hours and under other reasonable circumstances. (6) Activity involving production is subject to the specific provisions in § 400.14. (7) A grant of authority may not be sold, conveyed, transferred, set over, or assigned (FTZ Act, section 17; 19 U.S.C. 81q). (8) Private ownership of zone land and facilities is permitted, provided the zone grantee retains the control necessary to implement the approved zone. Such permission shall not constitute a vested right to zone designation, nor interfere with the Board's regulation of the grantee or the permittee, nor interfere with or complicate the revocation of the grant by the Board. Grantees shall retain a level of control which allows the grantee to carry out its responsibilities as grantee. The sale of zone-designated land/facility for more than its fair market value without zone designation could, depending on the circumstances, be subject to the prohibitions set forth in section 17 of the Act (19 U.S.C. 81q). (b) Board authority to restrict or prohibit activity. (c) Restrictions on items subject to antidumping and countervailing duty actions Board policy. (2) Admission of items subject to AD/CVD actions. (d) Additional conditions, prohibitions and restrictions. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8527, Feb. 8, 2024] § 400.14 Production—requirement for prior authorization. (a) In general. (b) Scope of authority. (c) Information about authorized production activity. (d) Scope determinations. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8527, Feb. 8, 2024] § 400.15 Production equipment. (a) In general. (b) Definition of production equipment. (c) Equipment not destined for zone activity. i.e., § 400.16 Exemption from state and local ad valorem Foreign merchandise (tangible personal property) imported from outside the United States and held in the activated area of a zone for the purpose of storage, sale, exhibition, repackaging, assembly, distribution, sorting, grading, cleaning, mixing, display, manufacturing, or processing, and tangible personal property produced in the United States and held in the activated area of a zone for exportation, either in its original form or as altered by any of the processes set out in this section, shall be exempt from state and local ad valorem [89 FR 8528, Feb. 8, 2024] Subpart C—Applications To Establish and Modify Authority § 400.21 Application to establish a zone. (a) In general. (b) Application format. Federal Register (c) Application letter. (1) The relationship of the proposal to the state enabling legislation and the applicant's charter; (2) The specific authority requested from the Board; (3) The proposed zone site(s) and facility(ies) and any larger project of which the zone is a part; (4) The project background; (5) The relationship of the project to the community's and state's international trade-related goals and objectives; and (6) Any additional pertinent information needed for a complete summary description of the proposal. (d) Detailed contents. (i) A current copy of the state enabling legislation described in §§ 400.12(b) and (c); (ii) A copy of the relevant sections of the applicant's charter or organization papers; and (iii) A certified copy of a resolution of the applicant's governing body specific to the application authorizing the official signing the application letter. The resolution must be dated no more than six months prior to the submission of the application. (2) Site descriptions (including a table with site designations when more than one site is involved) shall be documented with: (i) A detailed description of the zone site, including size, location, and address (and legal description or its equivalent in instances where the Executive Secretary determines it is needed to supplement the maps in the application), as well as dimensions and types of existing and proposed structures, master planning, and timelines for construction of roads, utilities and planned buildings; (ii) Where applicable, a summary description of the larger project of which the site is a part, including type, size, location and address; (iii) A statement as to whether the site is within or adjacent to a CBP port of entry (including distance from the limits of the port of entry and, if the distance exceeds 60 miles, driving time from the limits of the port of entry); (iv) A description of existing or proposed site qualifications, including appropriate land-use zoning (with environmentally sensitive areas avoided) and physical security; (v) A description of current and planned activities associated with the site; (vi) A statement regarding the environmental aspects of the proposal; (vii) The estimated time schedules for construction and activation; and (viii) A statement as to the possibilities and plans for future expansion of the site. (3) Operation and financing shall be documented with: (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 plans for operations at the site; (iii) A commitment to satisfy the requirements for CBP automated systems; and (iv) A summary of the plans for financing the project. (4) Economic justification shall be documented with: (i) A statement of the community's overall economic and trade-related goals and strategies in relation to those of the region and state, including a reference to the plan or plans on which the goals are based and how they relate to the zone project; (ii) An economic profile of the community including discussion of: (A) Dominant sectors in terms of employment or income; (B) Area strengths and weaknesses; (C) Unemployment rates; and (D) Area foreign trade statistics; (iii) A statement as to the role and objective of the zone project and a discussion of the anticipated economic impact, direct and indirect, of the zone project, including references to public costs and benefits, employment, and U.S. international trade; (iv) A separate justification for each proposed site, including a specific explanation addressing the degree to which the site may duplicate types of facilities at other proposed or existing sites in the zone; (v) A statement as to the need for zone services in the community, with specific expressions of interest from proposed zone users and letters of intent from those firms that are considered prime prospects for each specific proposed site; and (vi) For any production activity to be conducted at a proposed site, the separate requirements of § 400.14(a) must also be met. (5) Maps and site plans shall include the following documents: (i) State and county maps showing the general location of the proposed site(s) in terms of the area's transportation network; (ii) For any proposed site, a legible, detailed site plan of the zone area showing zone boundaries in red, with street name(s), and showing existing and proposed structures; and (iii) For proposals involving a change in existing zones, one or more maps showing the relationship between existing zone sites and the proposed changes. (e) ASF applications. (1) Service area. (2) Appropriate information regarding magnet sites. (3) Appropriate information regarding usage-driven sites or ASF subzones. (f) Additional information. (g) Amendment of application. (h) Drafts. (i) Submission of completed application. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8528, Feb. 8, 2024] § 400.22 Notification for production authority. Notifications requesting production authority pursuant to § 400.14(a) shall comply with any instructions, guidelines, and forms or related documents, published in the Federal Register (a) Identity of the user and its location; (b) Materials, components and finished products associated with the proposed activity, including the tariff schedule categories (6-digit HTSUS) and tariff rates; and (c) Information as to whether any material or component is subject to a trade-related measure or proceeding (e.g., AD/CVD order or proceeding, suspension of liquidation under AD/CVD procedures). § 400.23 Application for production authority. In addition to any applicable requirements set forth in § 400.21, an application requesting production authority pursuant to § 400.37(c) shall include: (a) A summary as to the reasons for the application and an explanation of its anticipated economic effects; (b) Identity of the user and its corporate affiliation; (c) A description of the proposed activity, including: (1) Finished products; (2) Imported (foreign-status) materials and components; (3) For each finished product and imported material or component, the tariff schedule category (6-digit HTSUS), tariff rate, and whether the material or component is subject to a trade-related measure or proceeding (e.g., AD/CVD order or proceeding, suspension of liquidation under AD/CVD procedures); (4) Domestic inputs, foreign inputs, and plant value added as percentages of finished product value; (5) Projected shipments to domestic market and export market (percentages); (6) Estimated total or range of annual value of benefits to proposed user (broken down by category), including as a percent of finished product value; (7) Annual production capacity (current and planned) for the proposed FTZ activity, in units; (8) Information to assist the Board in making a determination under § 400.27(a)(3) and 400.27(b); (9) Information as to whether alternative procedures have been considered as a means of obtaining the benefits sought; (10) Information on the industry involved and extent of international competition; and (11) Economic impact of the operation on the area; and (d) Any additional information requested by the Board or the Executive Secretary in order to conduct the review. § 400.24 Application for expansion or other modification to zone. (a) In general. (2) The Executive Secretary, in consultation with CBP as appropriate, shall 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 shall 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 they relate to the scope of operations envisioned in the original plan. (b) Major modification to zone. (c) Minor modification to zone. see see (d) Applications for other revisions to authority. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8528, Feb. 8, 2024] § 400.25 Application for subzone designation. In addition to the requirements of §§ 400.21(d)(1)(i) and (ii) pertaining to legal authority, § 400.21(d)(2)(vii) pertaining to environmental aspects of the proposal, and § 400.21(d)(3)(i) and (iii) pertaining to operation, a grantee's application for subzone designation shall contain the following information: (a) The name of the operator/user for which subzone designation is sought; (b) The nature of the activity at the proposed subzone; (c) The address(es) and physical size (acreage or square feet) of the proposed subzone location(s); and (d) One or more maps conforming to the requirements of section § 400.21(d)(5)(ii). For any production activity to be conducted at a proposed subzone, the separate requirements of § 400.14(a) must be met. § 400.26 Criteria for evaluation of proposals, including for zones, expansions, subzones, or other modifications of zones. The Board shall consider the following factors in determining whether to approve an application pertaining to a zone: (a) 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; (b) The suitability of each proposed site and its facilities based on the plans presented for the site, including existing and planned buildings, zone-related activities, and the timeframe for development of the site; (c) The specific need and justification for each proposed site, taking into account existing sites and/or other proposed sites; (d) 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 the outcome of Board decisions; and (e) The views of persons likely to be materially affected by proposed zone activity. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8528, Feb. 8, 2024] § 400.27 Criteria applicable to evaluation of applications for production authority. The Board shall apply the criteria set forth in this section in determining whether to approve an application for authority to conduct production activity pursuant to § 400.23. The Board's evaluation shall take into account information such as pertains to market conditions, price sensitivity, degree and nature of foreign competition, intra-industry and intra-firm trade, effect on exports and imports, ability to conduct the proposed activity outside the United States with the same U.S. tariff impact, analyses conducted in connection with prior Board actions, and net effect on U.S. employment and the U.S. economy: (a) Threshold factors. (1) The activity is inconsistent with U.S. trade and tariff law, or policy which has been formally adopted by the Executive branch; (2) Board approval of the activity under review would seriously prejudice U.S. tariff and trade negotiations or other initiatives; or (3) The activity involves items subject to quantitative import controls or inverted tariffs, and the use of zone procedures would be the direct and sole cause of imports that, but for such procedures, would not likely otherwise have occurred, taking into account imports both as individual items and as components of imported products. (b) Economic factors. (1) Overall employment impact; (2) Exports and re-exports; (3) Retention or creation of value-added activity; (4) Extent of value-added activity; (5) Overall effect on import levels of relevant products; (6) Extent and nature of foreign competition in relevant products; (7) Impact on related domestic industry, taking into account market conditions; and (8) Other relevant information relating to the public interest and net economic impact considerations, including technology transfers and investment effects. (c) The significant public benefit(s) that would result from the production activity, taking into account the factors in paragraphs (a) and (b) of this section. (d) Contributory effect. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8528, Feb. 8, 2024] § 400.28 Burden of proof. (a) In general. (b) Comments on applications. (c) Requests for extensions of comment periods. (d) Responses to comments on applications. § 400.29 Application fees. (a) In general. (b) Uniform system of user fee charges. (1) Additional zones (§ 400.21; § 400.11(a)(2))—$3,200. (2) Subzones (§ 400.25): (i) Not involving production activity or involving production activity with fewer than three products—$4,000. (ii) Production activity with three or more products—$6,500. (3) Expansions (§ 400.24(b))—$1,600. (c) Timing and manner of payment. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8528, Feb. 8, 2024] Subpart D—Procedures for Application Evaluation and Reviews § 400.31 General application provisions and pre-docketing review. (a) In general. (b) Pre-docketing review. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8528, Feb. 8, 2024] § 400.32 Procedures for docketing applications and commencement of case review. (a) Once the pre-docketing copy of the application is determined to be sufficient and any fees under § 400.29 have been paid, the Executive Secretary shall within 15 days: (1) Formally docket the application, thereby initiating the proceeding or review; (2) Assign a case-docket number; and (3) Notify the applicant of the formal docketing action. (b) After initiating a proceeding based on an application under §§ 400.21 and 400.23 through 400.25, the Executive Secretary shall: (1) Designate an examiner to conduct a review and prepare a report or memorandum with recommendations for the Board; (2) Publish in the Federal Register see (3) Transmit or otherwise make available copies of the docketing notice and the application to CBP; (4) Arrange for hearings, as appropriate; (5) Transmit the report and recommendations of the examiner and any comments by CBP to the Board for appropriate action; and (6) Notify the applicant in writing (via electronic means, where appropriate) and publish notice in the Federal Register (c) Any comments by CBP pertaining to the application shall be submitted to the Executive Secretary by the conclusion of the public comment period described in paragraph (b)(2) of this section. [89 FR 8529, Feb. 8, 2024] § 400.33 Examiner's review—application to establish or modify a zone. An examiner assigned to review an application to establish, reorganize or expand a zone shall conduct a review taking into account the factors enumerated in § 400.26 and other appropriate sections of this part, which shall include: (a) Conducting or participating in hearings scheduled by the Executive Secretary; (b) Reviewing case records, including public comments; (c) Requesting information and evidence from parties of record; (d) Developing information and evidence necessary for evaluation and analysis of the application in accordance with the criteria of the Act and this part; and (e) Developing recommendations to the Board and submitting a report to the Executive Secretary, generally within 150 days of the close of the period for public comment (75 days for reorganizations under the ASF) (see § 400.32): (1) If the recommendations are unfavorable to the applicant, they shall be considered preliminary and the applicant shall be notified in writing (via electronic means, where appropriate) of the preliminary recommendations and the factors considered in their development. The applicant shall be given 30 days from the date of notification, subject to extensions upon request by the applicant, which shall not be unreasonably withheld, in which to respond to the recommendations and submit additional evidence pertinent to the factors considered in the development of the preliminary recommendations. Public comment may be invited on preliminary recommendations when warranted. (2) If the response contains new evidence on which there has been no opportunity for public comment, the Executive Secretary shall publish a notice in the Federal Register Federal Register (3) If the factors considered for an examiner's recommendation(s) change as a result of new evidence, the applicable procedures of paragraphs (e)(1) and (2) of this section shall be followed. (4) When necessary, a request may be made to CBP to provide further comments, which shall be submitted within 45 days after the request. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8529, Feb. 8, 2024] § 400.34 Examiner's review—application for production authority. (a) The examiner shall conduct a review taking into account the factors enumerated in this section, § 400.27, and other appropriate sections of this part, which shall include: (1) Conducting or participating in hearings scheduled by the Executive Secretary; (2) Reviewing case records, including public comments; (3) Requesting information and evidence from parties of record and others, as warranted; (4) Developing information and evidence necessary for analysis of the threshold factors and the economic factors enumerated in § 400.27; and (5) Conducting an analysis to include: (i) An evaluation of policy considerations pursuant to §§ 400.27(a)(1) and (2); (ii) An evaluation of the economic factors enumerated in §§ 400.27(a)(3) and 400.27(b), 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 production activity; (iii) Conducting appropriate industry research and surveys, as necessary; and (iv) Developing recommendations to the Board and submitting a report to the Executive Secretary, generally within 150 days of the close of the period for public comment (although additional time may be required in circumstances such as when the applicant or other party has obtained a time extension for a particular procedural step): (A) If the recommendations are unfavorable to the applicant, they shall be considered preliminary and the applicant shall be notified in writing (via electronic transmission where appropriate) of the preliminary recommendations and the factors considered in their development. The applicant shall be given 45 days from the date of notification in which to respond to the recommendations and submit additional evidence pertinent to the factors considered in the development of the preliminary recommendations. Public comment may be invited on preliminary recommendations when warranted. (B) If the response contains new evidence on which there has not been an opportunity for public comment, the Executive Secretary shall publish notice in the Federal Register Federal Register (C) If the factors considered for an examiner's recommendation(s) change as a result of new evidence, the applicable procedures of paragraphs (a)(5)(iv)(A) and (B) of this section shall be followed. (b) Methodology and evidence. (1) The first phase (§ 400.27(a)) involves consideration of threshold factors. If an examiner or reviewer makes a negative finding on any of the factors in § 400.27(a) in the course of a review, the applicant shall be informed pursuant to § 400.34(a)(5)(iv)(A). When threshold factors are the basis for a negative recommendation in a review of ongoing activity, the zone grantee and directly affected party shall be notified and given an opportunity to submit evidence pursuant to § 400.34(a)(5)(iv)(A). If the Board determines in the negative regarding any of the factors in § 400.27(a), it shall deny or restrict authority for the proposed or ongoing activity. (2) The second phase (§ 400.27(b)) involves consideration of the enumerated economic factors, taking into account their relative weight and significance under the circumstances. Previous evaluations in similar cases shall be considered. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8529, Feb. 8, 2024] § 400.35 Examiner's review—application for subzone designation. The examiner shall develop a memorandum with a recommendation on whether to approve the application, taking into account the criteria enumerated in § 400.26. To develop that memorandum, the examiner shall review the case records including public comments, and may request information and evidence from parties of record, as necessary. The examiner's memorandum shall generally be submitted to the Board within 30 days of the close of the period for public comment. However, additional time may be taken as necessary for analysis of any public comment in opposition to the application or if other complicating factors arise. (a) If the examiner's recommendation is unfavorable to the applicant, it shall be considered preliminary and the applicant shall be notified in writing (via electronic means, where appropriate) of the preliminary recommendation and the factors considered in its development. The applicant shall be given 30 days from the date of notification, subject to extensions upon request by the applicant, which shall not be unreasonably withheld, in which to respond to the recommendation and submit additional evidence pertinent to the factors considered in the development of the preliminary recommendations. Public comment may be invited on preliminary recommendations when warranted. (b) If the response contains new evidence on which there has not been an opportunity for public comment, the Executive Secretary shall publish notice in the Federal Register Federal Register (c) If the factors considered for an examiner's recommendation(s) change as a result of new evidence, the applicable procedures of paragraphs (a) and (b) of this section shall be followed. (d) The CBP adviser shall be requested, when necessary, to provide further comments, which shall be submitted within 45 days after the request. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8529, Feb. 8, 2024] § 400.36 Completion of case review. (a) The Executive Secretary shall circulate the examiner's report (memorandum in the case of subzone applications) with recommendations to CBP headquarters staff and to the Treasury Board member for review and action. (b) In its advisory role to the Board, CBP headquarters staff shall provide any comments within 15 days for applications under § 400.25 and within 30 days for all other applications. (c) The vote of the Treasury Board member shall be returned to the Executive Secretary within 30 days, unless a formal meeting is requested (see, § 400.3(b)). (d) The Commerce Department shall complete the decision process within 15 days of receiving the vote of the Treasury Board member, and the Executive Secretary shall publish the Board decision. (e) If the Board is unable to reach a unanimous decision, the applicant shall be notified and provided an opportunity to meet with the Board members or their delegates. (f) The Board delegates to the Executive Secretary authority to approve applications requesting subzone designation, on the condition that such approved subzones will be subject to the activation limit for the zone in question. (g) The Board or the Commerce Department's Assistant Secretary for Enforcement and Compliance may opt to terminate review of an application with no further action if the applicant has failed to provide in a timely manner information needed for evaluation of the application. A request from an applicant for an extension of time to provide information needed for evaluation of an application shall not be unreasonably withheld. The Executive Secretary may terminate review of an application where the overall circumstances presented in the application no longer exist as a result of a material change, and shall notify the applicant in writing of the intent to terminate review and allow 30 days for a response prior to completion of any termination action. The Executive Secretary shall confirm the termination in writing (by electronic means, where appropriate) to the applicant. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8529, Feb. 8, 2024] § 400.37 Procedure for notification of proposed production activity. (a) Submission of notification. (b) Initial processing of notification. Federal Register Federal Register (c) Determinations regarding further review. (1) Further review is not needed for all or part of the activity that is the subject of the notification, and that the activity in question may be conducted; or (2) Further review is needed for all or part of the activity that is the subject of the notification, with such activity precluded absent specific authorization. (d) Authorization for commencement of an activity on an interim basis. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8529, Feb. 8, 2024] § 400.38 Procedure for request for minor modification of zone. (a) The Executive Secretary shall make a determination in cases under § 400.24(c) involving minor modifications of zones that do not require Board action, such as boundary modifications, including certain relocations, and shall notify the requestor in writing of the decision on the request within 30 days of the Executive Secretary's receipt of the complete request and the CBP comments under paragraph (b) of this section. Depending on the specific request, the decision could be that the request cannot be processed under § 400.24(c). The requestor shall submit a copy of its request to CBP no later than the time of the requestor's submission of the request to the Executive Secretary. (b) If not previously provided to the requestor for inclusion with the requestor's submission of the request to the Executive Secretary, any CBP comments on the request shall be provided to the Executive Secretary within 20 days of the requestor's submission of the request to the Executive Secretary. [89 FR 8529, Feb. 8, 2024] Subpart E—Operation of Zones and Administrative Requirements § 400.41 General operation of zones; requirements for commencement of operations. (a) In general. (b) Requirements for commencement of operations in a zone. (1) The grantee shall submit the zone schedule to the Executive Secretary, as provided in § 400.44. (2) Approval or concurrence from the grantee and approval from CBP, pursuant to 19 CFR part 146, are required prior to the activation of any portion of an approved zone; and (3) Prior to activation of a zone, the 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. § 400.42 Operation as public utility. (a) In general. (b) [Reserved] [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8530, Feb. 8, 2024] § 400.43 Uniform treatment. Pursuant to Section 14 of the FTZ Act (19 U.S.C. 81n), a grantee shall afford to all who may apply to make use of or participate in the zone uniform treatment under like conditions. Treatment of zone participants within a zone (including application of rates and charges) shall not vary depending on whether a zone participant has procured any zone-related product or service or engaged a particular supplier to provide any such product or service. (a) Agreements to be made in writing. (b) Evaluation of proposals. (c) Justification for differing treatment. (d) Avoidance of non-uniform treatment. (1) Key functions are: (i) Taking action on behalf of a grantee, or making recommendations to a grantee, regarding the disposition of proposals or requests by zone participants pertaining to FTZ authority or activity (including activation by CBP); (ii) Approving, or being a party to, a zone participant's agreement with the grantee (or person acting on behalf of the grantee) pertaining to FTZ authority or activity (including activation by CBP); or (iii) Overseeing zone participants' operations on behalf of a grantee. (2) Key categories of persons are: (i) A person that currently engages in, or which has during the preceding twelve months engaged in, offering/providing a zone-related product/service to or representing a zone participant in the grantee's zone; (ii) Any person that stands to gain from a person's offer/provision of a zone-related product/service to or representation of a zone participant in the zone; or (iii) Any person related, as defined in paragraph (e) of this section, to the person identified in paragraphs (d)(2)(i) and (ii) of this section. (e) Definition of related persons. (1) Members of a family or members of a household. The term members of a family means spouses, parents, grandparents, children, grandchildren, siblings (including half-siblings and step-siblings), aunts, uncles, nieces, nephews, and first cousins, as well as the parents, children, and siblings of a spouse, and the spouse of a sibling, child or parent; (2) Organizations that are wholly or majority-owned by members of the same family or members of the same household; (3) An officer or director of an organization and that organization; (4) Partners; (5) Employers and their employees; (6) An organization and any person directly or indirectly owning, controlling, or holding with power to vote, 20 percent or more of the outstanding voting stock or shares of that organization; (7) Any person that controls any other person and that other person (the term control means the power, direct or indirect, whether or not exercised, through any means, to determine, direct, or decide important matters affecting an entity); or (8) Any two or more persons who directly control, are controlled by, or are under common control with, any person (see definition of control in paragraph (e)(7) of this section). (f) Waivers. (g) Requests for determinations. (h) Identification of person undertaking function(s) on behalf of grantee. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8530, Feb. 8, 2024] § 400.44 Zone schedule. (a) The zone grantee shall submit to the Executive Secretary (electronic copy or as specified by the Executive Secretary) a zone schedule which sets forth the elements required in this section. No element of a zone schedule (including any amendment to the zone schedule) may be considered to be in effect until such submission has occurred. If warranted, the Board may subsequently amend the requirements of this section by Board Order. (b) Each zone schedule shall include: (1) A title page, which shall include the name of the zone grantee and the date of the current schedule; (2) A table of contents; (3) Internal rules/regulations and policies for the zone; (4) All rates or charges assessed by or on behalf of the grantee; (5) Information identifying any operator which offers services to the public and which has requested that its information be included in the zone schedule; and (6) An appendix with definitions of any FTZ-related terms used in the zone schedule (as needed). (c) The Executive Secretary may review the zone schedule (or any amendment to the zone schedule) to determine whether it contains sufficient information for zone participants concerning the operation of the zone and the grantee's rates and charges as provided in paragraphs (b)(3) and (b)(4) of this section. If the Executive Secretary determines that the zone schedule (or amendment) does not satisfy these requirements, the Executive Secretary shall notify the zone grantee. The Executive Secretary may also conduct a review under 400.45(b). (d) Amendments to the zone schedule shall be prepared and submitted in the manner described in paragraph (a) of this section, and listed in the concluding section of the zone schedule, with dates. No rates/charges or other provisions required for the zone schedule may be applied by, or on behalf of, the grantee unless those specific rates/charges or provisions are included in the most recent zone schedule submitted to the Board and made available to the public in compliance with paragraph (e) of this section. (e) A complete copy of the zone schedule shall be freely available for public inspection at the offices of the zone grantee. The Board shall make copies of zone schedules available on its website. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8530, Feb. 8, 2024] § 400.45 Complaints related to public utility and uniform treatment. (a) In general. (b) Objections to rates and charges. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8530, Feb. 8, 2024] § 400.46 Grantee liability. (a) Exemption from liability. per se, (b) Exception to exemption from liability. § 400.47 Retail trade. (a) In general. (b) Procedure. (c) Criteria. (1) Whether any public benefits would result from approval; and (2) The economic effect such activity would have on the retail trade outside the zone in the port of entry area. § 400.48 Zone-restricted merchandise. (a) In general. (b) Criteria. (1) The intent of the parties; (2) Why the merchandise cannot be exported; (3) The public benefit involved in allowing entry of the merchandise; and (4) The recommendation of CBP. (c) Procedure. (2) The Executive Secretary shall investigate the request and prepare a report for the Board. (3) The Executive Secretary may act for the Board under this section with respect to requests that involve merchandise valued at 500,000 dollars or less and that are accompanied by a letter of concurrence from CBP. § 400.49 Monitoring and reviews of zone operations and activity. (a) In general. (b) Conduct of reviews. (c) Prohibition or restriction. Subpart F—Records, Reports, Notice, Hearings and Information § 400.51 Records and reports. (a) Records and forms. (b) Maps and drawings. (c) Annual reports. (2) The Board shall submit an annual report to Congress. § 400.52 Notices and hearings. (a) In general. Federal Register (b) Requests for hearings. (2) The request must be made within 30 days of the beginning of the initial period for public comment ( see (3) A determination as to the need for the hearing shall be made by the Commerce Department's Assistant Secretary for Enforcement and Compliance within 15 days after the receipt of such a request. (c) Procedure for public hearings. Federal Register [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8530, Feb. 8, 2024] § 400.53 Official records; public access. (a) Content. verbatim (b) Opening and closing of official record. (c) Protection of the official record. § 400.54 Information. (a) Request for information. (b) Public information. (c) Business proprietary information. i.e., (d) Disclosure of information. (e) Availability of information. http://www.trade.gov/ftz Subpart G—Penalties and Appeals to the Board § 400.61 Revocation of authority. (a) In general. see (b) Procedure. (1) Notify the grantee of the zone in question in writing stating the nature of the alleged violations, provide the grantee an opportunity to request a hearing on the proposed revocation, and notify any known operators in the zone; (2) Conduct a hearing, if requested or otherwise if appropriate; (3) Make a determination on the record of the proceeding not earlier than four months after providing notice to the zone grantee under paragraph (b)(1) of this section; and (4) If the Board's determination is affirmative, publish a notice of revocation of authority, in whole or in part, in the Federal Register. (c) Appeals. [77 FR 12139, Feb. 28, 2012, as amended at 89 FR 8530, Feb. 8, 2024] § 400.62 Fines, penalties and instructions to suspend activated status. (a) In general. (b) Violations involving requirement to submit annual report. (c) Violations involving uniform treatment. (d) Procedures for determination of violations and imposition of fines. (1) The Executive Secretary shall notify the party or parties responsible for the violation and the zone grantee in writing stating the nature of the alleged violation, and provide the party(ies) a specified period (no less than 30 days, with consideration given to any requests for an extension, which shall not be unreasonably withheld) to respond in writing; (2) The Executive Secretary shall conduct a hearing, if requested or otherwise if appropriate. Parties may be represented by counsel at the hearing, and any evidence and testimony of witnesses in the proceeding shall be presented. A transcript of the hearing shall be produced and a copy shall be made available to the parties; (3) The Executive Secretary shall make a recommendation on the record of the proceeding not earlier than the later of 15 days after the deadline for the party(ies)'s response under paragraph (d)(1) of this section or 15 days after the date of a hearing held under paragraph (d)(2) of this section. If the recommendation is for an affirmative determination of a violation, the Executive Secretary shall also recommend the amount of the fine to be imposed; and (4) The Board shall make a determination regarding the finding of a violation and imposition of a fine based on the Executive Secretary's recommendation under paragraph (d)(3) of this section. For related actions where the total sum of recommended fines is no more than 10,000 dollars (50,000 dollars in the case of violations pursuant to paragraph (b) of this section), the Board delegates to the Executive Secretary the authority to make a determination. (e) Mitigation In general. (2) Mitigating factors. (i) A good record of a violator over the preceding five years with regard to the type of violation(s) at issue; (ii) The violation was due to the action of another party despite violator's adherence to the requirements of the FTZ Act and the Board's regulations; (iii) Immediate remedial action by the violator to avoid future violations; (iv) A violator's cooperation with the Board (beyond the degree of cooperation expected from a person under investigation for a violation) in ascertaining the facts establishing the violation; (v) A violation's resulting from a clerical error or similar unintentional negligence; and (vi) Such other factors as the Board, or the Executive Secretary, deems appropriate to consider in the specific circumstances presented. (f) Assessment of fines. (g) Time for payment. (h) Procedures for instruction to suspend activated status. (1) Notification of party(ies). (2) Hearing. (3) The Executive Secretary shall make a recommendation on the record of the proceeding not earlier than 15 days after the later of: (i) The deadline for the party(ies)'s response under paragraph (h)(1) of this section; or (ii) The date of a hearing held under paragraph (h)(2) of this section; and (4) The Board or the Commerce Department's Assistant Secretary for Enforcement and Compliance shall determine whether to instruct CBP to suspend the activated status of the zone operation(s) in question. If the determination is affirmative, the Executive Secretary shall convey the instruction to CBP, with due consideration to allow for the transfer of any affected merchandise from the applicable zone site(s). (i) Enforcement of assessment. (j) Adjustment for inflation. § 400.63 Appeals to the Board of decisions of the Assistant Secretary for Enforcement and Compliance and the Executive Secretary. (a) In general. (b) Procedures.