[Title 15 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2012 Edition]
[From the U.S. Government Printing Office]
[[Page i]]
Title 15
Commerce and Foreign Trade
________________________
Parts 300 to 799
Revised as of January 1, 2012
Containing a codification of documents of general
applicability and future effect
As of January 1, 2012
Published by the Office of the Federal Register
National Archives and Records Administration as a
Special Edition of the Federal Register
[[Page ii]]
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[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 15:
SUBTITLE B--Regulations Relating to Commerce and Foreign
Trade (Continued)
Chapter III--International Trade Administration,
Department of Commerce 5
Chapter IV--Foreign-Trade Zones Board, Department of
Commerce 63
Chapter VII--Bureau of Industry and Security,
Department of Commerce 83
Finding Aids:
Table of CFR Titles and Chapters........................ 921
Alphabetical List of Agencies Appearing in the CFR...... 941
List of CFR Sections Affected........................... 951
[[Page iv]]
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Cite this Code: CFR
To cite the regulations in
this volume use title,
part and section number.
Thus, 15 CFR 301.1 refers
to title 15, part 301,
section 1.
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[[Page v]]
EXPLANATION
The Code of Federal Regulations is a codification of the general and
permanent rules published in the Federal Register by the Executive
departments and agencies of the Federal Government. The Code is divided
into 50 titles which represent broad areas subject to Federal
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name of the issuing agency. Each chapter is further subdivided into
parts covering specific regulatory areas.
Each volume of the Code is revised at least once each calendar year
and issued on a quarterly basis approximately as follows:
Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1
The appropriate revision date is printed on the cover of each
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LEGAL STATUS
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HOW TO USE THE CODE OF FEDERAL REGULATIONS
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To determine whether a Code volume has been amended since its
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collection request.
[[Page vi]]
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that volume.
[[Page vii]]
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Office of the Federal Register.
January 1, 2012.
[[Page ix]]
THIS TITLE
Title 15--Commerce and Foreign Trade is composed of three volumes.
The parts in these volumes are arranged in the following order: Parts 0-
299, 300-799, and part 800-End. The first volume containing parts 0-299
is comprised of Subtitle A--Office of the Secretary of Commerce,
Subtitle B, chapter I--Bureau of the Census, Department of Commerce, and
chapter II--National Institute of Standards and Technology, Department
of Commerce. The second volume containing parts 300-799 is comprised of
chapter III--International Trade Administration, Department of Commerce,
chapter IV--Foreign-Trade Zones Board, and chapter VII--Bureau of
Industry and Security, Department of Commerce. The third volume
containing part 800-End is comprised of chapter VIII--Bureau of Economic
Analysis, Department of Commerce, chapter IX--National Oceanic and
Atmospheric Administration, Department of Commerce, chapter XI--
Technology Administration, Department of Commerce, chapter XIII--East-
West Foreign Trade Board, chapter XIV--Minority Business Development
Agency, chapter XX--Office of the United States Trade Representative,
and chapter XXIII--National Telecommunications and Information
Administration, Department of Commerce. The contents of these volumes
represent all current regulations codified under this title of the CFR
as of January 1, 2012.
For this volume, Jonn V. Lilyea was Chief Editor. The Code of
Federal Regulations publication program is under the direction of
Michael L. White, assisted by Ann Worley.
[[Page 1]]
TITLE 15--COMMERCE AND FOREIGN TRADE
(This book contains parts 300-799)
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SUBTITLE B--Regulations Relating to Commerce and Foreign Trade
(Continued)
Part
chapter iii--International Trade Administration, Department
of Commerce............................................... 301
chapter iv--Foreign-Trade Zones Board, Department of
Commerce.................................................. 400
chapter vii--Bureau of Industry and Security, Department of
Commerce.................................................. 700
[[Page 3]]
SUBTITLE B--Regulations Relating to Commerce and Foreign Trade
(Continued)
[[Page 5]]
CHAPTER III--INTERNATIONAL TRADE ADMINISTRATION, DEPARTMENT OF COMMERCE
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SUBCHAPTER A--MISCELLANEOUS REGULATIONS
Part Page
300 [Reserved]
301 Instruments and apparatus for educational
and scientific institutions............. 7
302 [Reserved]
303 Watches, watch movements and jewelry program 19
310 Official U.S. Government recognition of and
participation in international
expositions held in the United States... 41
315 Determination of bona fide motor-vehicle
manufacturer............................ 46
325 Export trade certificates of review......... 47
335 Imports of worsted wool fabric.............. 56
336 Imports of cotton woven fabric.............. 60
[[Page 7]]
SUBCHAPTER A_MISCELLANEOUS REGULATIONS
PART 300 [RESERVED]
PART 301_INSTRUMENTS AND APPARATUS FOR EDUCATIONAL AND SCIENTIFIC
INSTITUTIONS--Table of Contents
Sec.
301.1 General provisions.
301.2 Definitions.
301.3 Application for duty-free entry of scientific instruments.
301.4 Processing of applications by the Department of the Treasury
(Customs and Border Protection).
301.5 Processing of applications by the Department of Commerce.
301.6 Appeals.
301.7 Final disposition of an application.
301.8 Instructions for entering instruments through Customs and Border
Protection under subheading 9810.00.60, HTSUS.
301.9 Uses and disposition of instruments entered under subheading
9810.00.60, HTSUS.
301.10 Importation of repair components and maintenance tools under
HTSUS subheadings 9810.00.65 and 9810.00.67 for instruments
previously the subject of an entry liquidated under subheading
9810.00.60, HTSUS.
Authority: Sec. 6(c), Pub. L. 89-651, 80 Stat. 897, 899; Sec. 2402,
Pub. L. 106-36, 113 Stat. 127, 168; 19 U.S.C. 1514(c)(3)); and
Presidential Proclamation 7011, signed on June 30, 1997.
Source: 47 FR 32517, July 28, 1982, unless otherwise noted.
Sec. 301.1 General provisions.
(a) Purpose. This part sets forth the regulations of the Department
of Commerce and the Department of the Treasury applicable to the duty-
free importation of scientific instruments and apparatus by public or
private nonprofit institutions.
(b) Background. (1) The Agreement on the importation of Educational,
Scientific and Cultural Materials (Florence Agreement; ``the
Agreement'') is a multinational treaty, which seeks to further the cause
of peace through the freer exchange of ideas and knowledge across
national boundaries, primarily by eliminating tariffs on certain
educational, scientific and cultural materials.
(2) Annex D of the Agreement provides that scientific instruments
and apparatus intended exclusively for educational purposes or pure
scientific research use by qualified nonprofit institutions shall enjoy
duty-free entry if instruments or apparatus of equivalent scientific
value are not being manufactured in the country of importation.
(3) The Annex D provisions are implemented for U.S. purposes in
Subchapter X, Chapter 98, Harmonized Tariff Schedule of the United
States (HTSUS).
(c) Summary of statutory procedures and requirements. (1) U.S. Note
1, Subchapter X, Chapter 98, HTSUS, provides, among other things, that
articles covered by subheadings 9810.00.60 (scientific instruments and
apparatus), 9810.00.65 (repair components therefor) and 9810.00.67
(tools for maintaining and testing the above), HTSUS, must be
exclusively for the use of the institutions involved and not for
distribution, sale, or other commercial use within five years after
entry. These articles may be transferred to another qualified nonprofit
institution, but any commercial use within five years of entry shall
result in the assessment of applicable duties pursuant to Sec.
301.9(c).
(2) An institution wishing to enter an instrument or apparatus under
tariff subheading 9810.00.60, HTSUS, must file an application with the
Customs and Border Protection in accordance with the regulations in this
section. If the application is made in accordance with the regulations,
notice of the application is published in the Federal Register to
provide an opportunity for interested persons and government agencies to
present views. The application is reviewed by the Secretary of Commerce
(Director, Statutory Import Programs Staff) , who decides whether or not
duty-free entry may be accorded the instrument and publishes the
decision in the Federal Register. An appeal of the final decision may be
filed with the U.S. Court of Appeals for the Federal Circuit, on
questions of law only, within 20 days after publication in the Federal
Register.
[[Page 8]]
(3) Repair components for instruments or apparatus admitted duty-
free under subheading 9810.00.60, HTSUS require no application and may
be entered duty-free in accordance with the procedures prescribed in
Sec. 301.10.
(4) Tools specifically designed to be used for the maintenance,
checking, gauging or repair of instruments or apparatus admitted under
subheadings 9810.00.65 and 9810.00.67, HTSUS, require no application and
may be entered duty-free in accordance with the procedures prescribed in
Sec. 301.10.
(d) Authority and delegations. The Act authorizes the Secretaries of
Commerce and the Treasury to prescribe joint regulations to carry out
their functions under U.S. Note 6, Subchapter X, Chapter 98, HTSUS. The
Secretary of the Treasury has delegated authority to the Assistant
Secretary for Enforcement, who has retained rulemaking authority and
further delegated administration of the regulations to the Commissioner
of the Customs and Border Protection. The authority of the Secretary of
Commerce has been delegated to the Assistant Secretary for Import
Administration who has retained rulemaking authority and further
delegated administration of the regulations to the Director of the
Statutory Import Programs Staff.
[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 66
FR 28832, May 25, 2001; 74 FR 30463, June 26, 2009]
Sec. 301.2 Definitions.
For the purposes of these regulations and the forms used to
implement them:
(a) Director means the Director of the Statutory Import Programs
Staff, International Trade Administration, U.S. Department of Commerce.
(b) The Commissioner means Commissioner of Customs and Border
Protection, or the official(s) designated to act on the Commissioner's
behalf.
(c) CBP Port'' or the Port means the port where a particular claim
has been or will be made for duty-free entry of a scientific instrument
or apparatus under subheading 9810.00.60, HTSUS.
(d) Entry means entry of an instrument into the Customs territory of
the United States for consumption or withdrawal of an instrument from a
Customs bonded warehouse for consumption.
(e) United States includes only the several States, the District of
Columbia and the Commonwealth of Puerto Rico.
(f) Instrument means instruments and apparatus specified in U.S.
Note 6(a), Subchapter X, Chapter 98, HTSUS. A combination of basic
instrument or apparatus and accompanying accessories shall be treated as
a single instrument provided that, under normal commercial practice,
such combination is considered to be a single instrument and provided
further that the applicant has ordered or, upon favorable action on its
application, firmly intends to order the combination as a unit. The term
``instrument'' also covers separable components of an instrument that
are imported for assembly in the United States in such instrument where
that instrument, due to its size, cannot feasibly be imported in its
assembled state. The components, as well as the assembled instrument
itself, must be classifiable under the tariff provisions listed in U.S.
Note 6(a), Subchapter X, Chapter 98, HTSUS. See paragraph (k) of this
section and Sec. 301.3(f). Unless the context indicates otherwise,
instrument or apparatus shall mean a foreign ``instrument or apparatus''
for which duty-free entry is sought under subheading 9810.00.60, HTSUS.
Spare parts typically ordered and delivered with an instrument are also
considered part of an instrument for purposes of these regulations. The
term ``instruments'' shall not include:
(1) Materials or supplies used in the operation of instruments and
apparatus such as paper, cards, tapes, ink, recording materials,
expendable laboratory materials, apparatus that loses identity or is
consumed by usage or other materials or supplies.
(2) Ordinary equipment for use in building construction or
maintenance; or equipment for use in supporting activities of the
institution, such as its administrative offices, machine shops,
libraries, centralized computer facilities, eating facilities, or
religious facilities; or support equipment such as copying machines,
glass working apparatus and film processors.
[[Page 9]]
(3) General purpose equipment such as air conditioners, electric
typewriters, electric drills, refrigerators.
(4) General-purpose computers. Accessories to computers which are
not eligible for duty-free treatment are also ineligible. Scientific
instruments containing embedded computers which are to be used in a
dedicated process or in instrument control, as opposed to general data
processing or computation, are, however, eligible for duty-free
consideration.
(5) Instruments initially imported solely for testing or review
purposes which were entered under bond under subheading 9813.00.30,
HTSUS, subject to the provisions of U.S. Note 1(a), Subchapter XIII,
Chapter 98, HTSUS, and must be exported or destroyed within the time
period specified in that U.S. Note.
(g) Domestic instrument means an instrument which is manufactured in
the United States. A domestic instrument need not be made exclusively of
domestic components or accessories.
(h) Accessory has the meaning which it has under normal commercial
usage. An accessory, whether part of an instrument or an attachment to
an instrument, adds to the capability of an instrument. An accessory for
which duty-free entry is sought under subheading 9810.00.60, HTSUS shall
be the subject of a separate application when it is not an accompanying
accessory. The existing instrument, for which the accessory is being
purchased, may be domestic or, if foreign, it need not have entered duty
free under subheading 9810.00.60, HTSUS.
(i) Accompanying accessory means an accessory for an instrument that
is listed as an item in the same purchase order and that is necessary
for accomplishment of the purposes for which the instrument is intended
to be used.
(j) Ancillary equipment means an instrument which may be
functionally related to the foreign instrument but is not operationally
linked to it. Examples of ancillary equipment are vacuum evaporators or
ultramicrotomes, which can be used to prepare specimens for electron
microscopy. Further, equipment which is compatible with the foreign
instrument, but is also clearly compatible with similar domestic
instruments, such as a vacuum evaporator sold for use with an electron
microscope, will be treated as ancillary equipment. A separate
application will be required for ancillary equipment even if ordered
with the basic instrument.
(k) Components of an instrument means parts or assemblies of parts
which are substantially less than the instrument to which they relate. A
component enables an instrument to function at a specified minimum
level, while an accessory adds to the capability of an instrument.
Applications shall not be accepted for components of instruments that
did not enter duty-free under subheading 9810.00.60, HTSUS or for
components of instruments being manufactured or assembled by a
commercial firm or entity in the U.S. In determining whether an item is
a component ineligible for duty-free consideration or an accessory
eligible for such consideration, Customs and Border Protection shall
take into account such factors as the item's complexity, novelty, degree
of integration and pertinency to the research purposes to be performed
by the instrument as a whole. The above notwithstanding, separable
components of some instruments may be eligible for duty-free treatment.
See paragraph (f) of this section.
(l) Produced for stock means an instrument which is manufactured, on
sale and available from a stock.
(m) Produced on order means an instrument which a manufacturer lists
in current catalog literature and is able and willing to produce and
have available without unreasonable delay to the applicant.
(n) Custom-made means an instrument which a manufacturer is willing
and able to make to purchaser's specifications. Instruments resulting
from a development effort are treated as custom-made for the purposes of
these regulations. Also, a special-order variant of a produced on order
instrument, with significant modifications specified by the applicant,
may be treated as custom-made.
(o) Same general category means the category in which an instrument
is customarily classified in trade directories and product-source lists,
e.g.,
[[Page 10]]
scanning electron microscope, x-ray spectrometer, light microscope, x-
ray spectrometer.
(p) Comparable domestic instrument means a domestic instrument
capable or potentially capable of fulfilling the applicant's technical
requirements or intended uses, whether or not in the same general
category as the foreign instrument.
(q) Specifications means the particulars of the structural,
operational and performance characteristics or capabilities of a
scientific instrument.
(r) Guaranteed specifications are those specifications which are an
explicit part of the contractual agreement between the buyer and the
seller (or which would become part of the agreement if the buyer
accepted the seller's offer), and refer only to the minimum and
routinely achievable performance levels of the instrument under
specified conditions. If a capability is listed or quoted as a range
(e.g., ``5 to 10 nanometers'') or as a minimum that may be exceeded
(e.g., ``5 angstroms or better''), only the inferior capability may be
considered the guaranteed specification. Evidence that specifications
are ``guaranteed'' will normally consist of their being printed in a
brochure or other descriptive literature of the manufacturer; being
listed in a purchase agreement upon which the purchase is conditioned;
or appearing in a manufacturer's formal response to a request for quote.
If, however, no opportunity to submit a bid was afforded the domestic
manufacturer or if, for any other reason, comparable guaranteed
specifications of the foreign and domestic instruments do not appear on
the record, other evidence relating to a manufacturer's ability to
provide an instrument with comparable specifications may, at the
discretion of the Director, be considered in the comparison of the
foreign and domestic instruments' capabilities. Performance results on a
test sample run at the applicant's request may be cited as evidence for
or against a guaranteed specification.
(s) Pertinent specifications are those specifications necessary for
the accomplishment of the specific scientific research or science-
related educational purposes described by the applicant. Specifications
of features (even if guaranteed) which afford greater convenience,
satisfy personal preferences, accommodate institutional commitments or
limitations, or assure lower costs of acquisition, installation,
operation, servicing or maintenance are not pertinent. For example, a
design feature, such as a small number of knobs or controls on an
instrument primarily designed for research purposes, would be a
convenience. The ability to fit an instrument into a small room, when
the required operations could be performed in a larger room, would be
either a cost consideration or a matter of convenience and not a
pertinent specification. In addition, mere difference in design (which
would, for example, broaden the educational experience of students but
not provide superior scientific capability) would not be pertinent.
Also, characteristics such as size, weight, appearance, durability,
reliability, complexity (or simplicity), ease of operation, ease of
maintenance, productivity, versatility, ``state of the art'' design,
specific design and compatibility with currently owned or ordered
equipment are not pertinent unless the applicant demonstrates that the
characteristic is necessary for the accomplishment of its scientific
purposes.
[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 66
FR 28832, May 25, 2001; 74 FR 30463, June 26, 2009]
Sec. 301.3 Application for duty-free entry of scientific instruments.
(a) Who may apply. An applicant for duty-free entry of an instrument
under subheading 9810.00.60, HTSUS must be a public or private nonprofit
institution which is established for educational or scientific purposes
and which has placed a bona fide order or has a firm intention to place
a bona fide order for a foreign instrument within 60 days following a
favorable decision on the institution's application.
(b) Application forms. Applications must be made on form ITA-338P
which may be obtained from the Statutory Import Programs Staff,
International Trade Administration, U.S. Department of Commerce,
Washington, DC 20230, the Web site at http://ia.ita.doc.gov/sips/
index.html, or from the
[[Page 11]]
various District Offices of the U.S. Department of Commerce. (Approved
by the Office of Management and Budget under control number 0625-0037)
(c) Where to apply. Applications must be filed with the U.S. Customs
and Border Protection, at the address specified on page 1 of the form.
(d) Five copies of the form, including relevant supporting
documents, must be submitted. One of these copies shall be signed in the
original by the person in the applicant institution under whose
direction and control the foreign instrument will be used and who is
familiar with the intended uses of the instrument. The remaining four
copies of the form may be copies of the original. Attachments should be
fully identified and referenced to the question(s) on the form to which
they relate.
(e) A single application (in the requisite number of copies) may be
submitted for any quantity of the same type or model of foreign
instrument provided that the entire quantity is intended to be used for
the same purposes and provided that all units are included on a single
purchase order. A separate application shall be submitted for each
different type or model or variation in the type or model of instrument
for which duty-free entry is sought even if covered by a single purchase
order. Orders calling for multiple deliveries of the same type or model
of instrument over a substantial period of time may, at the discretion
of the Director, require multiple applications.
(f) An application for components of an instrument to be assembled
in the United States as described in Sec. 301.2(f) may be filed
provided that all of the components for the complete, assembled
instrument are covered by, and fully described in, the application. See
also Sec. 301.2(k).
(g) Failure to answer completely all questions on the form in
accordance with the instructions on the form or to supply the requisite
number of copies of the form and supporting documents may result in
delays in processing of the application while the deficiencies are
remedied, return of the application without processing, or denial of the
application without prejudice to resubmission. Any questions on these
regulations or the application form should be addressed to the Director.
[47 FR 32517, July 28, 1982, as amended at 50 FR 11501, Mar. 22, 1985;
66 FR 28833, May 25, 2001; 74 FR 30463, June 26, 2009]
Sec. 301.4 Processing of applications by the Department of the Treasury
(Customs and Border Protection).
(a) Review and determination. The Commissioner shall date each
application when received by Customs and Border Protection. If the
application appears to be complete, the Commissioner shall determine:
(1) Whether the institution is a nonprofit private or public
institution established for research and educational purposes and
therefore authorized to import instruments into the U.S. under
subheading 9810.00.60, HTSUS. In making this determination, the
Commissioner may require applicants to document their eligibility under
this paragraph;
(2) Whether the instrument or apparatus falls within the classes of
instruments eligible for duty-free entry consideration under subheading
9810.00.60, HTSUS. For eligible classes, see U.S. Note 6(a), Subchapter
X, Chapter 98, HTSUS; and
(3) Whether the instrument or apparatus is for the exclusive use of
the applicant institution and is not intended to be used for commercial
purposes. For the purposes of this section, commercial uses would
include, but not necessarily be limited to: Distribution, lease or sale
of the instrument by the applicant institution; any use by, or for the
primary benefit of, a commercial entity; or use of the instrument for
demonstration purposes in return for a fee, price discount or other
valuable consideration. Evaluation, modification or testing of the
foreign instrument, beyond normal, routine acceptance testing and
calibration, to enhance or expand its capabilities primarily to benefit
the manufacturer in return for a discount or other valuable
consideration, may be considered a commercial benefit. In making the
above determination, the Commissioner may consider, among other things,
whether the results of any research to be performed with the instrument
will be fully and timely made
[[Page 12]]
available to the public. For the purposes of this section, use of an
instrument for the treatment of patients is considered noncommercial.
If any of the Commissioner's determinations is in the negative, the
application shall be found to be outside the scope of the Act and shall
be returned to the applicant with a statement of the reason(s) for such
findings.
(b) Forwarding of applications to the Department of Commerce. If the
Commissioner finds the application to be within the scope of the Act and
these regulations, the Commissioner shall (1) assign a number to the
application and (2) forward one copy to the Secretary of the Department
of Health and Human Services (HHS), and two copies, including the one
that has been signed in the original, to the Director. The Commissioner
shall retain one copy and return the remaining copy to the applicant
stamped ``Accepted for Transmittal to the Department of Commerce.'' The
applicant shall file the stamped copy of the form with the Port when
formal entry of the article is made. If entry has already occurred under
a claim of subheading 9810.00.60, HTSUS , the applicant (directly or
through his/her agent) shall at the earliest possible date supply the
stamped copy to the Port. Further instructions for entering instruments
are contained in Sec. 301.8 of the regulations.
[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 50
FR 11501, Mar. 22, 1985; 66 FR 28833, May 25, 2001; 74 FR 30463, June
26, 2009]
Sec. 301.5 Processing of applications by the Department of Commerce.
(a) Public notice and opportunity to present views. (1) Within 5
days of receipt of an application from the Commissioner, the Director
shall make a copy available for public inspection during ordinary
business hours of the Department of Commerce. Unless the Director
determines that an application has deficiencies which preclude
consideration on its merits (e.g., insufficient description of intended
purposes to rule on the scientific equivalency of the foreign instrument
and potential domestic equivalents), he shall publish in the Federal
Register a notice of the receipt of the application to afford all
interested persons a reasonable opportunity to present their views with
respect to the question ``whether an instrument or apparatus of
equivalent scientific value for the purpose for which the article is
intended to be used is being manufactured in the United States.'' The
notice will include the application number, the name and address of the
applicant, a description of the instrument(s) for which duty-free entry
is requested, the name of the foreign manufacturer and a brief summary
of the applicant's intended purposes extracted from the applicant's
answer to question 7 of the application. In addition, the notice shall
specify the date the application was accepted by the Commissioner for
transmittal to the Department of Commerce.
(2) If the Director determines that an application is incomplete or
is otherwise deficient, he may request the applicant to supplement the
application, as appropriate, prior to publishing the notice of
application in the Federal Register. Supplemental information/material
requested under this provision shall be supplied to the Director in two
copies within 20 days of the date of the request and shall be subject to
the certification on the form. Failure to provide the requested
information on time shall result in a denial of the application without
prejudice to resubmission pursuant to paragraph (e) of this section.
(3) Requirement for presentation of views (comments) by interested
persons. Any interested person or government agency may make written
comments to the Director with respect to the question whether an
instrument of equivalent scientific value, for the purposes for which
the foreign instrument is intended to be used, is being manufactured in
the United States. Except for comments specified in paragraph (a)(4) of
this section, comments should be in the form of supplementary answers to
the applicable questions on the application form. Comments must be
postmarked no later than 20 days from the date on which the notice of
application is published in the Federal Register. In order to be
considered, comments and related attachments must be submitted to the
Director in duplicate; shall state the name, affiliation and address of
the person
[[Page 13]]
submitting the comment; and shall specify the application to which the
comment applies. In order to preserve the right to appeal the Director's
decision on a particular application pursuant to Sec. 301.6 of these
regulations, a domestic manufacturer or other interested person must
make timely comments on the application. Separate comments should be
supplied on each application in which a person has an interest. However,
brochures, pamphlets, printed specifications and the like, included with
previous comments, if properly identified, may be incorporated by
reference in subsequent comments.
(4) Comments by domestic manufacturers. Comments of domestic
manufacturers opposing the granting of an application should:
(i) Specify the domestic instrument considered to be scientifically
equivalent to the foreign article for the applicant's specific intended
purposes and include documentation of the domestic instrument's
guaranteed specifications and date of availability.
(ii) Show that the specifications claimed by the applicant in
response to question 8 to be pertinent to the intended purpose can be
equaled or exceeded by those of the listed domestic instrument(s)
whether or not it has the same design as the foreign instrument; that
the applicant's alleged pertinent specifications should not be
considered pertinent within the meaning of Sec. 301.2(s) of the
regulations for the intended purposes of the instrument described in
response to question 7 of the application; or that the intended purposes
for which the instrument is to be used do not qualify the instrument for
duty-free consideration under the Act.
(iii) Where the comments regarding paragraphs (a)(4)(i) and
(a)(4)(ii) of this section relate to a particular accessory or optional
device offered by a domestic manufacturer, cite the type, model or other
catalog designation of the accessory device and include the
specification therefor in the comments.
(iv) Where the justification for duty-free entry is based on
excessive delivery time, show whether:
(A) The domestic instrument is as a general rule either produced for
stock, produced on order, or custom-made and;
(B) An instrument or apparatus of equivalent scientific value to the
article, for the purposes described in response to question 7, could
have been produced and delivered to the applicant within a reasonable
time following the receipt of the order.
(v) Indicate whether the applicant afforded the domestic
manufacturer an opportunity to furnish an instrument or apparatus of
equivalent scientific value to the article for the purposes described in
response to question 7 and, if such be the case, whether the applicant
issued an invitation to bid that included the technical requirements of
the applicant.
(5) Untimely comments. Comments must be made on a timely basis to
ensure their consideration by the Director and the technical
consultants, and to preserve the commenting person's right to appeal the
Director's decision. The Director, at his discretion, may take into
account factual information contained in untimely comments.
(6) Provision of general comments. A domestic manufacturer who does
not wish to oppose duty-free entry of a particular application, but who
desires to inform the Director of the availability and capabilities of
its instrument(s), may at any time supply documentation to the Director
without reference to a particular application. Such documentation shall
be taken into account by the Director when applications involving
comparable foreign instruments are received. The provision of general
comments does not preserve the provider's right to appeal the Director's
decision.
(b) Additions to the record. The Director may solicit from the
applicant, from foreign or domestic manufacturers, their agents, or any
other person or Government agency considered by the Director to have
related competence, any additional information the Director considers
necessary to make a decision. The Director may attach conditions and
time limitations upon the provision of such information and may draw
appropriate inferences from a person's failure to provide the requested
information.
[[Page 14]]
(c) Advice from technical consultants. (1) The Director shall
consider any written advice from the Secretary of HHS, or his delegate,
on the question whether a domestic instrument of equivalent scientific
value to the foreign instrument, for the purposes for which the
instrument is intended to be used, is being manufactured in the United
States.
(2) After the comment period has ended (Sec. 301.5(a)(3)), the
complete application and any comments received and related information
are forwarded to appropriate technical consultants for their advice.
(3) The technical consultants relied upon for advice include, but
are not limited to, the National Institutes of Health (delegated the
function by the Secretary of HHS), the National Institute of Standards
and Technology and the National Oceanographic and Atmospheric
Administration.
(d) Criteria for the determinations of the Department of Commerce--
(1) Scientific equivalency. (i) The determination of scientific
equivalency shall be based on a comparison of the pertinent
specifications of the foreign instrument with similar pertinent
specifications of comparable domestic instruments (see Sec. 301.2(s)
for the definition of pertinent specification). Ordinarily, the Director
will consider only those performance characteristics which are
``guaranteed specifications'' within the meaning of Sec. 301.2(r) of
this part. In no event, however, shall the Director consider performance
capabilities superior to the manufacturer's guaranteed specifications or
their equivalent. In making the comparison the Director may consider a
reasonable combination of domestic instruments that brings together two
or more functions into an integrated unit if the combination of domestic
instruments is capable of accomplishing the purposes for which the
foreign instrument is intended to be used. If the Director finds that a
domestic instrument possesses all of the pertinent specifications of the
foreign instrument, he shall find that there is being manufactured in
the United States an instrument of equivalent scientific value for such
purposes as the foreign instrument is intended to be used. If the
Director finds that the foreign instrument possesses one or more
pertinent specifications not possessed by the comparable domestic
instrument, the Director shall find that there is not being manufactured
in the United States an instrument of equivalent scientific value to the
foreign instrument for such purposes as the foreign instrument is
intended to be used.
(ii) Programs that may be undertaken at some unspecified future date
shall not be considered in the Director's comparison. In making the
comparison, the Director shall consider only the instrument and
accompanying accessories described in the application and determined
eligible by the Customs and Border Protection. The Director shall not
consider the planned purchase of additional accessories or the planned
adaptation of the article at some unspecified future time.
(iii) In order for the Director to make a determination with respect
to the ``scientific equivalency'' of the foreign and domestic
instruments, the applicant's intended purposes must include either
scientific research or science-related educational programs. Instruments
used exclusively for nonscientific purposes have no scientific value,
thereby precluding the requisite finding by the Director with respect to
``whether an instrument or apparatus of equivalent scientific value to
such article, for the purposes for which the article is intended to be
used, is being manufactured in the United States.'' In such cases the
Director shall deny the application for the reason that the instrument
has no scientific value for the purposes for which it is intended to be
used. Examples of nonscientific purposes would be the use of an
instrument in routine diagnosis or patient care and therapy (as opposed
to clinical research); in teaching a nonscientific trade (e.g.,
printing, shoemaking, metalworking or other types of vocational
training); in teaching nonscientific courses (e.g., music, home
economics, journalism, drama); in presenting a variety of subjects or
merely for presenting coursework, whether or not science related (e.g.,
video tape editors, tape recorders, projectors); and in conveying
cultural information to the public (e.g., a planetarium in the
Smithsonian Institution).
[[Page 15]]
(2) Manufactured in the United States. An instrument shall be
considered as being manufactured in the United States if it is
customarily ``produced for stock,'' ``produced on order'' or ``custom-
made'' within the United States. In determining whether a U.S.
manufacturer is able and willing to produce an instrument, and have it
available without unreasonable delay, the normal commercial practices
applicable to the production and delivery of instruments of the same
general category shall be taken into account, as well as other factors
which in the Director's judgment are reasonable to take into account
under the circumstances of a particular case. For example, in
determining whether a domestic manufacturer is able to produce a custom-
made instrument, the Director may take into account the production
experience of the domestic manufacturer including (i) the types,
complexity and capabilities of instruments the manufacturer has
produced, (ii) the extent of the technological gap between the
instrument to which the application relates and the manufacturer's
customary products, (iii) the manufacturer's technical skills, (iv) the
degree of saturation of the manufacturer's production capability, and
(v) the time required by the domestic manufacturer to produce the
instrument to the purchaser's specification. Whether or not the domestic
manufacturer has field tested or demonstrated the instrument will not,
in itself, enter into the decision regarding the manufacturer's ability
to manufacture an instrument. Similarly, in determining whether a
domestic manufacturer is willing to produce an instrument, the Director
may take into account the nature of the bid process, the manufacturer's
policy toward manufacture of the product(s) in question, the minimum
size of the manufacturer's production runs, whether the manufacturer has
bid similar instruments in the past, etc. Also, if a domestic
manufacturer was formally requested to bid an instrument, without
reference to cost limitations and within a leadtime considered
reasonable for the category of instrument involved, and the domestic
manufacturer failed formally to respond to the request, for the purposes
of this section the domestic manufacturer would not be considered
willing to have supplied the instrument.
(3) Burden of proof. The burden of proof shall be on the applicant
to demonstrate that no instrument of equivalent scientific value for the
purposes for which the foreign instrument is to be used is being
manufactured in the United States. Evidence of applicant favoritism
towards the foreign manufacturer (advantages not extended to domestic
firms, such as additional lead time, know-how, methods, data on
pertinent specifications or intended uses, results of research or
development, tools, jigs, fixtures, parts, materials or test equipment)
may be, at the Director's discretion, grounds for rejecting the
application.
(4) Excessive delivery time. Duty-free entry of the instrument shall
be considered justified without regard to whether there is being
manufactured in the United States an instrument of equivalent scientific
value for the intended purposes if excessive delivery time for the
domestic instrument would seriously impair the accomplishment of the
applicant's intended purposes. For purposes of this section, (i) except
when objective and convincing evidence is presented that, at the time of
order, the actual delivery time would significantly exceed quoted
delivery time, no claim of excessive delivery time may be made unless
the applicant has afforded the domestic manufacturer an opportunity to
quote and the delivery time for the domestic instrument exceeds that for
the foreign instrument; and (ii) failure by the domestic manufacturer to
quote a specific delivery time shall be considered a non-responsive bid
(see Sec. 301.5(d)(2)). In determining whether the difference in
delivery times cited by the applicant justifies duty-free entry on the
basis of excessive delivery time, the Director shall take into account
(A) the normal commercial practice applicable to the production of the
general category of instrument involved; (B) the efforts made by the
applicant to secure delivery of the instruments (both foreign and
domestic) in the shortest possible time; and (C) such other factors as
the Director finds relevant under the circumstances of a particular
case.
[[Page 16]]
(5) Processing of applications for components. (i) The Director may
process an application for components which are to be assembled in the
United States into an instrument or apparatus which, due to its size,
cannot be imported in its assembled state (see Sec. 301.2(k)) as if it
were an application for the assembled instrument. A finding by the
Director that no equivalent instrument is being manufactured in the
United States shall, subject to paragraph (d)(5)(ii) of this section,
qualify all the associated components, provided they are entered within
the period established by the Director, taking into account both the
scientific needs of the importing institution and the potential for
development of related domestic manufacturing capacity.
(ii) Notwithstanding a finding under paragraph (d)(5)(i) of this
section that no equivalent instrument is being manufactured in the
United States, the Director shall disqualify a particular component for
duty-free treatment if the Director finds that the component is being
manufactured in the United States.
(e) Denial without prejudice to resubmission (DWOP). The Director
may, at any stage in the processing of an application by the Department
of Commerce, DWOP an application if it contains any deficiency which, in
the Director's judgment, prevents a determination on its merits. The
Director shall state the deficiencies of the application in the DWOP
letter to the applicant.
(1) The applicant has 60 days from the date of the DWOP to correct
the cited deficiencies in the application unless a request for an
extension of time for submission of the supplemental information has
been received by the Director prior to the expiration of the 60-day
period and is approved.
(2) If granted, extensions of time will generally be limited to 30
days.
(3) Resubmissions must reference the application number of the
earlier submission. The resubmission may be made by letter to the
Director. The record of a resubmitted application shall include the
original submission on file with the Department. Any new material or
information contained in a resubmission, which should address the
specific deficiencies cited in the DWOP letter, should be clearly
labeled and referenced to the applicable question on the application
form. The resubmission must be for the instrument covered by the
original application unless the DWOP letter specifies to the contrary.
The resubmission shall be subject to the certification made on the
original application.
(4) If the applicant fails to resubmit within the applicable time
period, the prior DWOP shall, irrespective of the merits of the case,
result in a denial of the application.
(5) The Director shall use the postmark date of the fully completed
resubmission in determining whether the resubmission was made within the
allowable time period. Certified or registered mail, or some other means
which can unequivocally establish the date of mailing, is recommended.
Resubmission by fax, e-mail or other electronic means is acceptable
provided an appropriate return number or address is provided in the
transmittal. Resubmissions must clearly indicate the date of transmittal
to the Director.
(6) The applicant may, at any time prior to the end of the
resubmission period, notify the Director in writing that it does not
intend to resubmit the application. Upon such notification, the
application will be deemed to have been withdrawn. (See Sec. 301.5(g).)
(7) Information provided in a resubmission that, in the judgment of
the Director, contradicts or conflicts with information provided in a
prior submission, or is not a reasonable extension of the information
contained in the prior submission, shall not be considered in making the
decision on an application that has been resubmitted. Accordingly, an
applicant may elect to reinforce an orginal submission by elaborating in
the resubmission on the description of the purposes contained in a prior
submission and may supply additional examples, documentation and/or
other clarifying detail, but the applicant shall not introduce new
purposes or other material changes in the nature of the original
application. The resubmission should address the specific deficiencies
cited in the DWOP. The Director may draw appropriate inferences
[[Page 17]]
from the failure of an applicant to attempt to provide the information
requested in the DWOP.
(8) In the event an applicant fails to address the noted
deficiencies in the response to the DWOP, the Director may deny the
application.
(f) Decisions on applications. The Director shall prepare a written
decision granting or denying each application. However, when he deems
appropriate, the Director may issue a consolidated decision on two or
more applications. The Director shall promptly forward a copy of the
decision to each applicant institution and to the Federal Register for
publication.
(g) Withdrawal of applications. The Director shall discontinue
processing an application withdrawn by the applicant and shall publish
notice of such withdrawal in the Federal Register. If at any time while
its application is pending before the Director, either during the
intital application or resubmission stage, an applicant cancels an order
for the instrument to which the application relates or ceases to have a
firm intention to order such instrument or apparatus, the institution
shall promptly notify the Director. Such notification shall constitute a
withdrawal. Withdrawals shall be considered as having been finally
denied for purposes of Sec. 301.7(c) below.
(h) Nothing in this subsection shall be construed as limiting the
Director's discretion at any stage of processing to insert into the
record and consider in making his decision any information in the public
domain which he deems relevant.
[47 FR 32517, July 28, 1982; 47 FR 34368, Aug. 9, 1982, as amended at 50
FR 11501, Mar. 22, 1985; 66 FR 28833, May 25, 2001; 74 FR 30463, June
26, 2009]
Sec. 301.6 Appeals.
(a) An appeal from a final decision made by the Director under Sec.
301.5(f) may be taken in accordance with U.S. Note 6(e), Subchapter X,
Chapter 98, HTSUS, only to the U.S. Court of Appeals for the Federal
Circuit and only on questions of law, within 20 days after publication
of the decision in the Federal Register. If at any time while its
application is under consideration by the Court of Appeals on an appeal
from a finding by the Director an institution cancels an order for the
instrument to which the application relates or ceases to have a firm
intention to order such instrument, the institution shall promptly
notify the court.
(b) An appeal may be taken by: (1) The institution which makes the
application;
(2) A person who, in the proceeding which led to the decision,
timely represented to the Secretary of Commerce in writing that he/she
manufactures in the United States an instrument of equivalent scientific
value for the purposes for which the instrument to which the application
relates is intended to be used;
(3) The importer of the instrument, if the instrument to which the
application relates has been entered at the time the appeal is taken; or
(4) An agent of any of the foregoing.
(c) Questions regarding appeal procedures should be addressed
directly to the U.S. Court of Appeals for the Federal Circuit, Clerk's
Office, Washington, DC 20439.
[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001]
Sec. 301.7 Final disposition of an application.
(a) Disposition of an application shall be final when 20 days have
elapsed after publication of the Director's final decision in the
Federal Register and no appeal has been taken pursuant to Sec. 301.6 of
these regulations, of if such appeal has been taken, when final judgment
is made and entered by the Court.
(b) The Director shall notify the CBP Port when disposition of an
application becomes final. If the Director has not been advised of the
port of entry of the instrument, or if entry has not been made when the
decision on the application becomes final, the Director shall notify the
Commissioner of final disposition of the application.
(c) An instrument, the duty-free entry of which has been finally
denied, may not be the subject of a new application from the same
institution.
[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001; 74
FR 30463, June 26, 2009]
[[Page 18]]
Sec. 301.8 Instructions for entering instruments through Customs and Border
Protection under subheading 9810.00.60, HTSUS.
Failure to follow the procedures in this section may disqualify an
instrument for duty-free entry notwithstanding an approval of an
application on its merits by the Department of Commerce.
(a) Entry procedures. (1) An applicant desiring duty-free entry of
an instrument may make a claim at the time of entry of the instrument
into the Customs territory of the United States (as defined in 19 CFR
101.1) that the instrument is entitled to duty-free classification under
subheading 9810.00.60, HTSUS.
(2) If no such claim is made the instrument shall be immediately
classified without regard to subheading 9810.00.60, HTSUS , duty will be
assessed, and the entry liquidated in the ordinary course.
(3) If a claim is made for duty-free entry under subheading
9810.00.60, HTSUS , the entry shall be accepted without requiring a
deposit of estimated duties provided that a copy of the form, stamped by
Customs and Border Protection as accepted for transmittal to the
Department of Commerce in accordance with Sec. 301.4(b), is filed
simultaneously with the entry.
(4) If a claim for duty-free entry under subheading 9810.00.60,
HTSUS is made but is not accompanied by a copy of the properly stamped
form, a deposit of the estimated duty is required. Before the entry is
liquidated, the applicant must file with the CBP Port a properly stamped
copy of the application form. In the event that the CBP Port does not
receive a copy of the properly stamped application form before
liquidation, the instrument shall be classified and liquidated in the
ordinary course, without regard for subheading 9810.00.60, HTSUS.
(5) Entry of an instrument after the Director's approval of an
application. Whenever an institution defers entry until after it
receives a favorable final determination on the application for duty-
free entry of the instrument, either by delaying importation or by
placing the instrument in a bonded warehouse or foreign trade zone, the
importer shall file with the entry of the instrument (i) the stamped
copy of the form, (ii) the institution's copy of the favorable final
determination and (iii) proof that a bona fide order for the merchandise
was placed on or before the 60th day after the favorable decision became
final pursuant to Sec. 301.7 of these regulations. Liquidation in such
case shall be made under subheading 9810.00.60, HTSUS.
(b) Normal Customs and Border Protection entry requirements. In
addition to the entry requirements in paragraph (a) of this section, the
normal Customs and Border Protection entry requirements must be met. In
most of the cases, the value of the merchandise will be such that the
formal Customs and Border Protection entry requirements, which generally
include the filing of a Customs entry bond, must be complied with. (For
further information, see 19 CFR 142.3 and 142.4 (TD-221).)
(c) Late filing. Notwithstanding the preceding provisions of this
section any document, form, or statement required by regulations in this
section to be filed in connection with the entry may be filed at any
time before liquidation of the entry becomes final, provided that
failure to file at the time of entry or within the period for which a
bond was filed for its production was not due to willful negligence or
fraudulent intent. Liquidation of any entry becomes conclusive upon all
persons if the liquidation is not protested in writing in accordance
with 19 CFR part 174, or the necessary document substantiating duty-free
entry is not produced in accordance with 19 CFR 10.112. Upon notice of
such final and conclusive liquidation, the Department of Commerce will
cease the processing of any pending application for duty-free entry of
the subject article. In all other respects, the provisions of this
section do not apply to Department of Commerce responsibilities and
procedures for processing applications pursuant to other sections of
these regulations.
(d) Payment of duties. The importer of record will be billed for
payment of duties when Customs and Border Protection determines that
such payment is due. If a refund of a deposit made pursuant to paragraph
(a)(4) of this section
[[Page 19]]
is due, the importer should contact Customs and Border Protection
officials at the port of entry, not the Department of Commerce.
[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001; 74
FR 30463, June 26, 2009]
Sec. 301.9 Uses and disposition of instruments entered under subheading
9810.00.60, HTSUS.
(a) An instrument granted duty-free entry may be transferred from
the applicant institution to another eligible institution provided the
receiving institution agrees not to use the instrument for commercial
purposes within 5 years of the date of entry of the instrument. In such
cases title to the instrument must be transferred directly between the
institutions involved. An institution transferring a foreign instrument
entered under subheading 9810.00.60, HTSUS within 5 years of its entry
shall so inform the CBP Port in writing and shall include the following
information:
(1) The name and address of the transferring institution.
(2) The name and address of the transferee.
(3) The date of transfer.
(4) A detailed description of the instrument.
(5) The serial number of the instrument and any accompanying
accessories.
(6) The entry number, date of entry, and port of entry of the
instrument.
(b) Whenever the circumstances warrant, and occasionally in any
event, the fact of continued use for 5 years for noncommercial purposes
by the applicant institution shall be verified by Customs and Border
Protection.
(c) If an instrument is transferred in a manner other than specified
above or is used for commercial purposes within 5 years of entry, the
institution for which such instrument was entered shall promptly notify
the Customs and Border Protection officials at the Port and shall be
liable for the payment of duty in an amount determined on the basis of
its condition as imported and the rate applicable to it.
[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001; 74
FR 30463, June 26, 2009]
Sec. 301.10 Importation of repair components and maintenance tools under
HTSUS subheadings 9810.00.65 and 9810.00.67 for instruments previously the
subject of an entry liquidated under subheading 9810.00.60, HTSUS.
(a) An institution owning an instrument that was the subject of an
entry liquidated duty-free under subheading 9810.00.60, HTSUS, that
wishes to enter repair components or maintenance tools for that
instrument may do so without regard to the application procedures
required for entry under subheading 9810.00.60, HTSUS. The institution
must certify to Customs and Border Protection officials at the port of
entry that such components are repair components for that instrument
under subheading 9810.00.65, HTSUS, or that the tools are maintenance
tools necessary for the repair, checking, gauging or maintenance of that
instrument under subheading 9810.00.67, HTSUS.
(b) Instruments entered under subheading 9810.00.60, HTSUS, and
subsequently returned to the foreign manufacturer for repair,
replacement or modification are not covered by subheading 9810.00.65 or
9810.00.67, HTSUS, although they may, upon return to the United States,
be eligible for a reduced duty payment under subheading 9802.00.40 or
9802.00.50, HTSUS (covering articles exported for repairs or
alterations) or may be made the subject of a new application under
subheading 9810.00.60, HTSUS.
[66 FR 28834, May 25, 2001, as amended at 74 FR 30463, June 26, 2009]
PART 302 [RESERVED]
PART 303_WATCHES, WATCH MOVEMENTS AND JEWELRY PROGRAM--Table of Contents
Subpart A_Watches and Watch Movements
Sec.
303.1 Purpose.
303.2 Definitions and forms.
303.3 Determination of the total annual duty-exemption.
303.4 Determination of territorial distribution.
303.5 Application for annual allocations of duty-exemptions and duty-
refunds.
[[Page 20]]
303.6 Allocation and reallocation of exemptions among producers.
303.7 Issuance of licenses and shipment permits.
303.8 Maintenance of duty-exemption entitlements.
303.9 Restrictions on the transfer of duty-exemptions.
303.10-303.11 [Reserved]
303.12 Issuance and use of production incentive certificates.
303.13 Appeals.
303.14 Allocation factors, duty refund calculations and miscellaneous
provisions.
Subpart B_Jewelry
303.15 Purpose.
303.16 Definitions and forms.
303.17 Application for annual duty-refunds.
303.18 Sale and transfer of business.
303.19 Issuance and use of production incentive certificates.
303.20 Duty refund.
303.21 Appeals.
Authority: Pub. L. 97-446, 96 Stat. 2331 (19 U.S.C. 1202, note);
Pub. L. 103-465, 108 Stat. 4991; Pub. L. 94-241, 90 Stat. 263 (48 U.S.C.
1681, note); Pub. L. 106-36, 113 Stat. 167; Pub. L. 108-429, 118 Stat.
2582.
Source: 49 FR 17740, Apr. 25, 1984, unless otherwise noted.
Editorial Note: Nomenclature changes to part 303 appear at 68 FR
56555, Oct. 1, 2003.
Subpart A_Watches and Watch Movements
Sec. 303.1 Purpose.
(a) This part implements the responsibilities of the Secretaries of
Commerce and the Interior (``the Secretaries'') under Pub. L. 97-446,
enacted on 12 January 1983, which substantially amended Pub. L. 89-805,
enacted 10 November 1966, amended by Pub. L. 94-88, enacted 8 August
1975, and amended by Pub. L. 94-241, enacted 24 March 1976, amended by
Public Law 103-465, enacted 8 December 1994 and amended by Public Law
108-429 enacted 3 December 2004. The law provides for exemption from
duty of territorial watches and watch movements without regard to the
value of the foreign materials they contain, if they conform with the
provisions of U.S. Legal Note 5 to Chapter 91 of the Harmonized Tariff
Schedule of the United States (``91/5''). 91/5 denies this benefit to
articles containing any material which is the product of any country
with respect to which Column 2 rates of duty apply; authorizes the
Secretaries to establish the total quantity of such articles, provided
that the quantity so established does not exceed 10,000,000 units or
one-ninth of apparent domestic consumption, whichever is greater, and
provided also that the quantity is not decreased by more than ten
percent nor increased by more than twenty percent (or to more than
7,000,000 units, whichever is greater) of the quantity established in
the previous year.
(b) The law directs the International Trade Commission to determine
apparent domestic consumption for the preceding calendar year in the
first year U.S. insular imports of watches and watch movements exceed
9,000,000 units. 91/5 authorizes the Secretaries to establish
territorial shares of the overall duty-exemption within specified
limits; and provides for the annual allocation of the duty-exemption
among insular watch producers equitably and on the basis of allocation
criteria, including minimum assembly requirements, that will reasonably
maximize the net amount of direct economic benefits to the insular
possessions.
(c) The amended law also provides for the issuance to producers of
certificates entitling the holder (or any transferee) to obtain duty
refunds on any article imported into the customs territory of the United
States duty paid except for any article containing a material which is
the product of a country to which column 2 rates of duty apply. The
amounts of these certificates may not exceed specified percentages of
the producers' verified creditable wages in the insular possessions (90%
of wages paid for the production of the first 300,000 units and
declining percentages, established by the Secretaries, of wages paid for
incremental production up to 750,000 units by each producer) nor an
aggregate annual amount for all certificates exceeding $5,000,000
adjusted for growth by the ratio of the previous year's gross national
product to the gross national product in 1982. Refund requests are
governed by regulations issued by the Department of Homeland Security.
The Secretaries are authorized to issue regulations necessary to carry
out their duties under additional U.S. note 5 to
[[Page 21]]
chapter 91 of the Harmonized Tariff Schedule of the United States, HTSUS
and may cancel or restrict the license or certificate of any insular
manufacturer found violating the regulations.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
53 FR 52994, Dec. 30, 1988; 61 FR 55884, Oct. 30, 1996; 70 FR 67647,
Nov. 8, 2005; 72 FR 16713, Apr. 5, 2007]
Sec. 303.2 Definitions and forms.
(a) Definitions. Unless the context indicates otherwise:
(1) Act means Pub. L. 97-446, enacted January 12, 1983 (19 U.S.C.
1202), 96 Stat. 2329, as amended by Pub. L. 103-465, enacted on December
8, 1994, 108 Stat. 4991, Public Law 108-429, enacted on 3 December 2004,
118 Stat. 2582.
(2) Secretaries means the Secretary of Commerce and the Secretary of
Interior or their delegates, acting jointly.
(3) Director means the Director of the Statutory Import Programs
Staff, International Trade Administration, U.S. Department of Commerce.
(4) Sale or tranfer of a business means the sale or transfer of
control, whether temporary or permanent, over a firm to which a duty-
exemption has been allocated, to any other firm, corporation,
partnership, person or other legal entity by any means whatsoever,
including, but not limited to, merger and transfer of stock, assets or
voting trusts.
(5) New firm is a watch firm not affiliated through ownership or
control with any other watch duty-refund recipient. In assessing whether
persons or parties are affiliated, the Secretaries will consider the
following factors, among others: stock ownership; corporate or family
groupings; franchise or joint venture agreements; debt financing; and
close supplier relationships. The Secretaries may not find that control
exists on the basis of these factors unless the relationship has the
potential to affect decisions concerning production, pricing, or cost.
Also, no watch duty-refund recipient may own or control more than one
jewelry duty-refund recipient. A new entrant is a new watch firm which
has received an allocation.
(6) Producer means a duty-exemption holder which has maintained its
eligibility for further allocations by complying with these regulations.
(7) Established industry means all producers, including new
entrants, that have maintained their eligibility for further
allocations.
(8) Territories, territorial, and insular possessions refer to the
insular possessions of the United States (i.e., the U.S. Virgin Islands,
Guam, and American Samoa and the Northern Mariana Islands).
(9) Duty-exemption refers to the authorization of duty-free entry of
a specified number of watches and watch movements into the Customs
Territory of the United States.
(10) Total annual duty-exemption refers to the entire quantity of
watches or watch movements which may enter duty-free into the customs
territory of the United States from the territories under 91/5 in a
calendar year, as determined by the Secretaries or by the International
Trade Commission in accordance with the Act.
(11) Territorial distribution refers to the apportionment by the
Secretaries of the total annual duty-exemption among the separate
territories; territorial share means the portion consigned to each
territory by this apportionment.
(12) Allocation refers to the distribution of all parts of a
territorial share, or a portion thereof, among the several producers in
a territory.
(13) Creditable wages and associated, creditable fringe benefits and
creditable duty differentials eligible for the duty refund benefit
include, but are not limited to, the following:
(i) Wages up to an amount equal to 65 percent of the contribution
and benefit base for Social Security, as defined in the Social Security
Act for the year in which wages were earned, paid to permanent residents
of the insular possessions employed in a firm's 91/5 watch and watch
movement program.
(A) Wages paid for the repair of watches up to an amount equal to 85
percent of the firm's total creditable wages.
(B) Wages paid to watch and watch movement assembly workers involved
in the complete assembly of watches and watch movements which have
entered the United States duty-free and
[[Page 22]]
have complied with the laws and regulations governing the program.
(C) Wages paid to watch and watch movement assembly workers involved
in the complete assembly of watches, excluding the movement, only in
situations where the desired movement can not be purchased unassembled
and the producer has documentation establishing this.
(D) Wages paid to those persons engaged in the day-to-day assembly
operations on the premises of the company office, wages paid to
administrative employees working on the premises of the company office,
wages paid to security employees and wages paid to servicing and
maintenance employees if these services are integral to the assembly and
manufacturing operations and the employees are working on the premises
of the company office.
(E) Wages paid to persons engaged in both creditable and non-
creditable assembly and repair operations may be credited proportionally
provided the firm maintains production, shipping and payroll records
adequate for the Departments' verification of the creditable portion.
(F) Wages paid to new permanent residents who have met the
requirements of permanent residency in accordance with the Departments'
regulations, along with meeting all other creditable wage requirements
of the regulations, which must be documented and verified to the
satisfaction of the Secretaries.
(ii) The combined creditable amount of individual health and life
insurance per year, for each full-time permanent resident employee who
works on the premises of the company office and whose wages qualify as
creditable, may not exceed 130 percent of the ``weighted average''
yearly federal employee health insurance, which is calculated from the
individual health plans weighted by the number of individual contracts
in each plan. The yearly amount is calculated by the Office of Personnel
Management and includes the ``weighted average'' of all individual
health insurance costs for federal employees throughout the United
States. The maximum life insurance allowed within this combined amount
is $50,000 for each employee. Only during the time employees are earning
creditable wages are they entitled to health and life insurance duty
refund benefits under the program.
(A) The combined creditable amount of family health and life
insurance per year, for each full-time permanent resident employee who
works on the premises of the company office and whose wages qualify as
creditable, may not exceed 150 percent of the ``weighted average''
yearly federal employee health insurance, which is calculated from the
family health plans weighted by the number of family contracts in each
plan. The yearly amount is calculated by the Office of Personnel
Management and includes the ``weighted average'' of all family health
insurance costs for federal employees throughout the United States. The
maximum life insurance allowed within this combined amount is $50,000
for each employee. Only during the time employees are earning creditable
wages are they entitled to health and life insurance duty refund
benefits under the program.
(B) The creditable pension benefit, for each full-time permanent
resident employee who works on the premises of the company office and
whose wages qualify as creditable, is up to 3 percent of the employee's
wages unless the employee's wages exceed the maximum annual creditable
wage allowed under the program (see paragraph (a)(13)(i) of this
section). An employee earning more than the maximum creditable wage
allowed under the program will be eligible for only 3 percent of the
maximum creditable wage. Only during the time employees are earning
creditable wages are they entitled to pension duty refund benefits under
the program.
(iii) If tariffs on watches and watch movements are reduced, then
companies would be required to provide the annual aggregate data by
individual HTSUS watch tariff numbers for the following components
contained therein: the quantity and value of watch cases, the quantity
of movements, the quantity and value of each type of strap, bracelet or
band, and the quantity and value of batteries shipped free of duty into
the United States. If discrete watch movements are shipped
[[Page 23]]
free of duty into the United States, then the annual aggregate quantity
by individual HTSUS movement tariff numbers would also be required along
with the value of each battery if it is contained within. These data
would be used to calculate the annual duty rate before each HTSUS tariff
reduction, and the annual duty rate after the HTSUS tariff reduction.
The amount of the difference would be creditable toward the duty refund.
The tariff information would only be collected and used in the
calculation of the annual duty-refund certificate and would not be used
in the calculation of the mid-year duty-refund.
(14) Non-creditable wages and associated non-creditable fringe
benefits ineligible for the duty refund benefit include, but are not
limited to, the following:
(i) Wages over 65 percent of the contribution and benefit base for
Social Security, as defined in the Social Security Act for the year in
which wages were earned, paid to permanent residents of the territories
employed in a firm's 91/5 watch and watch movement program.
(A) Wages paid for the repair of watches in an amount over 85
percent of the firm's total creditable wages.
(B) Wages paid for the assembly of watches and watch movements which
are shipped outside the customs territory of the United States; wages
paid for the assembly of watches and watch movements that do not meet
the regulatory assembly requirements; or wages paid for the assembly of
watches or watch movements that contain HTSUS column 2 components.
(C) Wages paid for the complete assembly of watches, excluding the
movement, when the desired movement can be purchased unassembled, if the
producer does not have adequate documentation, demonstrating to the
satisfaction of the Secretaries, that the movement could not be
purchased unassembled whether or not it is entering the United States.
(D) Wages paid to persons not engaged in the day-to-day assembly
operations on the premises of the company office; wages paid to any
outside consultants; wages paid to outside the office personnel,
including but not limited to, lawyers, gardeners, construction workers,
and accountants; wages paid to employees not working on the premises of
the company office; and wages paid to employees who do not qualify as
permanent residents in accordance with the Departments' regulations.
(E) Wages paid to persons engaged in both creditable and non-
creditable assembly and repair operations if the producer does not
maintain production, shipping and payroll records adequate for the
Departments' verification of the creditable portion.
(ii) Any costs, for the year in which the wages were paid, of the
combined creditable amount of individual health and life insurance for
employees over 130 percent of the ``weighted average'' yearly individual
health insurance costs for all federal employees. The cost of any life
insurance over the $50,000 limit for each employee. Any health and life
insurance costs during the time an employee is not earning creditable
wages.
(A) Any costs, for the year in which the wages were paid, of the
combined creditable amount of family health and life insurance for
employees over 150 percent of the ``weighted average'' yearly family
health insurance costs for all federal employee. The cost of any life
insurance over the $50,000 limit for each employee. Any health and life
insurance costs during the time an employee is not earning creditable
wages.
(B) Any pension benefits that were not based on associated
creditable wages. The cost of any pension benefit per employee over 3
percent of the employee's creditable wages unless the employee's wages
exceed the maximum annual creditable annual maximum creditable wage
allowed under the program (see paragraph (a)(13)(i) of this section).
Employees earning over the maximum creditable wage allowed under the
program would have a creditable annual pension benefit of up to 3
percent of the maximum creditable wage and wages over 3 percent of the
maximum creditable wage would not be creditable.
(15) Non-91/5 watches and watch movements include, but are not
limited to, watches and movements which are liquidated as dutiable by
the Bureau of
[[Page 24]]
Customs and Border Protection but do not include, for purposes of the
duty refund, watches that are completely assembled in the insular
possessions, with the exception of a desired movement if the movement
cannot be purchased in an unassembled condition; contains any material
which is the product of any country with respect to which Column 2 rates
of duty apply; are ineligible for duty-free treatment pursuant to law or
regulation; or are units the assembly of which the Departments have
determined not to involve substantial and meaningful work in the
territories (as elsewhere defined in these regulations).
(16) Discrete movements and components means screws, parts,
components and subassemblies not assembled together with another part,
component or subassembly at the time of importation into the territory.
(A mainplate containing set jewels or shock devices, together with other
parts, would be considered a single discrete component, as would a
barrel bridge subassembly.)
(17) Permanent resident means a person with one residence which is
in the insular possessions or a person with one or more residences
outside the insular possessions who meets criteria that include
maintaining his or her domicile in the insular possessions, residing
(i.e., be physically present for at least 183 days within a continuous
365 day period) and working in the territory at a program company, and
maintaining his or her primary office for day-to-day work in the insular
possessions.
(b) Forms--(1) ITA-334P ``Application for License to Enter Watches
and Watch Movements into the Customs Territory of the United States.''
This form must be completed annually by all producers desiring to
receive an annual allocation. It is also used, with appropriate special
instructions for its completion, by new firms applying for duty-
exemptions and by producers who wish to receive the duty refund in
installments on a biannual basis.
(2) ITA-333 ``License to Enter Watches and Watch Movements into the
Customs Territory of the United States.'' This form is issued by the
Director to producers who have received an allocation and constitutes
authorization for issuing specific shipment permits by the territorial
governments. It is also used to record the balance of a producer's
remaining duty-exemptions after each shipment permit is issued.
(3) ITA-340 ``Permit to Enter Watches and Watch Movements into the
Customs Territory of the United States.'' This form may be obtained, by
producers holding a valid license, from the territorial government or
may be produced by the licensee in an approved computerized format or
any other medium or format approved by the Departments of Commerce and
the Interior. The completed form authorizes duty-free entry of a
specified amount of watches or watch movements at a specified U.S.
Customs port.
(4) ITA-360P ``Certificate of Entitlement to Secure the Refund of
Duties on Articles that Entered the Customs Territory of The United
State Duty Paid.'' This document authorizes an insular watch producer to
request the refund of duties on imports of articles that entered the
customs territory of the United States duty paid, up to the specified
value of the certificate. Certificates may be used to obtain duty
refunds only when presented with a properly executed Form ITA-361P.
(5) ITA-361P ``Request for Refund of Duties on Articles that Entered
the Customs Territory of the United States Duty Paid.'' This form must
be completed to obtain the refund of duties authorized by the Director
through Form ITA-360P. After authentication by the Department of
Commerce, it may be used for the refund of duties on items which were
entered into the customs territory of the United States duty paid during
a specified time period. Copies of the appropriate Customs entries must
be provided with this form to establish a basis for issuing the claimed
amounts. The forms may also be used to transfer all or part of the
producer's
[[Page 25]]
entitlement to another party. (See Sec. 303.12.)
(The information collection requirements in paragraph (b)(1) were
approved by the Office of Management and Budget under control number
0625-0040. The information collection requirements in paragraphs (b) (4)
through (6) were approved under control number 0625-0134)
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
53 FR 52994, Dec. 30, 1988; 56 FR 9621, Mar. 7, 1991; 61 FR 55884,
55885, Oct. 30, 1996; 65 FR 8049, Feb. 17, 2000; 66 FR 34812, July 2,
2001; 67 FR 77408, Dec. 18, 2002; 68 FR 56555, Oct. 1, 2003; 70 FR
67647, Nov. 8, 2005; 72 FR 16714, Apr. 5, 2007; 73 FR 62881, Oct. 22,
2008]
Sec. 303.3 Determination of the total annual duty-exemption.
(a) Procedure for determination. If, after considering the
productive capacity of the territorial watch industry and the economic
interests of the territories, the Secretaries determine that the amount
of the total annual duty-exemption, or the territorial shares of the
total amount, should be changed, they shall publish in the Federal
Register a proposed limit on the quantity of watch units which may enter
duty-free into the customs territory of the United States and proposed
territorial shares thereof and, after considering comments, establish
the limit and shares by Federal Register notice. If the Secretaries take
no action under this section, they shall make the allocations in
accordance with the limit and shares last established by this procedure.
(b) Standards for determination. (1) Notwithstanding paragraph
(b)(2) of this section, the limit established for any year may be
7,000,000 units if the limit established for the preceding year was a
smaller amount.
(2) Subject to paragraph (c) of this section, the total annual duty-
exemption shall not be decreased by more than 10% of the quantity
established for the preceding calendar year, or increased, if the
resultant total is larger than 7,000,000, by more than 20% of the
quantity established for the calendar year immediately preceding.
(3) The Secretaries shall determine the limit after considering the
interests of the territories; the domestic or international trade policy
objectives of the United States; the need to maintain the competitive
nature of the territorial industry; the total contribution of the
industry to the economic well-being of the territories; and the
territorial industry's utilization of the total duty-exemption
established in the preceding year.
(c) Determinations based on consumption. (1) The Secretaries shall
notify the International Trade Commission whenever they have reason to
believe duty-free watch imports from the territories will exceed
9,000,000 units, or whenever they make a preliminary determination that
the total annual duty-exemption should exceed 10,000,000 units.
(2) In addition to the limitations in paragraph (b) of this section,
the Secretaries shall not establish a limit exceeding one-ninth of
apparent domestic consumption if such consumption, as determined by
International Trade Commission, exceeds 90 million units.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 7170, Feb. 21, 1985; 50
FR 43568, Oct. 28, 1985; 53 FR 52994, Dec. 30, 1988]
Sec. 303.4 Determination of territorial distribution.
(a) Procedure for determination. The Secretaries shall determine the
territorial shares concurrently with their determination of the total
annual duty exemption, and in the same manner (see Sec. 303.3, above).
(b) Standards for determination--(1) Limitations. A territorial
share may not be reduced by more than 500,000 units in any calendar
year. No territorial share shall be less than 500,000 units.
(2) Criteria for setting precise quantities. The Secretaries shall
determine the precise quantities after considering, inter alia, the
territorial capacity to produce and ship watch units. The Secretaries
shall further bear in mind the aggregate benefits to the territories,
such as creditable wages paid, creditable wages per unit exported, and
corporate income tax payments.
(3) Limitations on reduction of share. The Secretaries shall not
reduce a territory's share if its producers use 85% or more of the
quantity distributed to that territory in the immediately preceding
year, except in the case of a
[[Page 26]]
major increase or decrease in the number of producers in a territory or
if they believe that a territorial industry will decrease production by
more than 15% from the total of the preceding year.
(4) Standby redistribution authority. The Secretaries may
redistribute territorial shares if such action is warranted by
circumstances unforeseen at the time of the initial distributions, such
as that a territory will use less than 80% of its total by the end of a
calendar year, or if a redistribution is necessary to maintain the
competitive nature of the territorial industries.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 7170, Feb. 21, 1985]
Sec. 303.5 Application for annual allocations of duty-exemptions and duty-
refunds.
(a) Application forms (ITA-334P) shall be furnished to producers by
January 1, and must be completed and returned to the Director no later
than January 31, of each calendar year.
(b) All data supplied are subject to verification by the Secretaries
and no allocation or duty-refund certificate shall be made to producer
until the Secretaries are satisfied that the data are accurate. To
verify the data, representatives of the Secretaries shall have access to
relevant company records including:
(1) Work sheets used to answer all questions on the application
form;
(2) Original records from which such data are derived;
(3) Records pertaining to ownership and control of the company and
to the satisfaction of eligibility requirements of duty-free treatment
of its product by the Bureau of Customs and Border Protection;
(4) Records pertaining to corporate income taxes, gross receipts
taxes and excise taxes paid by each producer in the territories on the
basis of which a portion of each producer's annual allocation is or may
be predicated;
(5) Customs, bank, payroll, including time cards, production
records, and all shipping records including the importer of record
number and proof of residency, as requested;
(6) Records on purchases of components, including documentation on
the purchase of any preassembled movements, which demonstrate that such
movements could not have been purchased from the vendor in an
unassembled condition, and records on the sales of insular watches and
movements, including proof of payment; and
(7) Any other records in the possession of the parent or affiliated
companies outside the territory pertaining to any aspect of the
producer's 91/5 watch assembly operation.
(8) All records pertaining to health insurance, life insurance and
pension benefits for each employee; and
(9) If HTSUS tariffs on watches and watch movements are reduced,
records of the annual aggregate data by individual HTSUS watch tariff
numbers for the following components contained therein would be
required: the quantity and value of watch cases; the quantity of
movements; the quantity and value of each type of strap, bracelet or
band; and the quantity and value of batteries shipped free of duty into
the United States. In addition, if applicable, records of the annual
aggregate quantity of discrete watch movements shipped free of duty into
the United States by HTSUS tariff number.
(c) Data verification shall be performed in the territories, unless
other arrangements satisfactory to the Departments are made in advance,
by the Secretaries' representatives by the end of February of each
calendar year. It is the responsibility of each program producer to make
the appropriate data available to the Departments' officials for the
calendar year for which the annual verification is being performed and
no further data, from the calendar year for which the audit is being
completed, will be considered for benefits at any time after the audit
has been completed. In the event of discrepancies between the
application and substantiating data before the audit is complete, the
Secretaries shall determine which data will be used in the calculation
of the duty refund and allocations.
(d) Records subject to the requirements of paragraph (b), above,
shall be
[[Page 27]]
retained for a period of two years following their creation.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
53 FR 52994, Dec. 30, 1988; 68 FR 56556, Oct. 1, 2003; 70 FR 67648, Nov.
8, 2005; 72 FR 16714, Apr. 5, 2007]
Sec. 303.6 Allocation and reallocation of exemptions among producers.
(a) Interim allocations. As soon as practicable after January 1 of
each year the Secretaries shall make an interim allocation to each
producer equaling 70% of the number of watch units it has entered duty-
free into the customs territory of the United States during the first
eight months of the preceding calendar year, or any lesser amount
requested in writing by the producer. The Secretaries may also issue a
lesser amount if, in their judgment, the producer might otherwise
receive an interim allocation in an amount greater than the producer's
probable annual allocation. In calculating the interim allocations, the
Director shall count only duty-free watches and watch movements verified
by the Bureau of Customs and Border Protection, or verified by other
means satisfctory to the Secretaries, as having been entered on or
before August 31 of the preceding year. Interim allocations shall not be
published.
(b) Annual allocations. (1) By March 1 of each year the Secretaries
shall make annual allocations to the producers in accordance with the
allocation formula based on data supplied in their annual application
(Form ITA-334P) and verified by the Secretaries.
(2) The excess of a producer's duty-exemption earned under the
allocation criteria over the amount formally requested by the producer
shall be considered to have been relinquished voluntarily (see paragraph
(f) below). A producer's request may be modified by written
communication received by the Secretaries by February 28, or, at the
discretion of the Secretaries, before the annual allocations are made.
An allocation notice shall be published in the Federal Register.
(c) Supplemental allocations. At the request of a producer, the
Secretaries may supplement a producer's interim allocation if the
Secretaries determine the producer's interim allocation will be used
before the Secretaries can issue the annual allocation. Allocations to
supplement a producer's annual allocation shall be made under the
reallocation provisions prescribed below.
(d) Allocations to new entrants. In making interim and annual
allocations to producers selected the preceding year as new entrants,
the Secretaries shall take into account that such producers will not
have had a full year's operation as a basis for computation of its duty-
exemption. The Secretaries may make an interim or annual allocation to a
new entrant even if the firm did not operate during the preceding
calendar year.
(e) Special allocations. A producer may request a special allocation
if unusual circumstances kept it from making duty-free shipments at a
level comparable with its past record. In considering such requests, the
Secretaries shall take into account the firm's proposed assembly
operations; its record in contributing to the territorial economy; and
its intentions and capacity to make meaningful contributions to the
territory. They shall also first determine that the amount of the
special allocation requested will not significantly affect the amounts
allocated to other producers pursuant to Sec. 303.6(b)(1).
(f) Reallocations. Duty-exemptions may become available for
reallocation as a result of cancellation or reduction for cause,
voluntary relinquishment or nonplacement of duty-exemption set aside for
new entrants. At the request of a producer, the Secretaries may
reallocate such duty-exemptions among the remaining producers who can
use additional quantities in a manner judged best for the economy of the
territories. The Secretaries shall consider such factors as the wage and
income tax contributions of the respective producers during the
preceding year and the nature of the producer's present assembly
operations. In addition, the Secretaries may consider other factors
which, in their judgment, are relevant to determining that applications
from new firms, in lieu of reallocations, should be considered for part
or all of unused portions of the total duty exemptions. Such factors may
include:
[[Page 28]]
(1) The ability of the established industry to use the duty-
exemption;
(2) Whether the duty-exemption is sufficient to support new entrant
operations;
(3) The impact upon the established industry if new entrants are
selected, particularly with respect to the effect on local employment,
tax contributions to the territorial government, and the ability of the
established industry to maintain satisfactory production levels; and
(4) Whether additional new entrants offer the best prospect for
adding economic benefits to the territory.
(g) Section 303.14 of this part contains the criteria and formulae
used by the Secretaries in calculating each watch producer's annual
watch duty-exemption allocation, and other special rules or provisions
the Secretaries may periodically adopt to carry out their
responsibilities in a timely manner while taking into account changing
circumstances. References to duty-exemptions, unless otherwise
indicated, are to the amount available for reallocation in the current
calendar year. Specifications of or references to data or bases used in
the calculation of current year allocations (e.g., economic
contributions and shipments) are, unless indicated otherwise, those
which were generated in the previous year.
(h) The Secretaries may propose changes to Sec. 303.14 at any time
they consider it necessary to fulfill their responsibilities. Normally,
such changes will be proposed towards the end of each calendar year.
Interested parties shall be given an opportunity to submit written
comments on proposed changes.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
61 FR 55885, Oct. 30, 1996; 63 FR 5888, Feb. 5, 1998]
Sec. 303.7 Issuance of licenses and shipment permits.
(a) Issuance of Licenses (ITA-333). (1) Concurrently with annual
allocations under Sec. 303.5 the Director shall issue a non-
transferable license (Form ITA-333) to each producer. The Director shall
also issue a replacement license if a producer's allocation is reduced
pursuant to Sec. 303.6.
(2) Annual duty-exemption licenses shall be for only that portion of
a producer's annual duty-exemption not previously licensed.
(3) If a producer's duty-exemption has been reduced, the Director
shall not issue a replacement license for the reduced amount until the
producer's previous license has been received for cancellation by the
Director.
(4) A producer's license shall be used in their entirety, except
when they expire or are cancelled, in order of their date of issuance,
i.e., an interim license must be completely used before shipment permits
can be issued against an interim supplemental license.
(5) Outstanding licenses issued by the Director automatically expire
at midnight, December 31, of each calendar year. No unused allocation of
duty-exemption may be carried over into the subsequent calendar year.
(6) The Director shall ensure that all licenses issued are
conspicuously marked to show the type of license issued, the identity of
the producer, and the year for which the license is valid. All licenses
shall bear the signature of the Director.
(7) Each producer is responsible for the security of its licenses.
The loss of a license shall be reported immediately to the Director.
Defacing, tampering with, and unauthorized use of a license are
forbidden.
(b) Shipment Permit Requirements (ITA-340). (1) Producers may obtain
shipment permits from the territorial government officials designated by
the Governor. Permits may also be produced in any computerized or other
format or medium approved by the Departments. The permit is for use
against a producer's valid duty-exemption license and a permit must be
completed for every duty-free shipment.
(2) Each permit must specify the license and permit number, the
number of watches and watch movements included in the shipment, the
unused balance remaining on the producer's license, pertinent shipping
information and must have the certification statement signed by an
official of the licensee's company. A copy of the completed permit must
be sent electronically or taken to the designated territorial government
officials, no later than the day
[[Page 29]]
of shipment, for confirmation that the producer's duty-exemption license
has not been exceeded and that the permit is properly completed.
(3) The permit (form ITA-340) shall be filed with Customs along with
the other required entry documents to receive duty-free treatment unless
the importer or its representative clears the documentation through
Customs' automated broker interface. Entries made electronically do not
require the submission of a permit to Customs, but the shipment data
must be maintained as part of a producer's recordkeeping
responsibilities for the period prescribed by Customs' recordkeeping
regulations. Bureau of Customs and Border Protection Import Specialists
may request the documentation they deem appropriate to substantiate
claims for duty-free treatment, allowing a reasonable amount of time for
the importer to produce the permit.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
61 FR 55885, Oct. 30, 1996]
Sec. 303.8 Maintenance of duty-exemption entitlements.
(a) The Secretaries may order a producer to show cause within 30
days of receipt of the order why the duty-exemption to which the firm
would otherwise be entitled should not be cancelled, in whole or in
part, if:
(1) At any time after June 30 of the calendar year:
(i) A producer's assembly and shipment record provides a reasonable
basis to conclude that the producer will use less than 80 percent of its
total allocation by the end of the calendar year, and
(ii) The producer refuses a request from the Departments to
relinquish that portion of its allocation which they conclude will not
be used; or
(2) A producer fails to satisfy or fulfill any term, condition or
representation, whether undertaken by itself or prescribed by the
Departments, upon which receipt of allocation has been predicated or
upon which the Departments have relied in connection with the sale or
transfer of a business together with its allocation; or
(3) A producer, in the judgment of the Secretaries, has failed to
make a meaningful contribution to the territory for a period of two or
more consecutive calendar years, when compared with the performance of
the duty-free watch assembly industry in the territory as a whole. This
comparison shall include the producer's quantitative use of its
allocations, amount of direct labor employed in the assembly of watches
and watch movements, and the net amount of corporate income taxes paid
to the government of the territory. If the producer fails to satisfy the
Secretaries as to why such action should not be taken, the firm's
allocation shall be reduced or cancelled, whichever is appropriate under
the show-cause order. The eligibility of a firm whose allocation has
been cancelled to receive further allocations may also be terminated.
(b) The Secretaries may also issue a show-cause order to reduce or
cancel a producer's allocation or production incentive certificate (see
Sec. 303.12, below), as appropriate, or to declare the producer
ineligible to receive an allocation or certificate if it violates any
regulation in this part, uses a form, license, permit, or certificate in
an unauthorized manner, or fails to provide information or data required
by these regulations or requested by the Secretaries or their delegates
in the performance of their responsibilities.
(c) If a firm's allocation is reduced or cancelled, or if a firm
voluntarily relinquishes a part of its allocation, the Secretaries may:
(1) Reallocate the allocation involved among the remaining producers
in a manner best suited to contribute to the economy of the territory;
(2) Reallocate the allocation or part thereof to a new entrant
applicant; or
(3) Do neither of the above if deemed in the best interest of the
territories and the established industry.
[49 FR 17740, Apr. 25, 1984, as amended at 61 FR 55885, Oct. 31, 1996]
Sec. 303.9 Restrictions on the transfer of duty-exemptions.
(a) The sale or transfer of a duty-exemption from one firm to
another shall not be permitted.
(b) The sale or transfer of a business together with its duty-
exemption shall
[[Page 30]]
be permitted with prior written notification to the Departments. Such
notification shall be accompanied by certifications and representations,
as appropriate, that:
(1) If the transferee is a subsidiary of or in any way affiliated
with any other company engaged in the production of watch movements
components being offered for sale to any territorial producer, the
related company or companies will continue to offer such watch and watch
movement components on equal terms and conditions to all willing buyers
and shall not engage in any practice, in regard to the sale of
components, that competitively disadvantages the non-affiliated
territorial producers vis-a-vis the territorial subsidiary;
(2) The sale or transfer price for the business together with its
duty-exemption does not include the capitalization of the duty-exemption
per se;
(3) The transferee is neither directly or indirectly affiliated with
any other territorial duty-exemption holder in any territory;
(4) The transferee will not modify the watch assembly operations of
the duty-exemption firm in a manner that will significantly diminish its
economic contributions to the territory.
(c) At the request of the Departments, the transferee shall permit
representatives of the Departments to inspect whatever records are
necessary to establish to their satisfaction that the certifications and
representations contained in paragraph (b) of this section have been or
are being met.
(d) Any transferee who is either unwilling or unable to make the
certifications and representations specified in paragraph (b) of this
section shall secure the Departments' approval in advance of the sale or
transfer of the business together with its duty-exemption. The request
for approval shall specify which of the certifications specified in
paragraph (b) of this section the firm is unable or unwilling to make,
and give reasons why such fact should not constitute a basis for the
Departments' disapproval of the sale or transfer.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985]
Sec. Sec. 303.10-303.11 [Reserved]
Sec. 303.12 Issuance and use of production incentive certificates.
(a) Issuance of certificates. (1) The total annual amount of the
Certificate of Entitlement, Form ITA-360, may be divided and issued on a
biannual basis. The first portion of the total annual certificate amount
will be based on reported duty-free shipments and creditable wages,
determined from the wages as reported on the employer's first two
quarterly federal tax returns (941-SS), paid during the first six months
of the calendar year, using the formula in Sec. 303.14(c). The
Departments require the receipt of the data by July 31 for each producer
who wishes to receive an interim duty refund certificate. The interim
duty refund certificate will be issued on or before August 31 of the
same calendar year in which the wages were earned unless the Departments
have unresolved questions. The process of determining the total annual
amount of the duty refund will be based on verified creditable wages,
duty-free shipments into the customs territory of the United States,
creditable health insurance, life insurance and pension benefits and the
duty differential, if watch tariffs have been reduced during the
calendar year. The completed annual application (Form ITA-334P) shall be
received by the Departments on or before January 31 and the annual
verification of data and the calculation of each producer's total annual
duty refund, based on the verified data, will continue to take place in
February. Once the calculations for each producer's duty refund has been
completed, the portion of the duty refund that has already been issued
to each producer will be deducted from the total amount of each
producer's annual duty refund amount. The duty refund certificate will
continue to be issued by March 1 unless the Departments have unresolved
questions.
(2) Certificates shall not be issued to more than one company in the
territories owned or controlled by the same corporate entity.
(b) Securities and handling of certificates. (1) Certificate holders
are responsible for the security of the certificates. The certificates
shall be kept at
[[Page 31]]
the territorial address of the insular producer or at another location
having the advance approval of the Departments.
(2) All refund requests made pursuant to the certificates shall be
entered on the reverse side of the certificate.
(3) Certificates shall be returned by registered, certified or
express carrier mail to the Departments when:
(i) A refund is requested which exhausts the entitlement on the face
of the certificate,
(ii) The certificate expires, or
(iii) The Departments request their return with good cause.
(4) Certificate entitlements may be transferred according to the
procedures described in (c) of this section.
(c) The use and transfer of certificate entitlements. (1) Insular
producers issued a certificate may request a refund by executing Form
ITA-361P (see Sec. 303.2(b)(5) and the instructions on the form). After
authentication by the Department of Commerce, Form ITA-361P may be used
to obtain duty refunds on articles that entered the customs territory of
the United States duty paid except for any article containing a material
which is the product of a country to which column 2 rates of duty apply.
Articles for which duty refunds are claimed must have entered the
customs territory of the United States during the two-year period prior
to the issue date of the certificate or during the one-year period the
certificate remains valid. Copies of the appropriate Customs entries
must be provided with the refund request in order to establish a basis
for issuing the claimed amounts. Certification regarding drawback claims
and liquidated refunds relating to the presented entries is required
from the claimant on the form.
(2) Regulations issued by the Bureau of Customs and Border
Protection, U.S. Department of Homeland Security, govern the refund of
duties under Public Law 97-446, as amended by Public Law 103-465 and
Public Law 108-429. If the Departments receive information from the
Bureau of Customs and Border Protection that a producer has made
unauthorized use of any official form, they shall cancel the affected
certificate.
(3) The insular producer may transfer a portion of all of its
certificate entitlement to another party by entering in block C of Form
ITA-361P the name and address of the party.
(4) After a Form ITA-361P transferring a certificate entitlement to
a party other than the certificate holder has been authenticated by the
Department of Commerce, the form may be exchanged for any consideration
satisfactory to the two parties. In all cases, authenticated forms shall
be transmitted to the certificate holder or its authorized custodian for
disposition (see paragraph (b) above).
(5) All disputes concerning the use of an authenticated Form ITA-
361P shall be referred to the Departments for resolution. Any party
named on an authenticated Form ITA-361P shall be considered an
``interested party'' within the meaning of Sec. 303.13 of this part.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
56 FR 9621, Mar. 7, 1991; 61 FR 55885, Oct. 30, 1996; 66 FR 34812, July
2, 2001; 70 FR 67648, Nov. 8, 2005; 72 FR 16714, Apr. 5, 2007]
Sec. 303.13 Appeals.
(a) Any official decision or action relating to the allocation of
duty-exemptions or to the issuance or use of production incentive
certificates may be appealed to the Secretaries by any interested party.
Such appeals must be received within 30 days of the date on which the
decision was made or the action taken in accordance with the procedures
set forth in paragraph (b) of this section. Interested parties may
petition for the issuance of a rule, or amendment or repeal of a rule
issued by the Secretaries. Interested parties may also petition for
relief from the application of any rule on the basis of hardship or
extraordinary circumstances resulting in the inability of the petitioner
to comply with the rule.
(b) Petitions shall bear the name and address of the petitioner and
the name and address of the principal attorney or authorized
representative (if any) for the party concerned. They shall be addressed
to the Secretaries and filed in one original and two copies with the
U.S. Department of Commerce, Import Administration, International Trade
[[Page 32]]
Administration, Washington, D.C. 20230, Attention: Statutory Import
Programs Staff. Petitions shall contain the following:
(1) A reference to the decision, action or rule which is the subject
of the petition;
(2) A short statement of the interest of the petitioner;
(3) A statement of the facts as seen by the petitioner;
(4) The petitioner's argument as to the points of law, policy of
fact. In cases where policy error is contended, the alleged error
together with the policy the submitting party advocates as the correct
one should be described in full;
(5) A conclusion specifying the action that the petitioner believes
the Secretaries should take.
(c) The Secretaries may at their discretion schedule a hearing and
invite the participation of other interested parties.
(d) The Secretaries shall communicate their decision which shall be
final, to the petitioner by registered mail.
(e) If the outcome of any petition materially affects the amount of
the petitioner's allocation and if the Secretaries' consideration of the
petition continues during the calculation of the annual allocations, the
Secretaries shall set aside a portion of the affected territorial share
in an amount which, in their judgment, protects the petitioner's
interest and shall allocate the remainder among the other producers.
[49 FR 17740, Apr. 25, 1984, as amended at 56 FR 9622, Mar. 7, 1991; 72
FR 16714, Apr. 5, 2007]
Sec. 303.14 Allocation factors, duty refund calculations and miscellaneous
provisions.
(a) The allocation formula. (1) Except as provided in (a)(2) of this
section, the territorial shares (excluding any amount set aside for
possible new entrants) shall be allocated among the several producers in
each territory in accordance with the following formula:
(i) Fifty percent of the territorial share shall be allocated on the
basis of the net dollar amount of economic contributions to the
territory consisting of the dollar amount of creditable wages, up to an
amount equal to 65% of the contribution and benefit base for Social
Security as defined in the Social Security Act for the year in which the
wages were earned, paid by each producer to territorial residents, plus
the dollar amount of income taxes (excluding penalty and interest
payments and deducting any income tax refunds and subsidies paid by the
territorial government), and
(ii) Fifty percent of the territorial share shall be allocated on
the basis of the number of units of watches and watch movements
assembled in the territory and entered by each producer duty-free into
the customs territory of the United States.
(2) If there is only one producer in a territory, the entire
territorial share, excluding any amount set aside for possible new
entrants, may be allocated without recourse to any distributive formula.
(b) Minimum assembly requirements and prohibition of preferential
supply relationship. (1) No insular watch movement or watch may be
entered free of duty into the customs territory of the United States
unless the producer used 30 or more discrete parts and components to
assemble a mechanical watch movement and 33 or more discrete parts and
components to assemble a mechanical watch.
(2) Quartz analog watch movements must be assembled from parts
knocked down to the maximum degree possible for the technical
capabilities of the insular industry as a whole. The greatest degree of
disassembly specified, for each manufacturer's brand and model, by any
producer in any territory purchasing such brands and models shall
constitute the disassembly required as a minimum for the industry as a
whole.
(3) Watch movements and watches assembled from components with a
value of more than $300 for watch movements and $3000 for watches shall
not be eligible for duty-exemption upon entry into the U.S. Customs
territory. Value means the value of the merchandise plus all charges and
costs incurred up to the last point of shipment (i.e., prior to entry of
the parts and components into the territory).
(4) No producer shall accept from any watch parts and components
supplier advantages and preferences which
[[Page 33]]
might result in a more favorable competitive position for itself vis-a-
vis other territorial producers relying on the same supplier. Disputes
under this paragraph may be resolved under the appeals procedures
contained in Sec. 303.13(b).
(c) Calculation of the value of the mid-year production incentive
certificates. (1) The value of each producer's certificate shall equal
the producer's average creditable wage per unit shipped during the first
six months of the calendar year multiplied by the sum of:
(i) The number of units shipped up to 300,000 units times a factor
of 90%; plus
(ii) Incremental units shipped up to 450,000 units times a factor of
85%; plus
(iii) Incremental units shipped up to 600,000 units times a factor
of 80%; plus
(iv) Incremental units shipped up to 750,000 units times a factor of
75%.
(2) Calculation of the value of the annual production incentive
certificates. The value of each producer's certificate shall equal the
producer's average creditable benefit per unit based on creditable
wages, health insurance, life insurance and pension benefits plus any
duty differential, if applicable, averaged from the amount of duty free
units shipped during the calendar year multiplied by the sum of the
following to obtain the total verified amount of the annual duty-refund
per company. This amount would then be adjusted by deducting the amount
of the mid-year duty-refund already issued.
(i) The number of units shipped up to 300,000 units times a factor
of 90%; plus
(ii) Incremental units shipped up to 450,000 units times a factor of
85%; plus
(iii) Incremental units shipped up to 600,000 units times a factor
of 80%; plus
(iv) Incremental units shipped up to 750,000 units times a factor of
75%.
(3) The Departments may make adjustments for these data in the
manner set forth in Sec. 303.5(c).
(d) New entrant invitations. Applications from new firms are invited
for any unused portion of any territorial share.
(e) Territorial shares. The shares of the total duty exemption are
1,866,000 for the Virgin Islands, 500,000 for Guam, 500,000 for American
Samoa, and 500,000 for the Northern Mariana Islands.
[49 FR 17740, Apr. 25, 1984, as amended at 50 FR 43568, Oct. 28, 1985;
53 FR 17825, May 19, 1988; 53 FR 52679, Dec. 29, 1988; 53 FR 52994, Dec.
30, 1988; 56 FR 9622, Mar. 7, 1991; 58 FR 21348, Apr. 21, 1993; 59 FR
8847, 8848, Feb. 24, 1994; 61 FR 55885, Oct. 30, 1996; 63 FR 49667,
Sept. 17, 1998; 65 FR 8049, Feb. 17, 2000; 69 FR 51533, Aug. 20, 2004;
72 FR 16714, Apr. 5, 2007]
Subpart B_Jewelry
Source: 64 FR 67150, Dec. 1, 1999, unless otherwise noted.
Sec. 303.15 Purpose.
(a) This subpart implements the responsibilities of the Secretaries
of Commerce and the Interior (``the Secretaries'') under Pub. L. 106-36,
enacted 25 June 1999 which substantially amended Pub. L. 97-446, enacted
12 January 1983, amended by Pub. L. 89-805, enacted 10 November 1966,
amended by Pub. L. 94-88, enacted 8 August 1975, amended by Pub. L. 94-
241, enacted 24 March 1976, and amended by Pub. L. 103-465, enacted 8
December 1994, and Public Law 108-429, enacted on 3 December 2004.
(b) The amended law provides for the issuance of certificates to
insular jewelry producers who have met the requirements of the laws and
regulations, entitling the holder (or any transferee) to obtain refunds
of duties on any article imported into the customs territory of the
United States duty paid except for any article containing a material
which is the product of a country to which column 2 rates of duty apply.
The amounts of these certificates may not exceed specified percentages
of the producers' verified creditable wages in the insular possessions
(90% of wages paid for the production of the first 300,000 duty-free
units and declining percentages, established by the Secretaries, of
wages paid for incremental production up to 10,000,000 units by each
producer) nor an aggregate annual amount for all certificates exceeding
$5,000,000 adjusted for growth by the ratio of the previous year's gross
national product to the gross national product in 1982. However, the law
specifies that watch producer benefits are not to be diminished as a
consequence
[[Page 34]]
of extending the duty refund to jewelry manufacturers. In the event that
the amount of the calculated duty refunds for watches and jewelry
exceeds the total aggregate annual amount that is available, the watch
producers shall receive their calculated amounts and the jewelry
producers would receive amounts proportionately reduced from the
remainder. Refund requests are governed by regulations issued by the
Department of Homeland Security (see 19 CFR 7.4).
(c) Section 2401(a) of Pub. L. 106-36 and additional U.S. note 5 to
chapter 91 of the HTSUS authorize the Secretaries to issue regulations
necessary to carry out their duties. The Secretaries may cancel or
restrict the certificate of any insular manufacturer found violating the
regulations.
[49 FR 17740, Apr. 25, 1984, as amended at 70 FR 67648, Nov. 8, 2005; 72
FR 16715, Apr. 5, 2007; 73 FR 34857, June 19, 2008]
Sec. 303.16 Definitions and forms.
(a) Definitions. For purposes of the subpart, unless the context
indicates otherwise:
(1) Act means Pub. L. 97-446, enacted 12 January 1983 (19 U.S.C.
1202), 96 Stat. 2329, as amended by Pub. L. 103-465, enacted on 8
December 1994, 108 Stat. 4991 and, as amended by Pub. L. 106-36, enacted
on 25 June 1999, and Public Law 108-429, enacted on 3 December 2004.
(2) Secretaries means the Secretary of Commerce and the Secretary of
the Interior or their delegates, acting jointly.
(3) Director means the Director of the Statutory Import Programs
Staff, International Trade Administration, U.S. Department of Commerce.
(4) Sale or transfer of a business means the sale or transfer of
control, whether temporary or permanent, over a firm which is eligible
for a jewelry program duty-refund to any other firm, corporation,
partnership, person or other legal entity by any means whatsoever,
including, but not limited to, merger and transfer of stock, assets or
voting trusts.
(5) New firm means a jewelry company which has requested in writing
to the Secretaries permission to participate in the program. In addition
to any other information required by the Secretaries, new firm requests
shall include a representation that the company agrees to abide by the
laws and regulations of the program, an outline of the company's
anticipated economic contribution to the territory (including the number
of employees) and a statement as to whether the company is affiliated by
ownership or control with any other watch or jewelry company in the
insular possessions. The Secretaries will then review the request and
make a decision based on the information provided and the economic
contribution to the territory. A new jewelry firm may not be affiliated
through ownership or control with any other jewelry duty-refund
recipient. In assessing whether persons or parties are affiliated, the
Secretaries will consider the following factors, among others: stock
ownership; corporate or family groupings; franchise or joint venture
agreements; debt financing; and close supplier relationships. The
Secretaries may not find that control exists on the basis of these
factors unless the relationship has the potential to affect decisions
concerning production, pricing, or cost. Also, no jewelry duty-refund
recipient may own or control more than one watch duty-refund recipient.
(6) Jewelry producer means a company, located in one of the insular
territories (see paragraph (a)(8) of this section), that produces
jewelry provided for in heading 7113, HTSUS, which meets all the Bureau
of Customs and Border Protection requirements for duty-free entry set
forth in General Note 3(a)(iv), HTSUS, and 19 CFR 7.3, and has
maintained its eligibility for duty refund benefits by complying with
these regulations.
(7) Unit of Jewelry means a single article (e.g., ring, bracelet,
necklace), pair (e.g, cufflinks), gram for links which are sold in grams
and stocked in grams, and other subassemblies and components in the
customary unit of measure they are stocked and sold within the industry.
(8) Territories, territorial and insular possessions refers to the
insular possessions of the United States (i.e., the U.S. Virgin Islands,
Guam, American Samoa and the Northern Mariana Islands).
[[Page 35]]
(9) Creditable wages and associated creditable fringe benefits and
creditable duty differentials eligible for the duty refund benefit
include, but are not limited to, the following:
(i) Wages up to an amount equal to 65 percent of the contribution
and benefit base for Social Security, as defined in the Social Security
Act for the year in which wages were earned, paid to permanent residents
of the insular possessions employed in a firm's manufacture of HTSUS
heading 7113 articles of jewelry which are a product of the insular
possessions and have met the Bureau of Customs and Border Protection's
criteria for duty-free entry into the United States, plus any wages paid
for the repair of non-insular HTSUS heading 7113 jewelry up to an amount
equal to 50 percent of the firm's total creditable wages.
(A) Wages paid to persons engaged in the day-to-day assembly
operations at the company office, wages paid to administrative employees
working on the premises of the company office, wages paid to security
operations employees and wages paid to servicing and maintenance
employees if these services are integral to the assembly and
manufacturing operations and the employees are working on the premises
of the company office.
(B) Wages paid to permanent residents who are employees of a new
company involved in the jewelry assembly and jewelry manufacturing of
HTSUS heading 7113 jewelry for up to 18 months after such jewelry
company commences jewelry manufacturing or jewelry assembly operations
in the insular possessions.
(C) Wages paid when a maximum of two program producers work on a
single piece of HTSUS heading 7113 jewelry which entered the United
States free of duty under the program. Wages paid by the two producers
will be credited proportionally provided both producers demonstrate to
the satisfaction of the Secretaries that they worked on the same piece
of jewelry, the jewelry received duty-free treatment into the customs
territory of the United States, and the producers maintained production
and payroll records sufficient for the Departments' verification of the
creditable wage portion (see Sec. 303.17(b)).
(D) Wages paid to persons engaged in both creditable and non-
creditable assembly and repair operations may be credited proportionally
provided the firm maintains production, shipping and payroll records
adequate for the Departments' verification of the creditable portion.
(E) Wages paid to new permanent residents who have met the
requirements of permanent residency in accordance with the Departments'
regulations along with meeting all other creditable wage requirements of
the regulations, which must be documented and verified to the
satisfaction of the Secretaries.
(ii) The combined creditable amount of individual health and life
insurance per year, for each full-time permanent resident employee who
works on the premises of the company office and whose wages qualify as
creditable, may not exceed 130 percent of the ``weighted average''
yearly federal employee health insurance, which is calculated from the
individual health plans weighted by the number of individual contracts
in each plan. The yearly amount is calculated by the Office of Personnel
Management and includes the ``weighted average'' of all individual
health insurance costs for federal employees throughout the United
States. The maximum life insurance allowed within this combined amount
is $50,000 for each employee. Only during the time employees are earning
creditable wages are they entitled to health and life insurance duty
refund benefits under the program.
(A) The combined creditable amount of family health and life
insurance per year, for each full-time permanent resident employee who
works on the premises of the company office and whose wages qualify as
creditable, may not exceed 150 percent of the ``weighted average''
yearly federal employee health insurance, which is calculated from the
family health plans weighted by the number of family contracts in each
plan. The yearly amount is calculated by the Office of Personnel
Management and includes the ``weighted average'' of all family health
insurance costs for federal employees throughout the United States. The
maximum life
[[Page 36]]
insurance allowed within this combined amount is $50,000 dollars for
each employee. Only during the time employees are earning creditable
wages are they entitled to health and life insurance duty refund
benefits under the program.
(B) The creditable pension benefit, for each full-time permanent
resident employee who works on the premises of the company office and
whose wages qualify as creditable, is up to 3 percent of the employee's
wages unless the employee's wages exceed the maximum annual creditable
wage allowed under the program (see paragraph (a)(9)(i) of this
section). An employee earning more than the maximum creditable wage
allowed under the program will be eligible for only 3 percent of the
maximum creditable wage. Only during the time employees are earning
creditable wages are they entitled to pension duty refund benefits under
the program.
(10) Non-creditable wages and associated non-creditable fringe
benefits ineligible for the duty refund benefit include, but are not
limited to, the following:
(i) Wages over 65 percent of the contribution and benefit base for
Social Security, as defined in the Social Security Act for the year in
which wages were earned, paid to permanent residents of the territories
employed in a firm's 91/5 heading 7113, HTSUS, jewelry program.
(A) Wages paid for the repair of jewelry in an amount over 50
percent of the firm's total creditable wages.
(B) Wages paid to employees who are involved in assembling HTSUS
heading 7113 jewelry beyond 18 months after such jewelry company
commences jewelry manufacturing or jewelry assembly operations in the
insular possessions if the jewelry does not meet the Bureau of Customs
and Border Protection's substantial transformation requirements and
other criteria for duty-free enter into the United States.
(C) Wages paid for the assembly and manufacturing of jewelry which
is shipped to places outside the customs territory of the United States;
wages paid for the assembly and manufacturing of jewelry that does not
meet the regulatory assembly requirements; or wages paid for the
assembly and manufacture of jewelry that contain HTSUS column 2
components.
(D) Wages paid to those persons not engaged in the day-to-day
assembly operations on the premises of the company office, wages paid to
any outside consultants, wages paid to outside the office personnel,
including but not limited to, lawyers, gardeners, construction workers
and accountants; wages paid to employees not working on the premises of
the company office; wages paid to employees working with a non-program
producer to create a single piece of HTSUS heading 7113 jewelry whether
or not it entered the United States free of duty; and and wages paid to
employees who do not qualify as permanent residents in accordance with
the Departments' regulations.
(E) Wages paid to persons engaged in both creditable and non-
creditable assembly and repair operations if the producer does not
maintain production, shipping and payroll records adequate for the
Departments' verification of the creditable portion.
(ii) Any costs, for the year in which the wages were paid, of the
combined creditable amount of individual health and life insurance for
employees over 130 percent of the ``weighted average'' yearly individual
health insurance costs for all federal employees. The cost of any life
insurance over the $50,000 limit for each employee. Any health and life
insurance costs during the time an employee is not earning creditable
wages.
(A) Any costs, for the year in which the wages were paid, of the
combined creditable amount of family health and life insurance for
employees over 150 percent of the ``weighted average'' yearly family
health insurance costs for all federal employee. The cost of any life
insurance over the $50,000 limit for each employee. Any health and life
insurance costs during the time an employee is not earning creditable
wages.
(B) Any pension benefits that were not based on associated
creditable wages. The cost of any pension benefit per employee over 3
percent of the employee's creditable wages unless the employee's wages
exceed the maximum annual creditable annual maximum
[[Page 37]]
creditable wage allowed under the program (see paragraph (a)(9)(i) of
this section). Employees earning over the maximum creditable wage
allowed under the program would have a creditable annual pension benefit
of up to 3 percent of the maximum creditable wage and wages over 3
percent of the maximum creditable wage would not be creditable.
(11) Dutiable jewelry includes jewelry which does not meet the
requirements for duty-free entry under General Note 3(a)(iv), HTSUS, and
19 CFR 7.3, contains any material which is the product of any country
with respect to which Column 2 rates of duty apply or is ineligible for
duty-free treatment pursuant to other laws or regulations.
(12) Permanent resident means a person with one residence which is
in the insular possessions or a person with one or more residences
outside the insular possessions who meets criteria that include
maintaining his or her domicile in the insular possessions, residing
(i.e., be physically present for at least 183 days within a continuous
365 day period year) and working in the territory at a program company,
and maintaining his or her primary office for day-to-day work in the
insular possessions.
(b) Forms. (1) ITA--334P ``Annual Application for License to Enter
Watches and Watch Movements into the Customs Territory of the United
States.'' The Director shall issue instructions for jewelry
manufacturers on the completion of the relevant portions of the form.
The form must be completed annually by all jewelry producers desiring to
receive a duty refund and, with special instructions for its completion,
by producers who wish to receive the total annual amount of the duty
refund in installments on a biannual basis.
(2) ITA-360P ``Certificate of Entitlement to Secure the Refund of
Duties on Articles that Entered the Customs Territory of The United
State Duty Paid.'' This document authorizes an insular jewelry producer
to request the refund of duties on imports of articles that entered the
customs territory of the United States duty paid, with certain
exceptions, up to the specified value of the certificate. Certificates
may be used to obtain duty refunds only when presented with a properly
executed Form ITA-361P.
(3) ITA-361P ``Request for Refund of Duties on Articles that Entered
the Customs Territory of the United States Duty Paid.'' This form must
be completed to obtain the refund of duties authorized by the Director
through Form ITA-360P. After authentication by the Department of
Commerce, it may be used for the refund of duties on items which were
entered into the customs territory of the United States duty paid during
a specified time period. Copies of the appropriate Customs entries must
be provided with this form to establish a basis for issuing the claimed
amounts. The forms may also be used to transfer all or part of the
producer's entitlement to another party (see Sec. 303.19(c)).
(The information collection requirements in paragraph (b)(1) were
approved by the Office of Management and Budget under control number
0625-0040. The information collection requirements in paragraphs (b) (2)
and (3) were approved under control number 0625-0134)
[64 FR 67150, Dec. 1, 1999, as amended at 65 FR 8049, Feb. 17, 2000; 66
FR 34812, July 2, 2001; 67 FR 77409, Dec. 18, 2202; 70 FR 67648, Nov. 8,
2005; 72 FR 16715, Apr. 5, 2007; 73 FR 62881, Oct. 22, 2008]
Sec. 303.17 Application for annual duty-refunds.
(a) Form ITA-334P shall be furnished to producers by January 1 and
must be completed and returned to the Director no later than January 31
of each calendar year.
(b) All data supplied are subject to verification by the Secretaries
and no duty refund shall be made to producers until the Secretaries are
satisfied that the data are accurate. To verify the data,
representatives of the Secretaries shall have access to relevant company
records including, but not limited to:
(1) Work sheets used to answer all questions on the application
form, as specified by the instructions;
(2) Original records from which such data are derived;
(3) Records pertaining to ownership and control of the company;
(4) Records pertaining to all duty-free and dutiable shipments of
HTSUS 7113 jewelry, including Customs entry documents, or the
certificate of origin
[[Page 38]]
for the shipment, or, if a company did not receive such documents from
Customs, a certification from the consignee that the jewelry shipment
received duty-free treatment, or a certification from the producer, if
the producer can attest that the jewelry shipment received duty-free
treatment;
(5) Records pertaining to corporate income taxes, gross receipts
taxes and excise taxes paid by each producer in the territories;
(6) Customs, bank, payroll, including time cards, production
records, and all shipping records including the importer of record
number and proof of residency, as requested;
(7) All records pertaining to health insurance, life insurance and
pension benefits for each employee;
(8) Records on purchases of components and sales of jewelry,
including proof of payment; and
(9) Any other records in the possession of the parent or affiliated
companies outside the territory pertaining to any aspect of the
producer's jewelry operations.
(c) Data verification shall be performed in the territories, unless
other arrangements satisfactory to the Departments are made in advance,
by the Secretaries' representatives by the end of February of each
calendar year. In the event a company cannot substantiate the data in
its application, the Secretaries shall determine which data will be
used.
(d) Records subject to the requirements of paragraph (b) of this
section, shall be retained for a period of two years following their
creation.
[49 FR 17740, Apr. 25, 1984, as amended at 66 FR 34813, July 2, 2001; 70
FR 67650, Nov. 8, 2005; 72 FR 16715, Apr. 5, 2007]
Sec. 303.18 Sale or transfer of business.
(a) The sale or transfer of a business together with its duty refund
entitlement shall be permitted with prior written notification to the
Departments. Such notification shall be accompanied by certifications
and representations, as appropriate, that:
(1) The transferee is neither directly nor indirectly affiliated
with any other territorial duty refund jewelry recipient in any
territory;
(2) The transferee will not modify the jewelry operations in a
manner that will significantly diminish its economic contributions to
the territory.
(b) At the request of the Departments, the transferee shall permit
representatives of the Departments to inspect whatever records are
necessary to establish to their satisfaction that the certifications and
representations contained in paragraph (a) of this section have been or
are being met.
(c) Any transferee who is either unwilling or unable to make the
certifications and representations specified in paragraph (a) of this
section shall secure the Departments' approval in advance of the sale or
transfer of the business. The request for approval shall specify which
of the certifications specified in paragraph (a) of this section the
firm is unable or unwilling to make, and give reasons why such fact
should not constitute a basis for the Departments' disapproval of the
sale or transfer.
Sec. 303.19 Issuance and use of production incentive certificates.
(a) Issuance of certificates. (1) The total annual amount of the
Certificate of Entitlement, Form ITA-360, may be divided and issued on a
biannual basis. The first portion of the total annual certificate amount
will be based on reported duty-free shipments and creditable wages,
determined from the wages as reported on the employer's first two
quarterly federal tax returns (941-SS), paid during the first six month
of the calendar year, using the formula in Sec. 303.20(b). The
Departments require the receipt of the data by July 31 for each producer
who wishes to receive an interim duty refund certificate. The interim
duty refund certificate will be issued on or before August 31 of the
same year in which the wages were earned unless the Departments have
unresolved questions. The process of determining the total annual amount
of the duty refund will be based on verified creditable wages, duty-free
shipments into the customs territory of the United States, creditable
health insurance, life insurance and pension benefits and the duty
differential, if watch tariffs have been reduced during the calendar
year. The
[[Page 39]]
completed annual application (Form ITA-334P) shall be received by the
Departments on or before January 31 and the annual verification of data
and calculation of each producer's total annual duty refund, based on
the verified data, will continue to take place in February. Once the
calculations for each producer's duty refund has been completed, the
portion of the duty refund that has already been issued to each producer
will be deducted from the total amount of each producer's annual duty
refund amount. The duty refund certificate will continue to be issued by
March 1 unless the Departments have unresolved questions.
(2) Certificates shall not be issued to more than one jewelry
company in the territories owned or controlled by the same corporate
entity.
(b) Security and handling of certificates. (1) Certificate holders
are responsible for the security of the certificates. The certificates
shall be kept at the territorial address of the producer or at another
location having the advance approval of the Departments.
(2) All refund requests made pursuant to the certificates shall be
entered on the reverse side of the certificate.
(3) Certificates shall be returned by registered, certified or
express carrier mail to the Department of Commerce when:
(i) A refund is requested which exhausts the entitlement on the face
of the certificate,
(ii) The certificate expires, or
(iii) The Departments request their return with good cause.
(4) Certificate entitlements may be transferred according to the
procedures described in paragraph (c) of this section.
(c) The use and transfer of certificate entitlements. (1) Insular
producers issued a certificate may request a refund by executing Form
ITA-361P (see Sec. 303.16(b)(3)) and the instruction on the form).
After authentication by the Department of Commerce, Form ITA-361P may be
used to obtain duty refunds on article that entered the customs
territory of the United States duty paid. Duties on an article which is
the product of a country with respect to column 2 rates of duty apply
may not be refunded Articles for which duty refunds are claimed must
have entered the customs territory of the United States during the two-
year period prior to the issue date of the certificate or during the
one-year period the certificate remains valid. Copies of the appropriate
Customs entries must be provided with the refund request in order to
establish a basis for issuing the claimed amounts. Certification
regarding drawback claims and liquidated refunds relating to the
presented entries is required from the claimant on the form.
(2) Regulations issued by the Bureau of Customs and Border
Protection, U.S. Department of Homeland Security, govern the refund of
duties under 19 CFR 7.4. If the Departments receive information from the
Bureau of Customs and Border Protection that a producer has made
unauthorized use of any official form, they may cancel the affected
certificate.
(3) The territorial producer may transfer a portion of all of its
certificate entitlement to another party by entering in block C of Form
ITA-361P the name and address of the party.
(4) After a Form ITA-361P transferring a certificate entitlement to
a party other than the certificate holder has been authenticated by the
Department of Commerce, the form may be exchanged for any consideration
satisfactory to the two parties. In all cases, authenticated forms shall
be transmitted to the certificate holder or its authorized custodian for
disposition (see paragraph (b) of this section).
(5) All disputes concerning the use of an authenticated Form ITA-
361P shall be referred to the Departments for resolution. Any party
named on an authenticated Form ITA-361P shall be considered an
``interested party'' within the meaning of Sec. 303.21 of this part.
[49 FR 17740, Apr. 25, 1984, as amended at 66 FR 34813, July 2, 2001; 70
FR 67650, Nov. 8, 2005; 72 FR 16715, Apr. 5, 2007]
Sec. 303.20 Duty refund calculations and miscellaneous provisions.
(a) Territorial jewelry producers are entitled to duty refund
certificates only for jewelry that they produce which is provided for in
heading 7113, HTSUS, is a product of a territory and otherwise meets the
requirements for
[[Page 40]]
duty-free entry under General Note 3 (a)(iv), HTSUS, and 19 CFR 7.3.
(1) An article of jewelry is considered to be a product of a
territory if:
(i) The article is wholly the growth or product of the territory; or
(ii) The article became a new and different article of commerce as a
result of production or manufacture performed in the territories.
(2) Eighteen month exemption. Any article of jewelry provided for in
HTSUS heading 7113, assembled in the insular possessions by a new
entrant jewelry manufacturer shall be treated as a product of the
insular possessions if such article is entered into the customs
territory of the United States no later than 18 months after such
producer commences jewelry manufacturing or jewelry assembly operations
in the insular possessions.
(b) Calculation of the value of the mid-year production incentive
certificates.(1) The value of each producer's certificate shall equal
the producer's average creditable wage per unit shipped during the first
six months of the calendar year multiplied by the sum of:
(i) The number of units shipped up to 300,000 units times a factor
of 90%; plus
(ii) Incremental units shipped up to 3,533,334 units times a factor
of 85%; plus
(iii) Incremental units shipped up to 6,766,667 units times a factor
of 80%; plus
(iv) Incremental units shipped up to 10,000,000 units times a factor
of 75%.
(2) Calculation of the value of the annual production incentive
certificates. The value of each producer's certificate shall equal the
producer's average creditable benefit per unit based on creditable
wages, health insurance, life insurance and pension benefits averaged
from the amount of duty free units shipped during the calendar year
multiplied by the sum of the following to obtain the total verified
amount of the annual duty-refund per company. This amount would then be
adjusted by deducting the amount of the mid-year duty-refund already
issued.
(i) The number of units shipped up to 300,000 units times a factor
of 90%; plus
(ii) Incremental units shipped up to 3,533,334 units times a factor
of 85%; plus
(iii) Incremental units shipped up to 6,766,667 units times a factor
of 80%; plus
(iv) Incremental units shipped up to 10,000,000 units times a factor
of 75%.
[64 FR 67150, Dec. 1, 1999, as amended at 70 FR 67650, Nov. 8, 2005; 72
FR 16715, Apr. 5, 2007; 73 FR 34857, June 19, 2008]
Sec. 303.21 Appeals.
(a) Any official decision or action relating to the issuance or use
of production incentive certificates may be appealed to the Secretaries
by any interested party. Such appeals must be received within 30 days of
the date on which the decision was made or the action taken in
accordance with the procedures set forth in paragraph (b) of this
section. Interested parties may petition for the issuance of a rule, or
amendment or repeal of a rule issued by the Secretaries. Interested
parties may also petition for relief from the application of any rule on
the basis of hardship or extraordinary circumstances resulting in the
inability of the petitioner to comply with the rule.
(b) Petitions shall bear the name and address of the petitioner and
the name and address of the principal attorney or authorized
representative (if any) for the party concerned. They shall be addressed
to the Secretaries and filed in one original and two copies with the
U.S. Department of Commerce, Import Administration, International Trade
Administration, Washington, DC 20230, Attention: Statutory Import
Programs Staff. Petitions shall contain the following:
(1) A reference to the decision, action or rule which is the subject
of the petition;
(2) A short statement of the interest of the petitioner;
(3) A statement of the facts as seen by the petitioner;
(4) The petitioner's argument as to the points of law, policy or
fact. In cases where policy error is contended, the alleged error
together with the policy the submitting party advocates as the correct
one should be described in full;
(5) A conclusion specifying the action that the petitioner believes
the Secretaries should take.
[[Page 41]]
(c) The Secretaries may at their discretion schedule a hearing and
invite the participation of other interested parties.
(d) The Secretaries shall communicate their decision, which shall be
final, to the petitioner by registered, certified or express mail.
[64 FR 67150, Dec. 1, 1999, as amended at 72 FR 16716]
PART 310_OFFICIAL U.S. GOVERNMENT RECOGNITION OF AND PARTICIPATION IN
INTERNATIONAL EXPOSITIONS HELD IN THE UNITED STATES--Table of Contents
Sec.
310.1 Background and purpose.
310.2 Definitions.
310.3 Applications for Federal recognition.
310.4 Action on application.
310.5 Report of the Secretary on Federal recognition.
310.6 Recognition by the President.
310.7 Statement for Federal participation.
310.8 Proposed plan for Federal participation.
310.9 Report of the Secretary on Federal participation.
Authority: Pub. L. 91-269, 84 Stat. 271 (22 U.S.C. 2801 et seq.).
Source: 40 FR 34107, Aug. 14, 1975, unless otherwise noted.
Redesignated at 46 FR 57457, Nov. 24, 1981.
Sec. 310.1 Background and purpose.
The regulations in this part are issued under the authority of Pub.
L. 91-269 (84 Stat. 271, 22 U.S.C. 2801 et seq.) which establishes an
orderly procedure for Federal Government recognition of, and
participation in, international expositions to be held in the United
States. The Act provides, inter alia, that Federal recognition of an
exposition is to be granted upon a finding by the President that such
recognition will be in the national interest. In making this finding,
the President is directed to consider, among other factors, a report
from the Secretary of Commerce as to the purposes and reasons for an
exposition and the extent of financial and other support to be provided
by the State and local officials and business and community leaders
where the exposition is to be held, and a report by the Secretary of
State to determine whether the exposition is qualified for registration
under Bureau of International Expositions (BIE) rules. The BIE is an
international organization established by the Paris Convention of 1928
(T.I.A.S. 6548 as amended by T.I.A.S. 6549) to regulate the conduct and
scheduling of international expositions in which foreign nations are
officially invited to participate. The BIE divides international
expositions into different categories and types and requires each member
nation to observe specified minimum time intervals in scheduling each of
these categories and types of expositions. \1\ Under BIE rules, member
nations may not ordinarily participate in an international exposition
unless such exposition has been approved by the BIE. The United States
became a member of the BIE on April 30, 1968, upon ratification of the
Paris Convention by the U.S. Senate (114 Cong. Rec. 11012).
---------------------------------------------------------------------------
\1\ The BIE defines a General Exposition of the First Category as an
exposition dealing with progress achieved in a particular field applying
to several branches of human activity at which the invited countries are
obligated to construct national pavilions. A General Exposition of the
Secondary Category is a similar exposition at which invited countries
are not authorized to construct national pavilions, but occupy space
provided by the exposition sponsors. Special Category Expositions are
those dealing only with one particular technique, raw material, or basic
need.
The BIE frequency rules require that an interval of 15 years must
elapse between General Expositions of the First Category held in one
country. General Expositions of the Second Category require an interval
of 10 years. An interval of 5 years must ordinarily elapse between
Special Category Expositions of the same kind in one country or three
months between Special Category Expositions of different kinds. These
frequency intervals are computed from the date of the opening of the
exposition.
More detailed BIE classification criteria and regulations are
contained in the Paris Convention of 1928, as amended in 1948 and 1966.
Applicants not having a copy of the text of this convention may obtain
one by writing the Director. (The Convention may soon be amended by a
Protocol which has been approved by the BIE and ratified by the United
States. This amendment would increase authorized frequencies or
intervals for BIE approved expositions.)
[[Page 42]]
Federal participation in a recognized international exposition requires
a specific authorization by the Congress, upon a finding by the
President that such participation would be in the national interest. The
Act provides for the transmission to Congress of a participation
proposal by the President. This proposal transmits to the Congress
information regarding the exposition, including a statement that it has
been registered by the BIE and a plan for Federal participation prepared
by the Secretary of Commerce in cooperation with other interested
Federal departments and agencies.
Sec. 310.2 Definitions.
For the purpose of this part, except where the context requires
otherwise:
(a) Act means Pub. L. 91-269.
(b) Secretary means the Secretary of Commerce.
(c) Commissioner General means the person appointed to act as the
senior Federal official for the exposition as required by BIE rules and
regulations.
(d) Director means the Director of the International Expositions
Staff, Office of the Deputy Assistant Secretary for Export Development,
International Trade Administration, Department of Commerce.
(e) Applicant means a State, County, municipality, a political
subdivision of the foregoing, private non-profit or not-for-profit
organizations, or individuals filing an application with the Director
seeking Federal recognition of an international exposition to be held in
the United States.
(f) State means one of the several States of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Trust Territory of the Pacific
Islands.
(g) Exposition means an international exposition proposed to be held
in the United States for which an application has been filed with the
Director seeking Federal recognition under the Act; which proposes to
invite more than one foreign country to participate; and, which would
exceed three weeks in duration. Any event under three weeks in duration
is not considered an international exposition under BIE rules.
[40 FR 34107, Aug. 14, 1975. Redesignated and amended at 46 FR 57457,
Nov. 24, 1981]
Sec. 310.3 Applications for Federal recognition.
(a) Applications for Federal recognition of an exposition shall be
filed with, and all official communications in connection therewith
addressed to, the International Expositions Staff, International Trade
Administration, Department of Commerce, Washington, DC 20230.
(b) Every application, exhibit, or enclosure, except where
specifically waived by the Director, shall be in quadruplicate, duly
authenticated and referenced.
(c) Every application shall be in letter form and shall contain the
date, address, and official designation of the applicant and shall be
signed by an authorized officer or individual.
(d) Every application, except where specifically waived by the
Director, shall be accompanied by the following exhibits:
1. Exhibit No. 1. A study setting forth in detail the purpose for
the exposition, including any historical, geographic, or other
significant event of the host city, State, or region related to the
exposition.
2. Exhibit No. 2. An exposition plan setting forth in detail (i) the
theme of the exposition and the ``storyline'' around which the entire
exposition is to be developed; (ii) whatever preliminary architectural
and design plans are available on the physical layout of the site plus
existing and projected structures; (iii) the type of participation
proposed in the exposition (e.g., foreign and domestic exhibits); (iv)
cultural, sports, and special events planned; (v) the proposed BIE
category of the event and evidence of its conformity to the regulations
of the BIE (a copy of these regulations can be obtained from the
Director upon request); (vi) the proposed steps that will be taken to
protect foreign exhibitors under the BIE model rules and regulations and
(vii) in writing commit its organization to the completion of the
exposition.
3. Exhibit No. 3. Documentary evidence of State, regional and local
support (e.g., letters to the applicant from business and civic
leadership of the region, pledging assistance and/or financing; State
and/or municipal resolutions, acts, or appropriations; referendums on
bond issues, and others).
[[Page 43]]
4. Exhibit No. 4. An organization chart of the exposition management
structure (actual or proposed) of the applicant, including description
of the functions, duties and responsibilities of each official position
along with bibliographic material, including any professional experience
in the fields of architecture, industrial design, engineering, labor
relations, concession management, interpretative theme planning, exhibit
development, etc., on principal officers, if available. (The principal
officials should also be prepared to submit subsequent individual
statements under oath of their respective financial holdings and other
interests.)
5. Exhibit No. 5. A statement setting forth in detail (i) the
availability of visitor services in existence or projected to
accommodate tourists at the exposition (e.g., number of hotel and motel
units, number and type of restaurants, health facilities, etc.); (ii)
evidence of adequate transportation facilities and accessibility of the
host city to large groups of national and international visitors (e.g.,
number and schedule of airlines, bus lines, railroads, and truck lines
serving the host city); and (iii) plans to promote the exposition as a
major national and international tourist destination.
6. Exhibit No. 6. A statement setting forth in detail the
applicant's plans for acquiring title to, or the right to occupy and use
real property, other than that owned by the applicant or by the United
States, essential for implementing the project or projects covered by
the application. If the applicant, at the time of filing the
application, has acquired title to the real property, he should submit a
certified copy of the deed(s). If the applicant, at the time of filing
the application, has by easement, lease, franchise, or otherwise
acquired the right to occupy and use real property owned by others, he
should submit a certified copy of the appropriate legal instrument(s)
evidencing this right.
7. Exhibit No. 7. A statement of the latest prevailing hourly wage
rates for construction workers in the host city (e.g., carpenters,
cement masons, sheet metal workers, etc.).
8. Exhibit No. 8. Information on attitudes of labor leaders as to
``no strike'' agreements during the development and operation of the
exposition. Actual ``no strike'' pledges are desirable.
9. Exhibit No. 9. A detailed study conducted and certified by a
nationally recognized firm(s) in the field of economics, accounting,
management, etc., setting forth (i) proposed capital investment cost;
cash flow projections; and sources of financing available to meet these
costs, including but not limited to funds from State and municipal
financing, general obligation and/or general revenue bond issues, and
other public or private sources of front-end capital; (ii) assurances
that the ``guaranteed financing'' is or will be available in accordance
with Section 2(a)(1)(b) of Pub. L. 91-269; (iii) the projected expenses
for managing the exposition; (iv) projected operational revenues broken
down to include admissions, space rental, concessions, service fees and
miscellaneous income; and (v) cost-benefit projections. These should be
accompanied by a statement of the firm that the needed cash flow,
sources of funding, and revenue projections are realistic and
attainable.
10. Exhibit No. 10. A description of the exposition implementation
time schedule and the management control system to be utilized to
implement the time schedule (e.g., PERT, CPM, etc.).
11. Exhibit No. 11. A statement setting forth in detail the public
relations, publicity and other promotional plans of the applicant. For
example, the statement could include: (i) an outline of the public
relations/publicity program broken down by percentage allocations among
the various media; (ii) a public relations/publicity program budget with
the various calendar target dates for completion of phases prior to the
opening, the opening and post-opening of the exposition; and (iii)
protocol plans for U.S. and foreign dignitaries, as well as for special
ceremonies and events and how these plans are to be financed.
12. Exhibit No. 12. A study setting forth in detail the benefits to
be derived from the exposition and residual use plans. For example, the
study might include: (i) extent of immediate economic benefits for the
city/region/nation in proportion to total investment in the exposition;
(ii) extent of long range economic benefits for the city/region/nation
in proportion to total investment in the exposition; and (iii) extent of
intangible (social, psychological, ``good will'') benefits accruing to
the city/region/nation including the solution or amelioration of any
national/local problems.
13. Exhibit No. 13. A statement committing the applicant to develop
and complete an environmental impact statement which complies with
section 102(2)(c) of the National Environmental Policy Act of 1969 (83
Stat. 852; 42 U.S.C. 4331). Sample copies of environmental impact
statements may be obtained from the Director. Prior to the Director's
submitting a report to the Secretary containing his findings on the
application for Federal recognition pursuant to Sec. 310.4, the
applicant must have completed the required Environmental Impact
Statement (EIS), in a form acceptable to the Department of Commerce.
14. Exhibit No. 14. A detailed set of general and special rules and
regulations governing the exposition and participation in it, which, if
Federal recognition is obtained, can be used by the Federal Government
in seeking BIE registration.
[[Page 44]]
15. Exhibit No. 15. A statement from the applicant agreeing to
accept a U.S. Commissioner General, appointed by the President. He will
be recognized as the senior Federal official and titular head of the
exposition, final arbiter in disputes with exhibitors, and the official
contact with foreign governments. The applicant should also agree to
furnish the Commissioner General and his staff with suitable facilities
in the host community during the development and operation of the
exposition.
[40 FR 34107, Aug. 14, 1975. Redesignated and amended at 46 FR 57457,
Nov. 24, 1981]
Sec. 310.4 Action on application.
(a) Upon receipt of an application, the Director will analyze the
application and all accompanying exhibits to insure compliance with the
provisions of Sec. 310.3 and report his findings with respect thereto
to the Secretary.
(b) If more than one applicant applies for Federal recognition for
expositions to be held within three years or less of each other, the
applications will be reviewed concurrently by the Director. The
following standards will be considered in determining which if any of
the competing applicants will be recommended for Federal recognition:
(1) The order of receipt of the applications by the Director,
complete with all exhibits required by Sec. 310.3.
(2) The financial plans of the applications. Primary consideration
will be given to those applications which do not require Federal
financing for exposition development. This does not extend to funding
for a Federal pavilion, if one is desired.
(3) The relative merit of the applications in terms of their
qualifications as tourism destination sites, both with respect to
existing facilities and those facilities planned for the proposed
exposition. If necessary, to assist in making this determination, the
Director will appoint a panel of travel industry experts representing
tour developers, the transportation, entertainment and hotel/motel
industries for the purpose of studying the competing applications and
reporting to the Director its views as to which proposed site best meets
the above criteria. If such a panel is deemed necessary, the provisions
of the Federal Advisory Committee Act (86 Stat. 770, 5 U.S.C. App. I)
will be applicable.
(c) In analyzing the applications, the Director may hold public
hearings with the objective of clarifying issues that might be raised by
the application. If desired, the Director may utilize the services of an
examiner.
(d) If the Director, in his discretion, decides to hold a public
hearing, notice of such hearing shall be published in the Federal
Register, and a copy of the notice shall be furnished to local
newspapers. The notice shall state the subject to be considered and when
and where the hearing will be held, specifically designating the date,
hour, and place.
(e) The following general procedure shall govern the conduct of
public hearings: (1) Stenographic minutes of the proceedings shall be
made; (2) the names and addresses of all parties present or represented
at the hearing shall be recorded; and (3) the Director or Examiner shall
read aloud for the record and for the benefit of the public such parts
of the Act and of these regulations as bear on the application. He shall
also read aloud for the record and for the benefit of the public such
other important papers, or extracts therefrom, as may be necessary for a
full understanding of the issues which require clarification. The
Director or Examiner shall impress upon the parties in attendance at the
public hearing, and shall specifically state at the commencement of the
hearing, that the hearing is not adversary in nature and that the sole
objective thereof is to clarify issues that might have been raised by
the application.
(f) Statements of interested parties may be presented orally at the
hearing, or submitted in writing for the record.
(g) Within six months after receipt of a fully completed application
and/or the adjournment of the public hearing, the Director shall submit
his report containing his findings on the application to the Secretary.
Sec. 310.5 Report of the Secretary on Federal recognition.
If the Director's report recommends Federal recognition, the
Secretary, within a reasonable time, shall submit a report to the
President.
(a) The Secretary's report shall include: (1) An evaluation of the
purposes
[[Page 45]]
and reasons for the exposition; and (2) a determination as to whether
guaranteed financial and other support has been secured by the
exposition from affected State and local governments and from business
and civic leaders of the region and others in amounts sufficient to
assure the successful development and progress of the exposition.
(b) Based on information from, and coordination with the Department
of Commerce the Secretary of State shall also file a report with the
President that the exposition qualifies for recognition by the BIE.
Sec. 310.6 Recognition by the President.
If the President concurs in the favorable reports from the
Secretaries of State and Commerce, he may grant Federal recognition to
the exposition by indicating his concurrence to the two Secretaries and
authorizing them to seek BIE registration.
Sec. 310.7 Statement for Federal participation.
If Federal participation in the exposition, as well as Federal
recognition thereof is desired, the applicant shall in a statement to
the Director outline the nature of the Federal participation envisioned,
including whether construction of a Federal pavilion is contemplated.
(It should be noted, however, that before Federal participation can be
authorized by the Congress under the Act, the exposition must have (i)
met the criteria for Federal recognition and be so recognized, and (ii)
been registered by the BIE. Although applicants need not submit such a
statement until these prerequisites are satisfied, they are encouraged
to do so.) Where the desired Federal participation includes a request
for construction of a Federal pavilion, the statement shall be
accompanied by the following exhibits:
1. Exhibit No. 1. A survey drawing of the proposed Federal pavilion
site, showing its areas and boundaries, its grade elevations, and
surface and subsoil conditions.
2. Exhibit No. 2. Evidence of resolutions, statutes, opinions, etc.,
as to the applicant's ability to convey by deed the real property
comprising the proposed Federal pavilion site in fee-simple and free of
liens and encumbrances to the Federal Government. The only consideration
on the part of the Government for the conveyance of the property shall
be the Government's commitment to participate in the exposition.
3. Exhibit No. 3. A certified copy of the building code which would
be applicable should a pavilion be constructed.
4. Exhibit No. 4. An engineering drawing showing the accessibility
of the proposed pavilion site to utilities (e.g., sewerage, water, gas,
electricity, etc.).
5. Exhibit No. 5. A statement setting forth the security and
maintenance and arrangements which the applicant would undertake (and an
estimate of their cost) while a pavilion is under construction.
6. Exhibit No. 6. A study pursuant to Executive Order 11296 of
August 10, 1966, entitled ``Evaluation of flood hazard in locating
Federally owned or financed buildings, roads and other facilities and in
disposing of Federal land and properties.''
Sec. 310.8 Proposed plan for Federal participation.
(a) Upon receipt of the statement, and the exhibits referred to in
Sec. 310.7, the Director shall prepare a proposed plan in cooperation
with other interested departments and agencies of the Federal Government
for Federal participation in the exposition.
(b) In preparing the proposed plan for Federal participation in the
exposition, the Director shall conduct a feasibility study of Federal
participation including cost estimates by utilizing the services within
the Federal Government, professional consultants and private sources as
required and in accordance with applicable laws and regulations.
(c) The Director, in the proposed plan for Federal participation in
the exposition, shall determine whether or not a Federal pavilion should
be constructed and, if so, whether or not the Government would have need
for a permanent structure in the area of the exposition or whether a
temporary structure would be more appropriate.
(d) The Director shall seek the advice of the Administrator of the
General Services Administration to the extent necessary in carrying out
the proposed plan for Federal participation in the exposition.
(e) Upon completion of the proposed plan for Federal participation
in the exposition, the Director shall submit the plan to the Secretary.
[[Page 46]]
Sec. 310.9 Report of the Secretary on Federal participation.
Upon receipt of the Director's proposed plan for Federal
participation, the Secretary, within a reasonable time, shall submit a
report to the President including: (a) Evidence that the exposition has
met the criteria for Federal recognition and has been so recognized; (b)
a statement that the exposition has been registered by the BIE; and (c)
a proposed plan for the Federal participation referred to in Sec.
310.8.
PART 315_DETERMINATION OF BONA FIDE MOTOR-VEHICLE MANUFACTURER--Table of
Contents
Sec.
315.1 Scope and purpose.
315.2 Definitions.
315.3 Application.
315.4 Determination by the Under Secretary.
315.5 Maintenance and publication of a list of bona fide motor-vehicle
manufacturers.
Authority: Headnote 2, subpart B, part 6, schedule 6, Tariff
Schedules of the United States (19 U.S.C. 1202); sec. 501(2) of Title V,
Automotive Products Trade Act of 1965 (19 U.S.C. 2031).
Source: 45 FR 42214, June 23, 1980, unless otherwise noted.
Redesignated at 53 FR 52115, Dec. 27, 1988.
Sec. 315.1 Scope and purpose.
The purpose of this part is to set forth regulations implementing
headnote 2 to subpart B, part 6, schedule 6 of the Tariff Schedules of
the United States as proclaimed by Proclamation No. 3682 of October 21,
1965 (3 CFR 140-65 Comp.). issued pursuant to the Automotive Products
Trade Act of 1965 (19 U.S.C. 2031), by establishing a procedure under
which a person may apply to be determined a bona fide motor-vehicle
manufacturer. Under headnote 2 to subpart B, part 6, schedule 6 of the
Tariff Schedules of the United States, whenever the Secretary of
Commerce has determined a person to be a bona fide motor-vehicle
manufacturer, such person is eligible to obtain duty-free importation of
certain Canadian articles and to issue certain orders, contracts, or
letters of intent under or pursuant to which other persons, not
themselves bona fide motor-vehicle manufacturers, may obtain duty-free
treatment for such Canadian articles. The responsibilities of Secretary
of Commerce relating to the development, maintenance and publication of
a list of bona fide motor-vehicle manufacturers and the authority to
promulgate rules and regulations pertaining thereto have been delegated
to Under Secretary for International Trade, Department of Commerce
pursuant to Department of Commerce Organization Order 40-1, Amendment 9
of January 22, 1984 (49 FR 4538).
[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115,
Dec. 27, 1988]
Sec. 315.2 Definitions.
For the purpose of the regulations in this part and the forms issued
to implement it:
(a) Act means the Automotive Products Trade Act of 1965 (79 Stat.
1016, 19 U.S.C. 2001 through 2033).
(b) Under Secretary means Under Secretary for International Trade of
the Department of Commerce, or such official as may be designated by the
Under Secretary to act in his or her behalf.
(c) Motor vehicle means a motor vehicle of a kind described in item
692.05 or 692.10 of subpart B, part 6, schedule 6, of the Tariff
Schedules of the United States (excluding an electric trolley bus and a
three-wheeled vehicle) or an automotive truck tractor.
(d) Bona fide motor-vehicle manufacturer means a person who upon
application to the Under Secretary is determined by the Under Secretary
to have produced no fewer than 15 complete motor vehicles in the United
States during the 12-month period preceding the date certified in the
application, and to have had as of such date installed capacity in the
United States to produce 10 or more complete motor vehicles per 40-hour
week. A person shall only be regarded as having had the capacity to
produce a complete motor vehicle if his operation included the assembly
of two or more major components (e.g., the attachment of a body to a
chassis) to create a new motor vehicle ready for use.
[[Page 47]]
(e) Person includes any individual, corporation, partnership,
association, company, or any kind of organization.
(f) United States includes only the States, the District of Columbia
and Puerto Rico.
[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115,
Dec. 27, 1988]
Sec. 315.3 Application.
Any person in the United States desiring to be determined a bona
fide motor vehicle manufacturer shall apply to the Under Secretary by
filing two copies of Form BIE-3 in accordance with the instructions set
forth on the form and this part. Application forms may be obtained from
the Under Secretary, District offices of the U.S. Department of
Commerce, or from U.S. Collectors of Customs, and should be mailed or
delivered to the:
U.S. Department of Commerce, International Trade Administration, Office
of Automotive Industry Affairs--APTA, 14th and Constitution Avenue, NW.,
Room 4036, Washington, DC 20230.
[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115,
Dec. 27, 1988]
Sec. 315.4 Determination by the Under Secretary.
(a) As soon as practicable after receipt of the application, the
Under Secretary shall determine whether an applicant has produced no
fewer than 15 complete motor vehicles in the United States during the
12-month period preceding the date certified in the application and as
of such date, had installed capacity in the United States to produce 10
or more complete motor vehicles per 40 hour week. The Under Secretary
may request such additional data from an applicant as he may deem
appropriate to establish whether the applicant has satisfied the
requirements of this part.
(b) A determination by the Under Secretary under this part shall be
effective for a 12-month period to begin on the date as of which the
Under Secretary determines that the applicant qualified under this part.
Within 60 days prior to the termination of such period, a bona fide
motor vehicle manufacturer may apply for another determination under
this part.
(c) The Under Secretary will promptly notify each applicant in
writing of the final action taken on his application.
[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115,
Dec. 27, 1988]
Sec. 315.5 Maintenance and publication of a list of bona fide motor-vehicle
manufacturers.
The Under Secretary shall maintain and publish from time to time in
the Federal Register, a list of the names and addresses of bona fide
motor vehicle manufacturers, and the effective dates from each
determination.
[45 FR 42214, June 23, 1980. Redesignated and amended at 53 FR 52115,
Dec. 27, 1988]
PART 325_EXPORT TRADE CERTIFICATES OF REVIEW--Table of Contents
Sec.
325.1 Scope.
325.2 Definitions.
325.3 Applying for a certificate of review.
325.4 Calculating time periods.
325.5 Issuing the certificate.
325.6 Publishing notices in the Federal Register.
325.7 Amending the certificate.
325.8 Expediting the certification process.
325.9 Reconsidering an application that has been denied.
325.10 Modifying or revoking a certificate.
325.11 Judicial review.
325.12 Returning the applicant's documents.
325.13 Nonadmissibility in evidence.
325.14 Submitting reports.
325.15 Relinquishing a certificate.
325.16 Protecting confidentiality of information.
325.17 Waiver.
Authority: Title III of the Export Trading Company Act, Pub. L. 97-
290 (96 Stat. 1240-1245, 15 U.S.C. 4011-4021).
Source: 50 FR 1806, Jan. 11, 1985, unless otherwise noted.
Sec. 325.1 Scope.
This part contains regulations for issuing export trade certificates
of review under title III of the Export Trading Company Act, Pub. L. 97-
290. A holder of a certificate of review and the members named in the
certificate will have specific protections from private treble damage
actions and government criminal and civil suits under U.S. Federal and
State antitrust laws for the
[[Page 48]]
export conduct specified in the certificate and carried out during its
effective period in compliance with its terms and conditions.
Sec. 325.2 Definitions.
As used in this part:
(a) Act means title III of Pub. L. 97-290, Export Trade Certificates
of Review.
(b) Antitrust laws means the antitrust laws, as the term is defined
in the first section of the Clayton Act (15 U.S.C. 12), section 5 of the
Federal Trade Commission Act (15 U.S.C. 45) (to the extent that section
5 prohibits unfair methods of competition), and any State antitrust or
unfair competition law.
(c) Applicant means the person or persons who submit an application
for a certificate.
(d) Application means an application for a certificate to be issued
under the Act.
(e) Attorney General means the Attorney General of the United States
or his designee.
(f) Certificate means a certificate of review issued pursuant to the
Act.
(g) Control means either (1) holding 50 percent or more of the
outstanding voting securities of an issuer; or (2) having the
contractual power presently to designate a majority of the directors of
a corporation, or in the case of an unincorporated entity, a majority of
the individuals who exercise similar functions.
(h) Controlling entity means an entity which directly or indirectly
controls a member or applicant, and is not controlled by any other
entity.
(i) Export conduct means specified export trade activities and
methods of operation carried out in specified export trade and export
markets.
(j) Export trade means trade or commerce in goods, wares,
merchandise, or services that are exported, or are in the course of
being exported, from the United States or any territory of the United
States to any foreign nation.
(k) Export trade activities means activities or agreements in the
course of export trade.
(l) Member means an entity (U.S. or foreign) or a person which is
seeking protection under the certificate with the applicant. A member
may be a partner in a partnership or a joint venture; a shareholder of a
corporation; or a participant in an association, cooperative, or other
form of profit or nonprofit organization or relationship, by contract or
other arrangement.
(m) Method of operation means any method by which an applicant or
member conducts or proposes to conduct export trade.
(n) Person means an individual who is a resident of the United
States; a partnership that is created under and exists pursuant to the
laws of any State or of the United States; a State or local government
entity; a corporation, whether it is organized as a profit or nonprofit
corporation, that is created under and exists pursuant to the laws of
any State or of the United States; or any association or combination, by
contract or other arrangement, between or among such persons.
(o) Secretary means the Secretary of Commerce or his designee.
(p) Services means intangible economic output, including, but not
limited to--
(1) business, repair, and amusement services,
(2) management, legal, engineering, architectural, and other
professional services, and
(3) financial, insurance, transportation, informational and any
other data-based services, and communication services.
(q) United States means the fifty States of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, the Virgin
Islands, American Samoa, Guam, the Commonwealth of the Northern Mariana
Islands, and the Trust Territory of the Pacific Islands.
Sec. 325.3 Applying for a certificate of review.
(a) Place of filing. The applicant shall submit an original and two
copies of a completed application form (ITA 4093-P, OMB control number
0625-0125) by personal delivery during normal business hours or by first
class mail to the Office of Export Trading Company Affairs, Room 5618,
International Trade Administration, Department of Commerce, Washington,
DC 20230. Although
[[Page 49]]
not required, the applicant should consider using registered mail or
some other delivery method that provides evidence of receipt.
(b) Contents of application. Any person may submit an application
for certification. The application shall contain, where applicable, the
information listed below. Some information, in particular the
identification of goods or services that the applicant exports or
proposes to export, is requested in a certain form (Standard Industrial
Classification [SIC] numbers) if reasonably available. Where information
does not exist in this form, the applicant may satisfy the request for
information by providing it in some other convenient form. If the
applicant is unable to provide any of the information requested or if
the applicant believes that any of the information requested would be
both burdensome to obtain and unnecessary for a determination on the
application, the applicant should state that the information is not
being provided or is being provided in lesser detail, and explain why.
(1) Name and principal address of the applicant and of its
controlling entity, if any. Include the name, title, address, telephone
number, and relationship to the applicant of each individual to whom the
Secretary should address correspondence.
(2) The name and principal address of each member, and of each
member's controlling entity, if any.
(3) A copy of any legal instrument under which the applicant is
organized or will operate. Include copies, as applicable, of its
corporate charter, bylaws, partnership, joint venture, membership or
other agreements or contracts under which the applicant is organized.
(4) A copy of the applicant's most recent annual report, if any, and
that of its controlling entity, if any. To the extent the information is
not included in the annual report, or other documents submitted in
connection with the application, a description of the applicant's
domestic (including import) and export operations, including the nature
of its business, the types of products or services in which it deals,
and the places where it does business. This description may be
supplemented by a chart or table.
(5) A copy of each member's most recent annual report, if any, and
that of its controlling entity, if any. To the extent the information is
not included in the annual report, or other documents submitted in
connection with the application, a description of each member's domestic
(including import) and export operations, including the nature of its
business, the types of products or services in which it deals, and the
places where it does business. This description may be supplemented by a
chart or table.
(6) The names, titles, and responsibilities of the applicant's
directors, officers, partners and managing officials, and their business
affiliations with other members or other businesses that produce or sell
any of the types of goods or services described in paragraph (b)(7) of
this section.
(7)(i) A description of the goods or services which the applicant
exports or proposes to export under the certificate of review. This
description should reflect the industry's customary definitions of the
products and services.
(ii) If it is reasonably available, an identification of the goods
or services according to the Standard Industrial Classification (SIC)
number. Goods should normally be identified according to the 7-digit
level. Services should normally be identified at the most detailed SIC
level available.
(iii) The foreign geographic areas to which the applicant and each
member export or intend to export their goods and services.
(8) For each class of the goods, wares, merchandise or services
described in paragraph (b)(7) of this section:
(i) The principal geographic area or areas in the United States in
which the applicant and each member sell their goods and services.
(ii) For their previous two fiscal years, the dollar value of the
applicant's and each member's (A) total domestic sales, if any; and (B)
total export sales, if any. Include the value of the sales of any
controlling entities and all entities under their control.
(9) For each class of the goods, wares, merchandise or services
described in paragraph (b)(7) of this section, the
[[Page 50]]
best information or estimate accessible to the applicant of the total
value of sales in the United States by all companies for the last two
years. Identify the source of the information or the basis of the
estimate.
(10) A description of the specific export conduct which the
applicant seeks to have certified. Only the specific export conduct
described in the application will be eligible for certification. For
each item, the applicant should state the antitrust concern, if any,
raised by that export conduct. (Examples of export conduct which
applicants may seek to have certified include the manner in which goods
and services will be obtained or provided; the manner in which prices or
quantities will be set; exclusive agreements with U.S. suppliers or
export intermediaries; territorial, quantity, or price agreements with
U.S. suppliers or export intermediaries; and restrictions on membership
or membership withdrawal. These examples are given only to illustrate
the type of export conduct which might be of concern. The specific
activities which the applicant may wish to have certified will depend on
its particular circumstances or business plans.).
(11) If the export trade, export trade activities, or methods of
operation for which certification is sought will involve any agreement
or any exchange of information among suppliers of the same or similar
products or services with respect to domestic prices, production, sales,
or other competitively sensitive business information, specify the
nature of the agreement or exchange of information. Such information
exchanges are not necessarily impermissible and may be eligible for
certification. Whether or not certification is sought for such
exchanges, this information is necessary to evaluate whether the conduct
for which certification is sought meets the standards of the Act.
(12) A statement of whether the applicant intends or reasonably
expects that any exported goods or services covered by the proposed
certificate will re-enter the United States, either in their original or
modified form. If so, identify the goods or services and the manner in
which they may re-enter the U.S.
(13) The names and addresses of the suppliers of the goods and
services to be exported (and the goods and services to be supplied by
each) unless the goods and services to be exported are to be supplied by
the applicant and/or its members.
(14) A proposed non-confidential summary of the export conduct for
which certification is sought. This summary may be used as the basis for
publication in the Federal Register.
(15) Any other information that the applicant believes will be
necessary or helpful to a determination of whether to issue a
certificate under the standards of the Act.
(16) (Optional) A draft proposed certificate.
(c) The applicant must sign the application and certify that (1)
each member has authorized the applicant to submit the application, and
(2) to the best of its belief the information in the application is
true, correct, and fully responsive.
(d) Conformity with regulations. No application shall be deemed
submitted unless it complies with these regulations. Applicants are
encouraged to seek guidance and assistance from the Department of
Commerce in preparing and documenting their applications.
(e) Review and acceptance. The Secretary will stamp the application
on the day that it is received in the Office of Export Trading Company
Affairs. From that date, the Secretary will have five working days to
decide whether the application is complete and can be deemed submitted
under the Act. On the date on which the application is deemed submitted,
the Secretary will stamp it with that date and notify the applicant that
the application has been accepted for review. If the application is not
accepted for review, the Secretary shall advise the applicant that it
may file the application again after correcting the deficiencies that
the Secretary has specified. If the Secretary does not take action on
the application within the five-day period, the application shall be
deemed submitted as of the sixth day.
(f) Withdrawal of application. The applicant may withdraw an
application by written request at any time before the Secretary has
determined whether
[[Page 51]]
to issue a certificate. An applicant who withdraws an application may
submit a new application at any time.
(g) Supplemental information. After an application has been deemed
submitted, if the Secretary or the Attorney General finds that
additional information is necessary to make a determination on the
application, the Secretary will ask the applicant in writing to supply
the supplemental information. The running of the time period for a
determination on the application will be suspended from the date on
which the request is sent until the supplemental information is received
and is considered complete. The Secretary shall promptly decide whether
the supplemental information is complete, and shall notify the applicant
of his decision. If the information is being sought by the Attorney
General, the supplemental information may be deemed complete only if the
Attorney General concurs. If the applicant does not agree to provide the
additional information, or supplies information which the Secretary or
the Attorney General considers incomplete, the Secretary and the
Attorney General will decide whether the information in their possession
is sufficient to make a determination on the application. If either the
Secretary or the Attorney General considers the information in their
possession insufficient, the Secretary may make an additional request or
shall deny the application. If they consider the information in their
possession sufficient to make a determination on the application, the
Secretary shall notify the applicant that the time period for a
determination has resumed running.
(Information collection requirements in paragraph (a) approved by the
Office of Management and Budget under control number 0625-0125)
Sec. 325.4 Calculating time periods.
(a) When these regulations require action to be taken within a fixed
time period, and the last day of the time period falls on a non-working
day, the time period shall be extended to the next working day.
(b) The day after an application is deemed submitted shall be deemed
the first of the days within which the Secretary must make a
determination on the application.
Sec. 325.5 Issuing the certificate.
(a) Time period. The Secretary shall determine whether to issue a
certificate within ninety days after the application is deemed submitted
(excluding any suspension pursuant to Sec. 325.3(f) of the time period
for making a determination). If the Secretary or the Attorney General
considers it necessary, and the applicant agrees, the Secretary may take
up to an additional thirty days to determine whether to issue a
certificate.
(b) Determination. The Secretary shall issue a certificate to the
applicant if he determines, and the Attorney General concurs, that the
proposed export trade, export trade activities and methods of operation
will--
(1) Result in neither a substantial lessening of competition or
restraint of trade within the United States nor a substantial restraint
of the export trade of any competitor of the applicant;
(2) Not unreasonably enhance, stabilize, or depress prices within
the United States of the class of the goods, wares, merchandise or
services exported by the applicant;
(3) Not constitute unfair methods of competition against competitors
who are engaged in the export of goods, wares, merchandise or services
of the class exported by the applicant; and
(4) Not include any act that may reasonably be expected to result in
the sale for consumption or resale within the United States of the
goods, wares, merchandise, or services exported by the applicant.
(c) Concurrence of the Attorney General. (1) Not later than seven
days after an application is deemed submitted, the Secretary shall
deliver to the Attorney General a copy of the application, any
information submitted in connection with the application, and any other
relevant information in his possession. The Secretary and the Attorney
General shall make available to each other copies of other relevant
information that was obtained in connection with the application, unless
otherwise prohibited by law.
[[Page 52]]
(2) Not later than thirty days before the day a determination on the
application is due, the Secretary shall deliver a proposed certificate
to the Attorney General for discussion and comment. If the Attorney
General does not agree that the proposed certificate may be issued, he
shall, not later than ten days before the day a determination on the
application is due, so advise the Secretary and state the reasons for
the disagreement. The Secretary with the concurrence of the Attorney
General, may modify or revise the proposed certificate to resolve the
objections and problems raised by the Attorney General, or deny the
application.
(3) If the Attorney General receives the proposed certification by
the date specified in the preceding paragraph and does not respond
within the time period specified in that paragraph, he shall be deemed
to concur in the proposed certificate.
(d) Content of certificate. The certificate shall specify the export
conduct and all persons or entities which are protected from liability
under the antitrust laws. The Secretary may certify the proposed export
conduct contained in the application, in whole or in part, with such
changes, modifications, terms, or conditions as are appropriate. If the
Secretary intends to issue a certificate different from a draft
certificate submitted by the applicant, the Secretary shall first
consult with the applicant.
(e) Certificate obtained by fraud. A certificate shall be void ab
initio with respect to any export conduct for which a certificate was
obtained by fraud.
(f) Minimum thirty-day period. The Secretary may not issue a
certificate until thirty days after the summary of the application is
published in the Federal Register.
Sec. 325.6 Publishing notices in the Federal Register.
(a) Within ten days after an application is deemed submitted, the
Secretary shall deliver to the Federal Register a notice summarizing the
application. The notice shall identify the applicant and each member and
shall include a summary of the export conduct for which certification is
sought. If the Secretary does not intend to publish the summary proposed
by the applicant, he shall notify the applicant. Within twenty days
after the date the notice is published in the Federal Register,
interested parties may submit written comments to the Secretary on the
application. The Secretary shall provide a copy of such comments to the
Attorney General.
(b) If a certificate is issued, the Secretary shall publish a
summary of the certification in the Federal Register. If an application
is denied, the Secretary shall publish a notice of denial. Certificates
will be available for inspection and copying in the International Trade
Administration Freedom of Information Records Inspection Facility.
(c) If the Secretary initiates proceedings to revoke or modify a
certificate, he shall publish a notice of his final determination in the
Federal Register.
(d) If the applicant requests reconsideration of a determination to
deny an application, in whole or in part, the Secretary shall publish
notice of his final determination in the Federal Register.
Sec. 325.7 Amending the certificate.
An application for an amendment to a certificate shall be treated in
the same manner as an original application. The application for an
amendment shall set forth the proposed amendment(s) and the reasons for
them. It shall contain any information specified in Sec. 325.3(b) that
is relevant to the determination on the application for an amendment.
The effective date of an amendment will be the date on which the
application for the amendment was deemed submitted.
Sec. 325.8 Expediting the certification process.
(a) Request for expedited action. (1) An applicant may be granted
expedited action on its application in the discretion of the Secretary
and the Attorney General. The Secretary and the Attorney General will
consider such requests in light of an applicant's showing that it has a
special need for a prompt decision. A request for expedited action
should include an explanation of why expedited action is needed,
including a
[[Page 53]]
statement of all relevant facts and circumstances, such as bidding
deadlines or other circumstances beyond the control of the applicant,
that require the applicant to act in less than ninety days and that have
a significant impact on the applicant's export trade.
(2) The Secretary shall advise the applicant within ten days after
the application is deemed submitted whether it will receive expedited
action. The Secretary may grant the request in whole or in part and
process the remainder of the application through the normal procedures.
Expedited action may be granted only if the Attorney General concurs.
(b) Time period. The Secretary shall determine whether to issue a
certificate to the applicant within forty-five days after the Secretary
granted the request for expedited action, or within a longer period if
agreed to by the applicant (excluding any suspension pursuant to Sec.
325.3(f) of the time period for making a determination). The Secretary
may not issue a certificate until thirty days after the summary of the
application is published in the Federal Register.
(c) Concurrence of the Attorney General. (1) Not later than ten
working days before the date on which a determination on the application
is due, the Secretary shall deliver a proposed certificate to the
Attorney General for discussion and comment. If the Attorney General
does not agree that the proposed certificate may be issued, he shall,
not later than five working days before the date on which a
determination on the application is due, so advise the Secretary and
state the reasons for the disagreement. The Secretary, with the
concurrence of the Attorney General, may revise the proposed certificate
to resolve the objections and problems raised by the Attorney General,
or deny the application.
(2) If the Attorney General receives the proposed certificate by the
date specified in the preceding paragraph and does not respond within
the time period specified in that paragraph, he shall be deemed to
concur in the proposed certificate.
(Information collection requirements in paragraph (a)(1) approved by the
Office of Management and Budget under control number 0625-0125)
Sec. 325.9 Reconsidering an application that has been denied.
(a) If the Secretary determines to deny an application in whole or
in part, he shall notify the applicant in writing of his decision and
the reasons for his determination.
(b) Within thirty days after receiving a notice of denial, the
applicant may request the Secretary to reconsider his determination.
(1) The request for reconsideration shall include a written
statement setting forth the reasons why the applicant believes the
decision should be reconsidered, and any additional information that the
applicant considers relevant.
(2) Upon the request of the applicant, the Secretary and the
Attorney General will meet informally with the applicant and/or his
representative to discuss the applicant's reasons why the determination
on the application should be changed.
(c) The Secretary shall consult with the Attorney General with
regard to reconsidering an application. The Secretary may modify his
original determination only if the Attorney General concurs.
(d) The Secretary shall notify the applicant in writing of his final
determination after reconsideration and of his reasons for the
determination within thirty days after the request for reconsideration
has been received.
Sec. 325.10 Modifying or revoking a certificate.
(a) Action subject to modification or revocation. The Secretary
shall revoke a certificate, in whole or in part, or modify it, as the
Secretary or the Attorney General considers necessary, if:
(1) The export conduct of a person or entity protected by the
certificate no longer complies with the requirements set forth in Sec.
325.4(b);
(2) A person or entity protected by the certificate fails to comply
with a
[[Page 54]]
request for information under paragraph (b) of this section; or
(3) The certificate holder fails to file a complete annual report.
(b) Request for information. If the Secretary or the Attorney
General has reason to believe that the export trade, export trade
activities, or methods of operation of a person or entity protected by a
certificate no longer comply with the requirements set forth in Sec.
325.4(b), the Secretary shall request any information that he or the
Attorney General considers to be necessary to resolve the matter.
(c) Proceedings for the revocation or modification of a
certificate--(1) Notification letter. If, after reviewing the relevant
information in their possession, it appears to the Secretary or the
Attorney General that a certificate should be revoked or modified for
any of the reasons set forth in paragraph (a) above, the Secretary shall
so notify the certificate holder in writing. The notification shall be
sent by registered or certified mail to the address specified in the
certificate. The notification shall include a detailed statement of the
facts, conduct, or circumstances which may warrant the revocation or
modification of the certificate.
(2) Answer. The certificate holder shall respond to the notification
letter within thirty days after receiving it, unless the Secretary, in
his discretion, grants a thirty day extension for good cause shown. The
certificate holder shall respond specifically to the statement included
with the notification letter and state in detail why the facts, conduct
or circumstances described in the notification letter are not true, or
if they are true, why they do not warrant the revoking or modifying of
the certificate. If the certificate holder does not respond within the
specified period, it will be considered an admission of the statements
contained in the notification letter.
(3) Resolution of factual disputes. Where material facts are in
dispute, the Secretary and the Attorney General shall, upon request,
meet informally with the certificate holder. The Secretary or the
Attorney General may require the certificate holder to provide any
documents or information that are necessary to support its contentions.
After reviewing the statements of the certificate holder and the
documents or information that the certificate holder has submitted, and
upon considering other relevant documents or information in his
possession, the Secretary shall make proposed findings of the factual
matters in dispute. The Attorney General is not bound by the proposed
findings.
(4) Final determination. The Secretary and the Attorney General
shall review the notification letter and the certificate holder's answer
to it, the proposed factual findings made under paragraph (c)(3) of this
section, and any other relevant documents or information in their
possession. If, after review, the Secretary or the Attorney General
determines that the export conduct of a person or entity protected by
the certificate no longer complies with the standards set forth in Sec.
325.4(b), the Secretary shall revoke or modify the certificate as
appropriate. If the Secretary or the Attorney General determines that
the certificate holder has failed to comply with the request for
information under paragraph (b) of this section, or has failed to file a
complete annual report, and that the failure to comply or file should
result in revocation of modification, the Secretary shall revoke or
modify the certificate as appropriate. The determination will be final
and will be issued to the certificate holder in writing. The notice to
the certificate holder shall include a statement of the circumstances
underlying and the reasons in support of the determination. If the
Secretary determines to revoke or modify the certificate, the decision
shall specify the effective date of the revocation or modification; this
date must be at least thirty days but not more than ninety days after
the Secretary notifies the certificate holder of his determination. The
Secretary shall publish notice in the Federal Register of a revocation
or modification or a decision not to revoke or modify.
(d) Investigative information. In proceedings under this section,
the Attorney General shall make available to the Secretary any
information that has
[[Page 55]]
been obtained in response to Civil Investigative Demands issued under
section 304(b)(3) of the Act. Unless prohibited by law, the Attorney
General and the Secretary shall also make available to each other any
other information which each is relying upon under these proceedings.
Sec. 325.11 Judicial review.
(a) Review of certain determinations. (1) Any person aggrieved by a
final determination of the Secretary under Sec. 325.5, Sec. 325.7,
Sec. 325.9, or Sec. 325.10 of these regulations may, within thirty
days of the determination, bring an action in an appropriate district
court of the United States to set aside the determination on the ground
that it is erroneous. If a certificate is denied, the applicant may
bring suit within thirty days after the notice of denial is published in
the Federal Register, or, if the applicant seeks reconsideration, within
thirty days after the Secretary publishes in the Federal Register notice
of his determination after reconsideration.
(b) For purposes of judicial review, determinations of the Secretary
are final when notice is published in the Federal Register.
(c) Record for judicial review. For purposes of judicial review, the
record shall include all information presented to or obtained by the
Secretary which had a bearing on the determination, the determination
itself, the supporting statement setting forth the reasons for the
determination, and the Attorney General's response to the Secretary
indicating concurrence or nonconcurrence.
(d) Limitation of judicial review. Except as provided in paragraph
(a) of this section, no agency action taken under the Act shall be
subject to judicial review.
Sec. 325.12 Returning the applicant's documents.
(a) Upon the denial or withdrawal of an application for a
certificate in its entirety, the applicant may request the return of all
copies of the documents submitted by the applicant in connection with
the application to the Department of Commerce or the Department of
Justice. The applicant shall submit this request in writing to both the
Secretary and the Attorney General.
(b) The Secretary and the Attorney General shall return the
documents to the applicant within thirty days after they receive the
applicant's request.
Sec. 325.13 Nonadmissibility in evidence.
If the Secretary denies, in whole or in part, an application for a
certificate or for an amendment to a certificate, or revokes or amends a
certificate, neither the negative determination nor the statement of
reasons therefor shall be admissible in evidence in any administrative
or judicial proceeding in support of any claim under the antitrust laws.
Sec. 325.14 Submitting reports.
(a) Not later than each anniversary of a certificate's effective
date, the Secretary shall notify the certificate holder of the
information to be included in the annual report. This report shall
contain any changes relevant to the matters specified in the
certificate, an update of the information contained in the application
brought current to the anniversary date, and any other information the
Secretary considers appropriate, after consultation with the Attorney
General.
(b) Not later than forty-five days after each anniversary of a
certificate's effective date, a certificate holder shall submit its
annual report to the Secretary. The Secretary shall deliver a copy of
the annual report to the Attorney General.
(c) Failure to submit a complete annual report may be the basis for
modification or revocation of a certificate.
Sec. 325.15 Relinquishing a certificate.
A certificate holder may relinquish a certificate at any time
through written notice to the Secretary. The certificate will cease to
be effective on the day the Secretary receives the notice.
Sec. 325.16 Protecting confidentiality of information.
(a) Any information that is submitted by any person under the Act is
exempt from disclosure under the Freedom of Information Act (5 U.S.C.
552).
[[Page 56]]
(b)(1) Except as authorized under paragraph (b)(3) of this section,
no officer or employee of the United States shall disclose commercial or
financial information submitted under this Act if the information is
privileged or confidential, and if disclosing the information would
cause harm to the person who submitted it.
(2) A person submitting information shall designate the documents or
information which it considers privileged or confidential and the
disclosure of which would cause harm to the person submitting it. The
Secretary shall endeavor to notify these persons of any requests or
demands before disclosing any of this information.
(3) An officer or employee of the United States may disclose
information covered under paragraph (b)(1) of this section only under
the following circumstances--
(i) Upon a request made by either House of Congress or a Committee
of the Congress,
(ii) In a judicial or administrative proceeding subject to issuance
of an appropriate protective order,
(iii) With the written consent of the person who submitted the
information,
(iv) When the Secretary considers disclosure of the information to
be necessary for determining whether or not to issue, amend, or revoke a
certificate, if--
(A) The Secretary determines that a non-confidential summary of the
information is inadequate; and
(B) The person who submitted the information is informed of the
intent to disclose the information, and has an opportunity to advise the
Secretary of the potential harm which disclosure may cause,
(v) In accordance with any requirement imposed by a statute of the
United States.
(c) In any judicial or administrative proceeding in which disclosure
is sought from the Secretary or the Attorney General of any confidential
or privileged documents or information submitted under this Act, the
Secretary or Attorney General shall attempt to notify the party who
submitted the information of the request or demand for disclosure. In
appropriate circumstances the Secretary or Attorney General may seek or
support an appropriate protective order on behalf of the party who
submitted the documents or information.
Sec. 325.17 Waiver.
The Secretary may waive any of the provisions of this part in
writing for good cause shown, if the Attorney General concurs and if
permitted by law.
PART 335_IMPORTS OF WORSTED WOOL FABRIC--Table of Contents
Sec.
335.1 Purpose.
335.2 Definitions.
335.3 Applications to receive allocation.
335.4 Allocation.
335.5 Licenses.
335.6 Surrender, reallocation and license utilization requirement.
Authority: Title V of the Trade and Development Act of 2000 (Public
Law No. 106-200) as amended by Trade Act of 2002 and the Miscellaneous
Trade Act of 2004 (Public Law 108-429), Presidential Proclamation No.
7383 (December 1, 2000).
Source: 66 FR 6461, Jan. 22, 2001, unless otherwise noted.
Sec. 335.1 Purpose.
This part sets forth regulations regarding the issuance and effect
of licenses for the allocation of Worsted Wool Fabric under the TRQs
established by Section 501 of the Act, including the new HTS categories
9902.51.15 and 9902.51.16 added by the amended Act.
[70 FR 25777, May 16, 2005]
Sec. 335.2 Definitions.
For purposes of these regulations and the forms used to implement
them:
The Act means the Trade and Development Act of 2000 (Public Law No.
106-200, 114 Stat 251).
The Department means the United States Department of Commerce.
HTS means the Harmonized Tariff Schedule of the United States.
Imports subject to Tariff Rate Quotas are defined by date of
presentation as defined in 19 CFR 132.1(d) and 19 CFR 132.11(a).
Licensee means an applicant for an allocation of the Tariff Rate
Quotas that receives an allocation and a license.
[[Page 57]]
Production means cutting and sewing garments in the United States.
Tariff Rate Quota or Quotas means the temporary duty reduction
provided under Section 501 of the Act for limited quantities of fabrics
of worsted wool with average diameters greater than 18.5 micron,
certified by the importer as suitable for use in making suits, suit-type
jackets, or trousers (HTS heading 9902.51.11), and for limited
quantities of fabrics of worsted wool with average diameters of 18.5
microns or less, certified by the importer as suitable for use in making
suits, suit-type jackets, or trousers for the benefit of persons
(including firms, corporations, or other legal entities) who cut and sew
men's and boy's wool suits, suit-type jackets and trousers in the United
States (HTS heading 9902.51.15), and worsted wool fabric with average
fiber diameters of 18.5 microns or less for the benefit of persons
(including firms, corporations, or other legal entities) who weave
worsted wool fabric in the United States (HTS 9902.51.16).
Tariff Rate Quota Year means a calendar year for which the Tariff
Rate Quotas are in effect.
Worsted Wool Fabric means fabric containing at least 85 percent by
weight worsted wool.
Worsted Wool Suits means men's and boys' worsted wool suits,
containing at least 85 percent by weight worsted wool fabric.
Worsted Wool Suit-Type Jackets mean men's and boys' worsted wool
suit-type jackets, containing at least 85 percent by weight worsted wool
fabric.
Worsted Wool Trousers means men's and boys' worsted wool trousers,
containing at least 85 percent by weight worsted wool fabric.
[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]
Sec. 335.3 Applications to receive allocation.
(a) In each year prior to a Tariff Rate Quota Year, the Department
will cause to be published a Federal Register notice soliciting
applications to receive an allocation of the Tariff Rate Quotas.
(b) An application for a Tariff Rate Quota allocation must be
received, or postmarked by the U.S. Postal Service, within 30 calendar
days after the date of publication of the Federal Register notice
soliciting applications.
(c) For applying for TRQs 9902.51.11 or 9902.51.15 during the
calendar year of the date of the application, an applicant must have cut
and sewed in the United States all three of the following apparel
products: Worsted Wool Suits, Worsted Wool Suit-Type Jackets, and
Worsted Wool Trousers. The applicant may either have cut and sewn these
products on its own behalf or had another person cut and sew the
products on the applicant's behalf, provided the applicant owned the
fabric at the time it was cut and sewn. The application must contain a
statement to this effect. For applying for TRQ 9902.51.16 during the
calendar year of the date of the application, an applicant must have
woven in the United States worsted wool fabrics with average fiber
diameters of 18.5 microns or less, suitable for use in making suits,
suit-type jackets, and trousers. The application must contain a
statement to this effect.
(d) An applicant must provide the following information in the
format set forth in the application form provided by the Department:
(1) Identification. Applicant's name, address, telephone number, fax
number, and federal tax identification number; name of person submitting
the application, and title, or capacity in which the person is acting
for the applicant.
(2)(i) Production. Applicants for TRQs 9902.51.11 and 9902.51.15
must provide the name and address of each plant or location where
Worsted Wool Suits, Worsted Wool Suit-Type Jackets, and Worsted Wool
Trousers were cut and sewn or woven by the applicant and the name and
address of all plants or locations that cut and sewed such products on
behalf of the applicant. Production data, including the following: the
quantity and value of the Worsted Wool Suits, Worsted Wool Suit-Type
Jackets, and Worsted Wool Trousers cut and sewn in the United States by
applicant, or on behalf of applicant, from fabric owned by applicant.
This data must indicate actual production (not estimates) of Worsted
Wool Suits, Worsted Wool Suit-Type Jackets and Worsted Wool Trousers
containing at least 85
[[Page 58]]
percent worsted wool fabric by weight with an average diameter of 18.5
microns or less. This data must also indicate actual production (not
estimates) of Worsted Wool Suits, Worsted Wool Suit-Type Jackets and
Worsted Wool Trousers containing at least 85 percent worsted wool fabric
by weight with average diameter greater than 18.5 microns. Production
data must be provided for the first six months of the year of the
application. This data will be annualized for the purpose of making
Tariff Rate Quota allocations.
(ii) Applicants for TRQ 9902.51.16 must provide the name and address
of each plant or location where Worsted Wool Fabric was woven by the
applicant. The quantity and value of the Worsted Wool Fabric woven in
the United States by applicant. This data must indicate actual
production (not estimates) of Worsted Wool Fabric containing at least 85
percent worsted wool fabric by weight with an average diameter of 18.5
microns or less. For applications for the 2005 Tariff Rate Quota year,
production data must be provided for full calendar year 2004. For
allocations of Tariff Rate Quota years after 2005, production data must
be provided for the first six months of the year of the application.
This data will be annualized for the purpose of making Tariff Rate Quota
allocations.
(3) Worsted Wool Fabric. Data indicating the quantity and value of
the Worsted Wool Fabric used in reported production.
(4) Certification. A statement by the applicant (if a natural
person), or on behalf of applicant, by an employee, officer or agent,
with personal knowledge of the matters set out in the application,
certifying that the information contained therein is complete and
accurate, signed and sworn before a Notary Public, and acknowledging
that false representations to a federal agency may result in criminal
penalties under federal law.
(e) Confidentiality. Any business confidential information provided
pursuant to this section that is marked business confidential will be
kept confidential and protected from disclosure to the full extent
permitted by law.
(f) Record Retention: The applicant shall retain records
substantiating the information provided in Sec. 335.3(d)(2), (3), and
(4) for a period of 3 years and the records must be made available upon
request by an appropriate U.S. government official.
[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]
Sec. 335.4 Allocation.
(a) For HTS 9902.51.11 and HTS 9902.51.15 each Tariff Rate Quota
will be allocated separately. Allocation will be based on an applicant's
Worsted Wool Suit production, on a weighted average basis, and the
proportion of imported Worsted Wool Fabric consumed in the production of
Worsted Wool Suits. In regards to HTS 9902.51.16 the Tariff Rate Quota
will be allocated based on an applicant's Worsted Wool Fabric
production, on a weighted average basis.
(b) For the purpose of calculating allocations for HTS 9902.51.11
and HTS 9902.51.15 only, Worsted Wool Suit production will be increased
by the percentage of imported fabric consumed in the production of
Worsted Wool Suits to total fabric consumed in this production. For
example, if an applicant uses 30 percent imported fabric in the
production of Worsted Wool Suits, that applicant's production level will
be increased by 30 percent.
(c) The Department will cause to be published in the Federal
Register its determination to allocate the Tariff Rate Quotas and will
notify applicants of their respective allocation as soon as possible.
Promptly thereafter, the Department will issue licenses.
[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]
Sec. 335.5 Licenses.
(a) Each Licensee will receive a license, which will include a
unique control number. The license is subject to the surrender and
reallocation provisions in Sec. 335.6.
(b) A license may be exercised only for fabric entered for
consumption, or withdrawn from warehouse for consumption, during the
Tariff Rate Quota Year specified in the license. A license will be
debited on the basis of date of entry for consumption or withdrawal from
warehouse for consumption.
[[Page 59]]
(c) A Licensee may import fabric certified by the importer as
suitable for use in making suits, suit-type jackets, or trousers under
the appropriate Tariff Rate Quota as specified in the license (i.e.,
under the Tariff Rate Quota for fabric of worsted wool with average
fiber diameters greater than 18.5 micron or the Tariff Rate Quota for
fabric of worsted wool with average fiber diameters of 18.5 micron or
less) up to the quantity specified in the license subject to the Tariff
Rate Quota duty rate. Only a Licensee or an importer authorized by a
Licensee will be permitted to import fabric under the Tariff Rate Quotas
and to receive the Tariff Rate Quota duty rate.
(d) The term of a license shall be the Tariff Rate Quota Year for
which it is issued. Fabric may be entered or withdrawn from warehouse
for consumption under a license only during the term of that license.
The license cannot be used for fabric entered or withdrawn from
warehouse for consumption after December 31 of the year of the term of
the license.
(e) The importer of record of fabric entered or withdrawn from
warehouse for consumption under a license must be the Licensee or an
importer authorized by the Licensee to act on its behalf. If the
importer of record is the Licensee, the importer must possess the
license at the time of filing the entry summary or warehouse withdrawal
for consumption (Customs Form 7501).
(f) A Licensee may only authorize an importer to import fabric under
the license on its behalf by making such an authorization in writing or
by electronic notice to the importer and providing a copy of such
authorization to the Department. A Licensee may only withdraw
authorization from an importer by notifying the importer, in writing or
by electronic notice, and providing a copy to the Department.
(g) The written authorization must include the unique number of the
license, must specifically cover the type of fabric imported, and must
be in the possession of the importer at the time of filing the entry
summary or warehouse withdrawal for consumption (Customs Form 7501), or
its electronic equivalent, in order for the importer to obtain the
applicable Tariff Rate Quota duty rate.
(h) It is the responsibility of the Licensee to safeguard the use of
the license issued. The Department and the U.S. Customs Service will not
be liable for any unauthorized or improper use of the license.
Sec. 335.6 Surrender, reallocation and license utilization requirement.
(a) Not later than September 30 of each Tariff Rate Quota Year, a
Licensee that will not import the full quantity granted in a license
during the Tariff Rate Quota Year shall surrender the allocation that
will not be used to the Department for purposes of reallocation through
a written or electronic notice to the Department, including the license
control number and the amount being surrendered. The surrender shall be
final, and shall apply only to that Tariff Rate Quota Year.
(b) For purposes of this section, ``unused allocation'' means the
amount by which the quantity set forth in a license, including any
additional amount received pursuant to paragraph (d) of this section,
exceeds the quantity entered under the license, excluding any amount
surrendered pursuant to paragraph (a) of this section.
(c) The Department will notify Licensees of any amount surrendered
and the application period for requests for reallocation. A Licensee
that has imported, or intends to import, a quantity of Worsted Wool
Fabric exceeding the quantity set forth in its license may apply to
receive additional allocation from the amount to be reallocated. The
application shall state the maximum amount of additional allocation the
applicant will be able to use.
(d) The amount surrendered will be reallocated to Licensees that
have applied for reallocation. The entire amount surrendered will be
reallocated pro-rata among applicants based on the applicant's share of
the annual allocation, but will not exceed the amount set forth in the
reallocation application as the maximum amount able to be used.
(e) A Licensee whose unused allocation in a Tariff Rate Quota Year
exceeds five percent of the quantity set forth in its license shall be
subject to
[[Page 60]]
having its allocation reduced in the subsequent Tariff Rate Quota Year.
The subsequent Tariff Rate Quota Year allocation will be reduced from
the quantity such Licensee would otherwise have received by a quantity
equal to 25 percent of its unused allocation from the prior year. A
Licensee whose unused allocation in two or more consecutive Tariff Rate
Quota Years exceeds five percent of the quantity set forth in its
license shall have its allocation reduced in the subsequent Tariff Rate
Quota Year by a quantity equal to 50 percent of its unused allocation
from the prior year.
(f) No penalty will be imposed under paragraph (e) of this section
if the Licensee demonstrates to the satisfaction of the Department that
the unused allocation resulted from breach by a carrier of its contract
of carriage, breach by a supplier of its contract to supply the fabric,
act of God, or force majeure.
[66 FR 6461, Jan. 22, 2001, as amended at 70 FR 25777, May 16, 2005]
PART 336_ IMPORTS OF COTTON WOVEN FABRIC--Table of Contents
Sec.
336.1 Purpose.
336.2 Definitions.
336.3 Eligibility criteria and application requirements to receive
allocation.
336.4 Allocation.
336.5 Licenses.
Authority: Section 406 Public Law 109-434. Tax Relief and Health
Care Act of 2006. December 9, 2006.
Source: 72 FR 40237, July 24, 2007, unless otherwise noted.
Sec. 336.1 Purpose.
This part sets forth regulations regarding the issuance and effect
of licenses for allocation of Cotton Woven Fabric under the Tariff Rate
Quota established by Section 406 of the Act.
Sec. 336.2 Definitions.
For purposes of these regulations:
Act means the Tax Relief and Health Care Act of 2006 (Public Law
109-434).
Cotton Shirts means men's and boys' cotton shirts made from woven
fabric containing 85 percent or more by weight of cotton.
Cotton Woven Fabric means woven fabrics of cotton containing 85
percent or more by weight of cotton.
Department means the United Sates Department of Commerce.
HTS means the Harmonized Tariff Schedule of the United States.
Imports subject to Tariff Rate Quota are defined by date of
presentation as defined in 19 CFR 132.1(d) and 19 CFR 132.11(a).
Licensee means applicant for an allocation of the Tariff Rate Quota
that receives an allocation and a license.
Manufacturer means a person or entity that cuts and sews men's and
boys' cotton woven shirts in the United States.
Tariff Rate Quota or Quotas means the temporary duty reduction
provided under Section 406 of the Act for limited quantities of cotton
woven fabrics entered under HTS headings 9902.52.08 through 9902.52.19
suitable for use in making men's and boys' cotton woven shirts.
Tariff Rate Quota Year means a calendar year for which the Tariff
Rate Quotas are in effect.
Sec. 336.3 Eligibility criteria and application requirements to receive
allocation.
(a) In each year prior to the Tariff Rate Quota Year, the Department
will cause to be published a Federal Register notice soliciting
applications to receive an allocation of the Tariff Rate Quotas.
(b) An application for a Tariff Rate Quota must be received, or
postmarked by the U.S. Postal Service, within 30 calendar days after the
date of publication of the Federal Register notice soliciting
applications.
(c) Eligibility. The TRQ is available to manufacturers that during
the calendar year of the date of application, have cut and sewed men's
and boys' cotton woven shirts in the United States. Furthermore, an
applicant must have, during calendar year 2000, cut and sewed men's and
boy's cotton shirts in the United States from imported woven fabrics of
cotton containing 85 percent or more by weight of cotton of the kind
described in HTS headings 9902.52.08 through 9902.5219
[[Page 61]]
purchased by such manufacturer during calendar year 2000. The applicant
may have cut or sewn these cotton shirts on its own behalf or had
another person cut and sew the cotton shirts on the applicant's behalf,
provided the applicant owned the fabric at the time it was cut and sewn.
Any manufacturer who becomes a successor-of-interest to a manufacturer
of the cotton shirts described in HTS headings 9902.52.08 through
9902.52.19 during 2000 because of a reorganization or otherwise, shall
be eligible to apply for a TRQ.
(d) Application requirements. To receive consideration for a TRQ, an
applicant must submit ITA Form ITA-4156P providing the following
information:
(1) Identification. Company name, address, contact telephone number,
e-mail address, federal tax identification number, name of person
submitting the application, and title, or capacity in which the person
is acting for the applicant.
(2) Manufacturing Facilities. The name and address of each plant or
location in the United States where men's and boy's cotton shirts of
imported woven fabric of the kind described in HTS headings 9902.52.08
through 9902.52.19 was cut and sewn in calendar year 2000.
(3) Date of purchase. The date of purchase shall be (a) the invoice
date if the manufacturer is not the importer of record; and (b) the date
of entry if the manufacturer is the importer of record.
(4) Quantity of fabric. The quantity of imported woven fabrics of
cotton containing 85 percent or more by weight of cotton purchased
during calendar year 2000 for use in the cutting and sewing of men's and
boys' shirts in the United States.
(5) Affidavit. At the conclusion of the application an officer of
the manufacturer must certify that the manufacturer is eligible to
receive a license and stating the quantity of imported woven fabrics of
cotton containing 85 percent or more by weight of cotton purchased
during calendar year 2000 for use in the cutting and sewing of men's and
boys' shirts in the United States and attest that all information
contained in the application is complete and correct and no false
claims, statements or representations have been made. Applicants should
be aware that, generally, pursuant to 31 U.S.C. 3729 persons providing
false or fraudulent claims, and pursuant to 18 U.S.C. 101, persons
making materially false statement to representations, are subject to
civil or criminal penalties, respectively.
(6) Notarization. All application must be notarized by a licensed
public notary.
(e) Confidentiality. Any business confidential information provided
pursuant to this section that is marked ``business confidential'' will
be kept confidential and protected from disclosure to the full extent
permitted by law.
(f) Record retention. The applicant shall retain records
substantiating the information provided in Sec. 336.3(d)(2), and (3),
and (4) for a period of 3 years and the records must be made available
upon request by an appropriate government official.
Sec. 336.4 Allocation.
(a) The Tariff Rate Quota licenses will be issued to eligible
manufacturers on the basis of the percentage of each manufacturer's
quantity of imported woven fabrics described under HTS headings
9902.52.08 through 9902.52.19 during calendar year 2000, compared to the
imports of such fabric by all manufacturers that qualify for a Tariff
Rate Quota license.
(b) The Department will cause to be published in the Federal
Register its determination to allocate Tariff Rate Quotas and issue
licenses to manufacturers within 60 days after the manufacturers file an
application with the Department.
Sec. 336.5 Licenses.
(a) Each Licensee will receive a license, which will include a
unique control number.
(b) A license may be exercised only for fabric entered for
consumption, or withdrawn from warehouse for consumption, during the
Tariff Rate Quota Year specified in the license. A licensee will be
debited on the basis of date of entry for consumption or withdrawal from
warehouse for consumption.
(c) A Licensee may import fabric certified by the importer as
suitable for
[[Page 62]]
use in making men's and boys' cotton shirts under the Tariff Rate Quota
as specified in the license up to the quantity specified in the license
subject to the Tariff Rate Quota duty rate. Only a Licensee or an
importer authorized by a Licensee will be permitted to import fabric
under the Tariff Rate Quota and to receive the Tariff Rate Quota duty
rate.
(d) The term of the license shall be the Tariff Rate Quota Year for
which it is issued. Fabric may be entered or withdrawn from warehouse
for consumption under a license only during the term of that license.
The license cannot be used for fabric entered or withdrawn from
warehouse for consumption after December 31 of the year of the term of
the license.
(e) The importer of fabric entered or withdrawn from warehouse for
consumption under a license must be the Licensee or an importer
authorized by the licensee to act on its behalf. If the importer of
record is the Licensee, the importer must possess the license at the
time of filing the entry summary or warehouse withdrawal for consumption
(Customs Form 7501).
(f) A Licensee may only authorize an importer to import fabric under
the license on its behalf by making such an authorization in writing or
by electronic notice to the importer and providing a copy of such
authorization to the Department. A Licensee may only withdraw
authorization from an importer by notifying the importer, in writing or
by electronic notice, and providing a copy to the Department.
(g) The written authorization must include a unique number of the
license, must specifically cover the type of fabric imported, and must
be in possession of the importer at the time of filing the entry summary
or warehouse withdrawal for consumption (Customs Form 7501), or its
electronic equivalent, in order for the importer to obtain the
applicable Tariff Rate Quota duty rate. The authorization also must
include the unique PIN assigned by the licensee to the importer. A copy
of the authorization and PIN assigned to each importer must be provided
to the Department by fax (202) 482-0667 or by mail to the Office of
Textiles and Apparel, Room 3001, United States Department of Commerce,
Washington, D.C. 20230 . The licensee also must advise the Department of
each authorized importer's Importer of Record Identification Number.
(h) It is the responsibility of the Licensee to safeguard the use of
the license issued. The Department and U.S. Customs and Border
Protection will not be liable for any improper use of the license.
(i) The licensee should inform its authorized importers that if they
enter an amount less than the exact amount requested and authorized by
the Import Approval, the importer must annotate the Import Approval form
and send a copy to the Department and to the licensee. This annotation
will be used to correct the record of use of the license. Failure to
provide such information could disrupt the orderly use of the license.
Imports in excess of amount of import approval are not authorized.
[[Page 63]]
CHAPTER IV--FOREIGN-TRADE ZONES BOARD, DEPARTMENT OF COMMERCE
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Part Page
400 Regulations of the Foreign-Trade Zones Board 65
[[Page 65]]
PART 400_REGULATIONS OF THE FOREIGN-TRADE ZONES BOARD--Table of Contents
Subpart A_Scope and Definitions
Sec.
400.1 Scope.
400.2 Definitions.
Subpart B_Foreign-Trade Zones Board
400.11 Authority of the Board.
400.12 Responsibilities and authority of the Executive Secretary.
400.13 Board headquarters.
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.
400.27 Procedure for processing application.
400.28 Conditions, prohibitions and restrictions applicable to grants of
authority.
400.29 Application fees.
Subpart D_Manufacturing and Processing Activity_Reviews
400.31 Manufacturing and processing activity; criteria.
400.32 Procedure for review of request for approval of manufacturing or
processing.
400.33 Restrictions on manufacturing and processing activity.
Subpart E_Zone Operations and Administrative Requirements
400.41 Zone operations; general.
400.42 Requirements for commencement of operations in a zone project.
400.43 Restriction and prohibition of certain zone operations.
400.44 Zone-restricted merchandise.
400.45 Retail trade.
400.46 Accounts, records and reports.
400.47 Appeals to the Board from decisions of the Assistant Secretary
for Import Administration and the Executive Secretary.
Subpart F_Notice, Hearings, Record and Information
400.51 Notice and hearings.
400.52 Official record; public access.
400.53 Information.
Authority: Foreign-Trade Zones Act of June 18, 1934, as amended
(Pub. L. 397, 73rd Congress, 48 Stat. 998-1003 (19 U.S.C. 81a-81u)).
Source: 56 FR 50798, Oct. 8, 1991, unless otherwise noted.
Subpart A_Scope and Definitions
Sec. 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 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 the
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 regulations of the United States Customs Service
(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 ``activated'' under Customs 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 manufacturing or processing, to
the emerging product. Quota restrictions do not normally apply to
foreign goods in zones. The Board can deny or limit the
[[Page 66]]
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.
[56 FR 50798, Oct. 8, 1991; 56 FR 56544, Nov. 5, 1991]
Sec. 400.2 Definitions.
(a) Act means the Foreign-Trade Zones Act of 1934, as amended.
(b) 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.
(c) Customs Service means the United States Customs Service of the
Department of the Treasury.
(d) Executive Secretary is the Executive Secretary of the Foreign-
Trade Zones Board.
(e) Foreign-trade zone is a restricted-access site, in or adjacent
to a Customs port of entry, operated pursuant to public utility
principles under the sponsorship of a corporation granted authority by
the Board and under supervision of the Customs Service.
(f) Grant of authority is a document issued by the Board which
authorizes a zone grantee to establish, operate and maintain a zone
project or a subzone, subject to limitations and conditions specified in
this part and in 19 CFR part 146. The authority to establish a zone
includes the authority to operate and the responsibility to maintain it.
(g) Manufacturing, 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.
(h) Port Director is normally the director of Customs for the
Customs jurisdictional area in which the zone is located.
(i) Port of entry means a port of entry in the United States, as
defined by part 101 of the regulations of the Customs Service (19 CFR
part 101), or a user fee airport authorized under 19 U.S.C. 58b and
listed in part 122 of the regulations of the Customs Service (19 CFR
part 122).
(j) Private corporation means any corporation, other than a public
corporation, which is organized for the purpose of establishing a zone
project and which is chartered for this purpose under a law of the state
in which the zone is located.
(k) Processing, when referring to zone activity, means any activity
involving a change in condition of merchandise, other than
manufacturing, which results in a change in the Customs classification
of an article or in its eligibility for entry for consumption.
(l) 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.
(m) State includes any state of the United States, the District of
Columbia, and Puerto Rico.
(n) Subzone means a special-purpose zone established as an adjunct
to a zone project for a limited purpose.
(o) Zone means a foreign-trade zone established under the provisions
of the Act and these regulations. Where used in this part, the term also
includes subzones, unless the context indicates otherwise.
(p) Zone grantee is the corporate recipient of a grant of authority
for a zone project. Where used in this part, the term ``grantee'' means
``zone grantee'' unless otherwise indicated.
(q) Zone operator is a corporation, partnership, or person that
operates a zone or subzone under the terms of an agreement with the zone
grantee or an intermediary entity, with the concurrence of the Port
Director.
(r) Zone project means the zone plan, including all of the zone and
subzone sites that the Board authorizes a single grantee to establish.
(s) Zone site means the physical location of a zone or subzone.
[[Page 67]]
(t) Zone user is a party using a zone under agreement with the zone
grantee or operator.
[62 FR 53534, Oct. 15, 1997]
Subpart B_Foreign-Trade Zones Board
Sec. 400.11 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 subzones, and approve
modifications to the original zone project;
(3) Approve manufacturing and processing activity in zones and
subzones as described in subpart D of 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 Import Administration or the
Executive Secretary;
(6) Inspect the premises, operations and accounts of zone grantees
and operators;
(7) Require zone grantees to report on zone operations;
(8) Report annually to the Congress on zone operations;
(9) Restrict or prohibit zone operations;
(10) Impose fines for violations of the Act and this part;
(11) Revoke grants of authority for cause; and
(12) Determine, as appropriate, whether zone activity is or would be
in the public interest or detrimental to the public interest.
(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 will designate an alternate
with authority to act in an official capacity for that member.
(d) Determinations of the Board. (1) The determination of the Board
will be based on the unanimous vote of the members (or alternate
members) of the Board.
(2) All votes will be recorded.
(3) The Board will issue its determination in proceedings under the
regulations in the form of a Board order.
[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]
Sec. 400.12 Responsibilities and authority 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, Board
agencies 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) Determine subzone sponsorship questions as provided in Sec.
400.22(d);
(i) 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
Sec. Sec. 400.24, 400.25, and 400.26;
(j) Issue guidelines on information required for subzone
applications under Sec. 400.25(a)(6);
(k) Determine whether proposed modifications involve major changes
under Sec. 400.26(a)(2);
[[Page 68]]
(l) Determine whether applications meet prefiling requirements under
Sec. 400.27(b);
(m) Direct processing of applications, including designation of
examiners and scheduling of hearings under Sec. Sec. 400.27 and 400.32;
(n) Authorize minor modifications to zone projects under Sec.
400.27(f);
(o) Review changes in sourcing under Sec. 400.28(a)(3);
(p) Direct monitoring of zone activity under Sec. 400.31(d);
(q) Direct reviews and make recommendations on requests for
manufacturing/processing approvals under Sec. 400.32(b);
(r) Determine questions of scope under Sec. 400.32(c);
(s) Accept rate schedules and determine their sufficiency under
Sec. 400.42(b)(3);
(t) Review and decide zone rate complaints cases under Sec.
400.42(b)(5);
(u) Make recommendations in cases involving questions as to whether
zone activity should be prohibited or restricted for public interest
reasons, including reviews under Sec. 400.43;
(v) Authorize under certain circumstances the return of ``zone-
restricted merchandise'' for entry into Customs territory under Sec.
400.44;
(w) Authorize certain duty-paid retail trade under Sec. 400.45;
(x) Determine the format for the annual reports of zone grantees to
the Board and direct preparation of an annual report to Congress from
the Board under Sec. 400.46(d); and
(y) Designate an acting Executive Secretary.
Sec. 400.13 Board headquarters.
The headquarters of the Board is located within the U.S. Department
of Commerce (Herbert C. Hoover Building), Pennsylvania Avenue and 14th
Street, NW., Washington, DC 20230, as part of the office of the Foreign-
Trade Zones staff.
Subpart C_Establishment and Modification of Zone Projects
Sec. 400.21 Number and location of zones and subzones.
(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.
Sec. 400.22 Eligible applicants.
(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
[[Page 69]]
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 Sec.
400.47 regarding appeals to decisions of the Executive Secretary).
Sec. 400.23 Criteria for grants of authority for zones and subzones.
(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 Sec. 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
Sec. 400.31(c); and
(3) Whether the proposed activity is in the public interest, taking
into account the criteria in Sec. 400.31.
Sec. 400.24 Application for zone.
(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
[[Page 70]]
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
Sec. 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;
[[Page 71]]
(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 Sec. 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\1/2\ x 11 (216 x
279 mm) paper. Exhibit Five of the original application shall contain
full-sized maps, and copies shall contain letter-sized reductions.
(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.
(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]
Sec. 400.25 Application for subzone.
(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 Sec. 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
Sec. Sec. 400.31(b)(1)(iii) and 400.31(b)(2);
(vi) Benefits to subzone user;
(vii) Information required in Sec. 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;
[[Page 72]]
(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 Sec.
400.23(b).
(Approved by the Office of Management and Budget under control number
0625-0139)
Sec. 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 Sec. 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, Sec.
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 Sec. 400.32 shall apply. If not,
the procedure set forth in Sec. 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]
Sec. 400.27 Procedure for processing application.
(a) In general. This section outlines the procedure followed in
processing applications submitted under Sec. Sec. 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 Sec. 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 Sec. Sec. 400.22-400.24, 400.25, 400.26, 400.32, and
other applicable provisions of this part.
[[Page 73]]
(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 Sec. Sec. 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 Federal Register a notice of the formal filing of
the application and initiation of the review which includes the name of
the applicant, a description of the zone project, information as to any
hearing scheduled at the outset, and an invitation for public comment,
including a time period during which the public may submit evidence,
factual information, and written arguments. Normally, the comment period
will close 60 days after the date the notice appears, except that, if a
hearing is held (see, Sec. 400.51), the period will not close prior to
15 days after the date of the hearing. The closing date for general
comment will ordinarily be followed by an additional 15-day period for
rebuttal comments;
(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
Federal Register of the Board's determination.
(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
Sec. 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 Federal Register after completion of the review of
the response. The new material will be made available for public
inspection and the Federal Register notice will invite further public
comment for 30 days, with an additional 15-day period for rebuttal
comments.
(C) The Customs adviser shall be notified when necessary for further
comments, which shall be submitted within 45 days after notification.
[[Page 74]]
(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 Sec. 400.23, Sec. 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 Sec.
400.31;
(v) Conducting an analysis to include:
(A) An evaluation of policy considerations pursuant to Sec. Sec.
400.31(b)(1)(i) and 400.31(b)(1)(ii);
(B) An evaluation of the economic factors enumerated in Sec. Sec.
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 Federal Register after completion of the review of
the response. The new material will be made available for public
inspection and the Federal Register notice will invite further public
comment for 30 days, with an additional 15-day period for rebuttal
comments.
(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, Sec. 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 Sec. 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
Sec. 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]
Sec. 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
[[Page 75]]
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 Sec. 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 Sec.
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
[[Page 76]]
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 Federal Register.
(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]
Sec. 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 general-purpose zones (Sec. 400.24; Sec. $3,200
400.21(a)(2)).................................................
(2) Special-purpose subzones (Sec. 400.25):
(i) Non-manufacturing/processing or less than three products. 4,000
(ii) Manufacturing/processing--three or more products........ 6,500
(3) Expansions (Sec. 400.26(b)).............................. 1,600
(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
Sec. 400.27(b)(1), or withdrawn by applicants prior to formal filing,
refunds will be made.
Subpart D_Manufacturing and Processing Activity_Reviews
Sec. 400.31 Manufacturing and processing activity; criteria.
(a) In general. Pursuant to section 15(c) of the Act (19 U.S.C.
81o(c)), the Board has authority to restrict or prohibit zone activity
``that in its judgment is detrimental to the public interest.'' When
evaluating zone and subzone manufacturing and processing activity,
either as proposed in an application, in a request for manufacturing/
[[Page 77]]
processing approval, or as part of a review of an ongoing operation, the
Board shall determine whether the activity is in the public interest by
reviewing it in relation to the evaluation criteria contained in
paragraph (b) of this section. With regard to processing activity, this
section shall apply only when the activity involves foreign articles
subject to quantitative import controls (quotas) or results in articles
subject to a lower duty rate (inverted tariff) than any of their foreign
components. Such a review involves consideration of whether the activity
is consistent with trade policy and programs, and whether its net
economic effect is positive.
(b) Evaluation criteria--(1) Threshold factors. It is the policy of
the Board to authorize zone activity only when it is consistent with
public policy and, in regard to activity involving foreign merchandise
subject to quotas or inverted tariffs, when zone procedures are not the
sole determining cause of imports. Thus, without undertaking a review of
the economic factors enumerated in Sec. 400.31(b)(2), the Board shall
deny or restrict authority for proposed or ongoing activity if it
determines that:
(i) The activity is inconsistent with U.S. trade and tariff law, or
policy which has been formally adopted by the Executive branch;
(ii) Board approval of the activity under review would seriously
prejudice U.S. tariff and trade negotiations or other initiatives; or
(iii) 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.
(2) Economic factors. After its review of threshold factors, if
there is a basis for further consideration, the Board shall consider the
following factors in determiing the net economic effect of the activity
or proposed activity:
(i) Overall employment impact;
(ii) Exports and reexports;
(iii) Retention or creation of manufacturing or processing activity;
(iv) Extent of value-added activity;
(v) Overall effect on import levels of relevant products, including
import displacement;
(vi) Extent and nature of foreign competition in relevant products;
(vii) Impact on related domestic industry, taking into account
market conditions; and
(viii) Other relevant information relating to public interest and
net economic impact considerations, including technology transfers and
investment effects.
(c) Methodology and evidence--(1)(i) The first phase (Sec.
400.31(b)) involves consideration of threshold factors. If an examiner
or reviewer makes a negative finding on any of the factors in paragraph
(b)(1) of this section in the course of a review, the applicant shall be
informed pursuant to Sec. 400.27(d)(3)(vii)(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 Sec.
400.27(d)(3)(vii)(A). If the Board determines in the negative any of the
factors in paragraph (b)(1) of this section, it shall deny or restrict
authority for the proposed or ongoing activity.
(ii) The process for paragraph (b)(2) of this section involves
consideration of the enumerated economic factors, taking into account
their relative weight and significance under the circumstances. Previous
evaluations in similar cases are considered. The net effect is arrived
at by balancing the positive and negative factors and arriving at a net
economic effect.
(2) Contributory effect. In assessing the significance of the
economic effect of the zone activity as part of the consideration of
economic factors, and in consideration of whether there is a significant
public benefit, the Board may consider the contributory effect zone
savings have as an incremental part of cost effectiveness programs
adopted by companies to improve their international competitiveness.
(3) Burden of proof. Applicants for subzones shall have the burden
of submitting evidence establishing that the
[[Page 78]]
activity does or would result in a significant public benefit, taking
into account the factors in paragraph (b) of this section. Applicants
for approval of manufacturing or processing in general-purpose zones
shall submit evidence regarding the positive economic effects that would
result from activity within the zone and may submit evidence and
comments as to policy considerations. Both types of applicants are
expected to submit information in response to evidence of adverse
economic effects during the public comment period. Parties should submit
evidence that is probative and substantial in addressing the matter in
issue.
(d) Monitoring and post-approval reviews--(1) Ongoing zone activity
may be reviewed at anytime to determine whether it is in compliance with
the Act and regulations, as well as the authority granted by the Board.
Reviews may also be conducted to determine whether there are changed
circumstances that raise questions as to whether the activity is
detrimental to the public interest, taking into account the factors
enumerated in Sec. 400.31. The Board may prescribe special monitoring
requirements in its decisions when appropriate.
(2) Reviews may be initiated by the Board, the Commerce Department's
Assistant Secretary for Import Administration, or the Executive
Secretary; or, they may be undertaken in response to requests from
parties directly affected by the activity in question and showing good
cause.
(3) Upon review, if the Board finds that zone activity is no longer
in the public interest, taking into account the provisions of Sec.
400.31, it may restrict the activity in question. The appropriateness of
a delayed effective date will be considered in such cases.
[56 FR 50798, Oct. 8, 1991; 56 FR 56544, Nov. 5, 1991]
Sec. 400.32 Procedure for review of request for approval of manufacturing or
processing.
(a) Request as part of application for grant of authority. A request
for approval of proposed manufacturing or processing activity may be
submitted as part of an application under Sec. Sec. 400.24-400.26(a).
The Board will review the request taking into account the criteria in
Sec. 400.31(b).
(b) Request for manufacturing/processing in approved zone or
subzone. Prior to the commencement of manufacturing in a zone or subzone
involving activity beyond the scope of that which has been previously
authorized at the facility (i.e., new end products, significant
expansions of plant production capacity), and of similar changes in
processing activity that involves foreign articles subject to quotas or
inverted tariffs, zone grantees or operators shall request the
determination referred to in Sec. 400.31(a) by submitting a request in
writing to the Executive Secretary (Sec. 400.28(a)(2)). Such requests
shall include the information required by Sec. Sec. 400.24(d)(4)(vii)
and 400.25.
(1) The Commerce Department's Assistant Secretary for Import
Administration may make determinations in these cases based upon a
review by the FTZ staff and the recommendation of the Executive
Secretary, when:
(i) The proposed activity is the same, in terms of products
involved, to activity recently approved by the Board and similar in
circumstances; or
(ii) The activity is for export only; or
(iii) The zone benefits sought do not involve the election of non-
privileged foreign status (19 CFR 146.42) on items involving inverted
tariffs; or
(iv) The Port Director determines that the activity could otherwise
be conducted under Customs bonded procedures.
(2) When the informal procedure in paragraph (b)(1) of this section
is not appropriate--
(i) The Executive Secretary will:
(A) Assign a case docket number and give notice in the Federal
Register inviting public comment;
(B) Arrange a public hearing, if appropriate;
(C) Appoint an examiner, if appropriate, to conduct a review and
prepare a report with recommendations for the Board; and
(D) Prepare and transmit a report with recommendations, or transmit
the examiners report, to the Board for appropriate action; and
[[Page 79]]
(ii) The Board will make a determination on the requests, and the
Executive Secretary will notify the grantee in writing of the Board's
determination, and will publish notice of the determination in the
Federal Register.
(c) Scope determinations. Determinations shall be made by the
Executive Secretary as to whether changes in activity are within the
scope of related activity already approved for the facility involved
under this part. When warranted, the procedures of paragraph (b)(2) of
this section will be followed.
[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]
Sec. 400.33 Restrictions on manufacturing and processing activity.
(a) In general. In approving manufacturing or processing activity
for a zone or subzone the Board may adopt restrictions to protect the
public interest, health, or safety. The Commerce Department's Assistant
Secretary for Import Administration may similarly adopt restrictions in
exercising authority under Sec. 400.32(b)(1).
(b) Restrictions on items subject to antidumping and countervailing
duty actions--(1) Board policy. Zone procedures shall not be used to
circumvent antidumping (AD) and countervailing duty (CVD) actions under
19 CFR parts 353 and 355.
(2) Admission of items subject to AD/CVD actions. Items subject to
AD/CVD orders or items which would be otherwise subject to suspension of
liquidation under AD/CVD procedures, if they entered U.S. Customs
territory, shall be placed in privileged foreign status (19 CFR 146.41)
upon admission to a zone or subzone. Upon entry for consumption, such
items shall be subject to duties under AD/CVD orders or to suspension of
liquidation, as appropriate, under 19 CFR parts 353 and 355.
Subpart E_Zone Operations and Administrative Requirements
Sec. 400.41 Zone operations; general.
Zones shall be operated by or under the contractual oversight of
zone grantees, subject to the requirements of the Act and this part, as
well as those of other federal, state and local agencies having
jurisdiction over the site and operation. Zone grantees shall ensure
that the reasonable zone needs of the business community are served by
their zone projects. The Port Director represents the Board with regard
to the zone projects in the district and is responsible for enforcement,
including physical security and access requirements, as provided in 19
CFR part 146.
[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]
Sec. 400.42 Requirements for commencement of operations in a zone project.
(a) In general. The following actions are required before operations
in a zone may commence:
(1) Approval by the Port Director of an application for activation
is required as provided in 19 CFR part 146; and
(2) The Executive Secretary will review proposed manufacturing or
processing, pursuant to Sec. 400.32, and a zone schedule as provided in
this section.
(b) Zone schedule. (1) The zone grantee shall submit to the
Executive Secretary and to the Port Director a zone schedule which sets
forth:
(i) Internal rules and regulations for the zone; and
(ii) A statement of the rates and charges (fees) applicable to zone
users.
(2) A zone schedule shall consist of typed, loose-leaf, numbered,
letter-sized pages, enclosed in covers, and shall contain:
(i) A title page, with information to include:
(A) The name of the zone grantee and operator(s);
(B) Schedule identification;
(C) Site description;
(D) Date of original schedule; and
(E) Name of the preparer;
(ii) A table of contents;
(iii) Administrative information;
(iv) A statement of zone operating policy, rules and regulations,
including uniform procedures regarding the construction of buildings and
facilities; and
(v) A section listing rates and charges for zones and subzones with
information sufficient for the Board or the Executive Secretary to
determine
[[Page 80]]
whether the rates and charges are reasonable based on other like
operations in the port of entry area, and whether there is uniform
treatment under like circumstances among zone users.
(3) The Executive Secretary will review the schedule to determine
whether it contains sufficient information for users concerning the
operation of the facility and a statement of rates and charges as
provided in paragraph (b)(2) of this section. If the Executive Secretary
determines that the schedule satisfies these requirements, the Executive
Secretary will notify the zone grantee, unless there is a basis for
review under paragraph (b)(5) of this section. A copy of the schedule
shall be available for public inspection at the offices of the zone
grantee and operator. The zone grantee shall send a copy to the Port
Director, who may submit comments to the Executive Secretary.
(4) Amendments to the schedule shall be prepared and submitted in
the manner described in paragraphs (b)(1) through (b)(3) of this
section, and listed in the concluding section of the schedule, with
dates.
(5) A zone user or prospective user showing good cause may object to
the zone or subzone fee on the basis that it is not reasonable, fair and
uniform, by submitting to the Executive Secretary a complaint in writing
with supporting information. The Executive Secretary will review the
complaint and issue a report and decision, which will be final unless
appealed to the Board within 30 days. The Board or the Executive
Secretary may otherwise initiate a review for cause. The factors
considered in reviewing reasonableness and fairness, will include:
(i) The going-rates and charges for like operations in the area and
the extra costs of operating a zone, including return on investment; and
(ii) In the case of subzones, the value of actual services rendered
by the zone grantee or operator, and reasonable out-of-pocket expenses.
[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]
Sec. 400.43 Restriction and prohibition of certain zone operations.
(a) In general. After review, the Board may restrict or prohibit any
admission of merchandise into a zone project or operation in a zone
project when it determines that such activity is detrimental to the
public interest, health or safety.
(b) Initiation of review. The Board may conduct a proceeding, or the
Executive Secretary a review, to consider a restriction or prohibition
under paragraph (a) of this section either self-initiated, or in
response to a complaint made to the Board by a party directly affected
by the activity in question and showing good cause.
Sec. 400.44 Zone-restricted merchandise.
(a) In general. Merchandise which has been given export status by
Customs officials (``zone-restricted merchandise''--19 CFR 146.44) may
be returned to the Customs Territory of the United States only when the
Board determines that the return would be in the public interest. Such
returns are subject to the Customs laws and the payment of applicable
duties and excise taxes (19 U.S.C. 81c, 4th proviso).
(b) Criteria. In making the determination described in paragraph (a)
of this section, the Board will consider:
(1) The intent of the parties;
(2) Why the goods cannot be exported;
(3) The public benefit involved in allowing their return; and
(4) The recommendation of the Port Director.
(c) Procedure. (1) A request for authority to return ``zone-
restricted'' merchandise into Customs territory shall be made to the
Executive Secretary in letter form by the zone grantee or operator of
the zone in which the merchandise is located, with supporting
information and documentation.
(2) The Executive Secretary will investigate the request and prepare
a report for the Board.
(3) The Executive Secretary may act for the Board under this section
in cases involving merchandise valued at 500,000 dollars or less,
provided requests
[[Page 81]]
are accompanied with a letter of concurrence from the Port Director.
[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]
Sec. 400.45 Retail trade.
(a) In general. Retail trade is prohibited in zones, except that
sales or other commercial activity involving domestic, duty-paid, and
duty-free goods may be conducted within an activated zone project under
permits issued by the zone grantee and approved by the Board, with the
further exception that no permits shall be necessary for sales involving
domestic, duty-paid or duty-free food and non-alcoholic beverage
products sold within the zone or subzone for consumption on premises by
persons working therein. The Port Director will determine whether an
activity is retail trade, subject to review by the Board when the zone
grantee requests such a review with a good cause.
(b) Procedure. Requests for Board approval under this section shall
be submitted in letter form, with supporting documentation, to the Port
Director, who is authorized to act for the Board in these cases, subject
to the concurrence of the Executive Secretary.
(c) Criteria. In evaluating requests under this section, the Port
Director and the Executive Secretary will consider:
(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.
[56 FR 50798, Oct. 8, 1991; 57 FR 2319, Jan. 21, 1992, as amended at 62
FR 53535, Oct. 15, 1997]
Sec. 400.46 Accounts, records and reports.
(a) Zone accounts. Zone accounts shall be maintained in accordance
with generally accepted accounting principles, and in compliance with
the requirements of Federal, State or local agencies having jurisdiction
over the site or operation.
(b) Records and forms. Zone records and forms shall be prepared and
maintained in accordance with the requirements of the Customs Service
and the Board, and the zone grantee shall retain copies of applications
it submits to the Board.
(c) Maps and drawings. Zone grantees or operators, and Port
Directors, shall keep current layout drawings of approved sites as
described in Sec. 400.24(d)(5), showing activated portions, and a file
showing required approvals. The zone grantee shall furnish necessary
maps to the Port Director.
(d) Annual reports. (1) Zone grantees shall submit annual reports to
the Board at the time and in the format prescribed by the Executive
Secretary, for use by the Executive Secretary in the preparation of the
Board's annual report to the Congress.
(2) The Board shall submit an annual report to the Congress.
(Approved by the Office of Management and Budget under control number
0625-0109)
[56 FR 50798, Oct. 8, 1991, as amended at 62 FR 53535, Oct. 15, 1997]
Sec. 400.47 Appeals to the Board from decisions of the Assistant Secretary
for Import Administration and the Executive Secretary.
(a) In general. Decisions of the Assistant Secretary for Import
Administration and the Executive Secretary made pursuant to Sec. Sec.
400.22(d)(2)(ii), 400.32(b)(1), 400.44(c)(3), and 400.45(b)(2) may be
appealed to the Board by adversely affected parties showing good cause.
(b) Procedures. Parties appealing a decision under paragraph (a) of
this section shall submit a request for review to the Board in writing,
stating the basis for the request, and attaching a copy of the decision
in question, as well as supporting information and documentation. After
a review, the Board will notify the complaining party of its decision in
writing.
Subpart F_Notice, Hearings, Record and Information
Sec. 400.51 Notice and hearings.
(a) In general. The Executive Secretary will publish notice in the
Federal Register inviting public comment on applications docketed for
Board action (see, Sec. 400.27(c)), and with regard to other reviews or
matters considered under this part when public comment is necessary.
Applicants shall
[[Page 82]]
give appropriate notice of their proposals in local newspapers. The
Board, the Secretary, the Commerce Department's Assistant Secretary for
Import Administration, or the Executive Secretary, as appropriate, may
schedule and/or hold hearings during any proceedings or reviews
conducted under this part whenever necessary or appropriate.
(b) Requests for hearings--(1) A directly affected party showing
good cause may request a hearing during a proceeding or review.
(2) The request must be made within 30 days of the beginning of the
period for public comment (see, Sec. 400.27) and must be accompanied by
information establishing the need for the hearing and the basis for the
requesting party's interest in the matter.
(3) A determination as to the need for the hearing will be made by
the Commerce Department's Assistant Secretary for Import Administration
within 15 days after the receipt of such a request.
(c) Procedure for public hearings. The Board will publish notice in
the Federal Register of the date, time and location of a hearing. All
participants shall have the opportunity to make a presentation.
Applicants and their witnesses shall ordinarily appear first. The
presiding officer may adopt time limits for individual presentations.
Sec. 400.52 Official record; public access.
(a) Content. The Executive Secretary will maintain at the location
stated in Sec. 400.53(d) an official record of each proceeding within
the Board's jurisdiction. The Executive Secretary will include in the
official record all factual information, written argument, and other
material developed by, presented to, or obtained by the Board in
connection with the proceeding. The official record will contain
material that is public, business proprietary, privileged, and
classified. While there is no requirement that a verbatim record shall
be kept of public hearings, the proceedings of such hearings shall
ordinarily be recorded and transcribed when significant opposition is
involved.
(b) Opening and closing of official record. The official record
opens on the date the Executive Secretary files an application or
receives a request that satisfies the applicable requirements of this
part and closes on the date of the final determination in the proceeding
or review, as applicable.
(c) Protection of the official record. Unless otherwise ordered in a
particular case by the Executive Secretary, the official record will not
be removed from the Department of Commerce. A certified copy of the
record will be made available to any court before which any aspect of a
proceeding is under review, with appropriate safeguards to prevent
disclosure of proprietary or privileged information.
Sec. 400.53 Information.
(a) Request for information. The Board may request submission of any
information, including business proprietary information, and written
argument necessary or appropriate to the proceeding.
(b) Public information. Except as provided in paragraph (c) of this
section, the Board will consider all information submitted in a
proceeding to be public information. If the person submitting the
information does not agree to its public disclosure, the Board will
return the information and not consider it in the proceeding.
(c) Business proprietary information. Persons submitting business
proprietary information and requesting protection from public disclosure
shall mark the cover page ``business proprietary,'' as well as the top
of each page on which such information appears.
(d) Disclosure of information. Disclosure of public information will
be governed by 15 CFR part 4. Public information in the official record
will be available for inspection and copying at the Office of the
Executive Secretary, Foreign-Trade Zones Board, U.S. Department of
Commerce Building, Pennsylvania Avenue and 14th Street, NW., Washington,
DC 20230.
[[Page 83]]
CHAPTER VII--BUREAU OF INDUSTRY AND SECURITY, DEPARTMENT OF COMMERCE
--------------------------------------------------------------------
Editorial Note: Nomenclature changes to chapter VII appear at 67 FR
20632, Apr. 26, 2002 and 69 FR 60546 and 60547, Oct. 12, 2004.
SUBCHAPTER A--NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS
Part Page
700 Defense priorities and allocations system... 85
701 Reporting of offsets agreements in sales of
weapon systems or defense-related items
to foreign countries or foreign firms... 110
702-704 [Reserved]
705 Effect of imported articles on the national
security................................ 114
706-709 [Reserved]
SUBCHAPTER B--CHEMICAL WEAPONS CONVENTION REGULATIONS
710 General information and overview of the
Chemical Weapons Convention Regulations
(CWCR).................................. 120
711 General information regarding declaration,
reporting, and advance notification
requirements, and the electronic filing
of declarations and reports............. 127
712 Activities involving Schedule 1 chemicals... 131
713 Activities involving Schedule 2 chemicals... 140
714 Activities involving Schedule 3 chemicals... 150
715 Activities involving Unscheduled Discrete
Organic Chemicals (UDOCs)............... 157
716 Initial and routine inspections of declared
facilities.............................. 163
717 CWC clarification procedures (consultations
and challenge inspections).............. 172
718 Confidential business information........... 175
719 Enforcement................................. 178
720 Denial of export privileges................. 187
721 Inspection of records and recordkeeping..... 189
722
Interpretations [Reserved]
[[Page 84]]
723-729
[Reserved]
SUBCHAPTER C--EXPORT ADMINISTRATION REGULATIONS
730 General information......................... 192
732 Steps for using the EAR..................... 201
734 Scope of the Export Administration
regulations............................. 215
736 General prohibitions........................ 232
738 Commerce Control List overview and the
country chart........................... 238
740 License exceptions.......................... 248
742 Control policy--CCL based controls.......... 301
743 Special reporting........................... 345
744 Control policy: End-user and end-use based.. 348
745 Chemical Weapons Convention requirements.... 400
746 Embargoes and other special controls........ 404
747 Special Iraq reconstruction license......... 414
748 Applications (classification, advisory, and
license) and documentation.............. 416
750 Application processing, issuance, and denial 461
752 Special comprehensive license............... 472
754 Short supply controls....................... 488
756 Appeals..................................... 501
758 Export clearance requirements............... 502
760 Restrictive trade practices or boycotts..... 511
762 Recordkeeping............................... 577
764 Enforcement and protective measures......... 582
766 Administrative enforcement proceedings...... 593
768 Foreign availability determination
procedures and criteria................. 617
770 Interpretations............................. 626
772 Definitions of terms........................ 634
774 The Commerce Control List................... 661
775-780 [Reserved]
SUBCHAPTER D--ADDITIONAL PROTOCOL REGULATIONS
781 General information and overview of the
additional protocol regulations (APR)... 875
782 General information regarding reporting
requirements and procedures............. 879
783 Civil nuclear fuel cycle-related activities
not involving nuclear materials......... 881
784 Complementary access........................ 902
785 Enforcement................................. 908
786 Records and recordkeeping................... 916
787-799 [Reserved]
[[Page 85]]
SUBCHAPTER A_NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS
PART 700_DEFENSE PRIORITIES AND ALLOCATIONS SYSTEM--Table of Contents
Subpart A_Purpose
Sec.
700.1 Purpose of this regulation.
Subpart B_Overview
700.2 Introduction.
700.3 Priority ratings and rated orders.
700.4 Priorities and allocations in a national emergency.
700.5 Special priorities assistance.
700.6 Official actions.
700.7 Compliance.
Subpart C_Definitions
700.8 Definitions.
Subpart D_Industrial Priorities
700.10 Delegation of authority.
700.11 Priority ratings.
700.12 Elements of a rated order.
700.13 Acceptance and rejection of rated orders.
700.14 Preferential scheduling.
700.15 Extension of priority ratings.
700.16 Changes or cancellations of priority ratings and rated orders.
700.17 Use of rated orders.
700.18 Limitations on placing rated orders.
Subpart E_Industrial Priorities for Energy Programs
700.20 Use of priority ratings.
700.21 Application for priority rating authority.
Subpart F_National emergency Preparedness and Critical Items
700.30 Priorities and allocations in a national emergency.
700.31 Metalworking machines.
Subpart G [Reserved]
Subpart H_Special Priorities Assistance
700.50 General provisions.
700.51 Requests for priority rating authority.
700.52 Examples of assistance.
700.53 Criteria for assistance.
700.54 Instances where assistance may not be provided.
700.55 Assistance programs with Canada and other nations.
Subpart I_Official Actions
700.60 General provisions.
700.61 Rating Authorizations.
700.62 Directives.
700.63 Letters of Understanding.
Subpart J_Compliance
700.70 General provisions.
700.71 Audits and investigations.
700.72 Compulsory process.
700.73 Notification of failure to comply.
700.74 Violations, penalties, and remedies.
700.75 Compliance conflicts.
Subpart K_Adjustments, Exceptions, and Appeals
700.80 Adjustments or exceptions.
700.81 Appeals.
Subpart L_Miscellaneous Provisions
700.90 Protection against claims.
700.91 Records and reports.
700.92 Applicability of this regulation and official actions.
700.93 Communications.
Schedule I to Part 700--Approved Programs and Delegate Agencies
Appendix I to Part 700--Form BIS-999-Request for Special Priorities
Assistance
Authority: Titles I and VII of the Defense Production Act of 1950,
as amended (50 U.S.C. App. 2061, et seq.), Title VI of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5195 et
seq.), Executive Order 12919, 59 FR 29525, 3 CFR, 1994 Comp. 901, and
Executive Order 13286, 68 FR 10619, 3 CFR, 2003 Comp. 166; section 18 of
the Selective Service Act of 1948 (50 U.S.C. App. 468), 10 U.S.C. 2538,
50 U.S.C. 82, and Executive Order 12742, 56 FR 1079, 3 CFR, 1991 Comp.
309; and Executive Order 12656, 53 FR 226, 3 CFR, 1988 Comp. 585.
Source: 49 FR 30414, July 30, 1984, unless otherwise noted.
Redesignated at 54 FR 601, Jan. 9, 1989.
Subpart A_Purpose
Sec. 700.1 Purpose of this regulation.
(a) Title I of the Defense Production Act of 1950, as amended (50
U.S.C. App. 2061, et seq.) (Defense Production Act),
[[Page 86]]
authorizes the President: to require the priority performance of
contracts and orders necessary or appropriate to promote the national
defense over other contracts or orders; to allocate materials, services,
and facilities as necessary or appropriate to promote the national
defense; and to require the allocation of, or the priority performance
under contracts or orders relating to, supplies of materials, equipment,
and services in order to assure domestic energy supplies for national
defense needs.
(b) Section 18 of the Selective Service Act of 1948 (50 U.S.C. app.
468) (Selective Service Act) authorizes the President to place an order
with a supplier for any articles or materials required for the exclusive
use of the U.S. armed forces whenever the President determines that in
the interest of national security, prompt delivery of the articles and
materials is required. The supplier must give precedence to the order so
as to deliver the articles or materials in a required time period. 10
U.S.C. 2538, and 50 U.S.C. 82, provide similar authority specifically
for Department of Defense procurement, but only in time of war or when
war is imminent.
(c) Section 602(b) of the Robert T. Stafford Disaster Relief and
Emergency Assistance Act (42 U.S.C. 5195a(b)) provides that the terms
``national defense'' and ``defense'' as used in the Defense Production
Act includes ``emergency preparedness activities'' conducted pursuant to
Title VI of the Stafford Act. The definition of ``national defense'' in
section 702(14) of the Defense Production Act provides that this term
includes ``emergency preparedness activities'' conducted pursuant to
Title VI of the Stafford Act and ``critical infrastructure protection
and restoration.''
(d) The Defense Priorities and Allocations System (DPAS) regulation
implements the priorities and allocations authority of the Defense
Production Act and as this authority pertains to Title VI of the
Stafford Act, and the priorities authority of the Selective Service Act
and related statutes, all with respect to industrial resources. The DPAS
ensures the timely availability of industrial resources for approved
programs and provides an operating system to support rapid industrial
response to a national emergency.
(e) To aid in understanding and using the DPAS, an overview of its
major provisions is incorporated into this regulation as subpart B--
Overview. The full text of the DPAS is found in subparts D through L.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31921, June 11, 1998; 71 FR 39527, July 13, 2006]
Subpart B_Overview
Sec. 700.2 Introduction.
(a) Certain national defense and energy programs (including
emergency preparedness activities) are approved for priorities and
allocations support. For example, military aircraft production,
ammunition, and certain programs which maximize domestic energy supplies
are ``approved programs.'' A complete list of currently approved
programs is provided at Schedule I to this part.
(b) The Department of Commerce administers the DPAS to ensure the
timely delivery of industrial items to meet approved program
requirements.
(c) Commerce has delegated authorities to place priority ratings on
contracts or orders necessary or appropriate to promote the national
defense to the government agencies that issue such contracts or orders.
Schedule I includes a list of agencies delegated this authority.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31921, June 11, 1998; 71 FR 39527, July 13, 2006]
Sec. 700.3 Priority ratings and rated orders.
(a) Rated orders are identified by a priority rating consisting of
the rating--either DX or DO--and a program identification symbol. Rated
orders take preference over all unrated orders as necessary to meet
required delivery dates. Among rated orders, DX rated orders take
preference over DO rated orders. Program identification symbols
[[Page 87]]
indicate which approved program is involved with the rated order. For
example, A1 identifies defense aircraft programs and A7 signifies
defense electronic programs. The program identification symbols, in
themselves, do not connote any priority.
(b) Persons receiving rated orders must give them preferential
treatment as required by this regulation. This means a person must
accept and fill a rated order for items that the person normally
supplies. The existence of previously accepted unrated or lower rated
orders is not sufficient reason for rejecting a rated order. Persons are
required to reschedule unrated orders if they conflict with performance
against a rated order. Similarly, persons must reschedule DO rated
orders if they conflict with performance against a DX rated order.
(c) All rated orders must be scheduled to the extent possible to
ensure delivery by the required delivery date.
(d) Persons who receive rated orders must in turn place rated orders
with their suppliers for the items they need to fill the orders. This
provision ensures that suppliers will give priority treatment to rated
orders from contractor to subcontractor to suppliers throughout the
procurement chain.
(e) Persons may place a priority rating on orders only when they are
in receipt of a rated order, have been explicitly authorized to do so by
the Department of Commerce or a Delegate Agency, or are otherwise
permitted to do so by this regulation.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31921, June 11, 1998]
Sec. 700.4 Priorities and allocations in a national emergency.
(a) In the event of a national emergency, special rules may be
established as needed to supplement this part, thus ensuring rapid
industrial response and the timely availability of critical industrial
items and facilities to meet the urgent national defense requirements,
including domestic emergency preparedness requirements, of approved
programs.
(b) The special rules established in response to the emergency may
include provisions for the taking of certain emergency official actions
and the allocation of critical and scarce materials and facilities.
[63 FR 31921, June 11, 1998]
Sec. 700.5 Special priorities assistance.
(a) The DPAS is designed to be largely self-executing. However, from
time-to-time production or delivery problems will arise. In this event,
special priorities assistance is available from Commerce and from the
Delegate Agencies.
(b) Special priorities assistance is available for any reason
consistent with this regulation. Generally, special priorities
assistance is provided to expedite deliveries, resolve delivery
conflicts, place rated orders, locate suppliers, or to verify
information supplied by customers and vendors. Special priorities
assistance may also be used to request rating authority for items not
automatically ratable.
Sec. 700.6 Official actions.
When necessary, Commerce takes specific official actions to
implement or enforce the provisions of this regulation and to provide
special priorities assistance. Such actions may include the issuance of:
Rating Authorizations, Directives, Letters of Understanding, Set-asides,
and compliance documents (Administrative Subpoenas, Demands for
Information, and Inspection Authorizations).
Sec. 700.7 Compliance.
(a) Compliance with the provisions of this regulation and official
actions is required by the Defense Production Act and the Selective
Service Act and related statutes. Violators are subject to criminal
penalties.
(b) Any person who places or receives a rated order should be
thoroughly familiar with, and must comply with, the provisions of this
regulation.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31921, June 11, 1998]
[[Page 88]]
Subpart C_Definitions
Sec. 700.8 Definitions.
In addition to the definitions provided in Section 702 of the
Defense Production Act (excepting the definition of ``industrial
resources'') and Section 602(a) of the Stafford Act, the following
definitions pertain to all sections of this part:
Approved program. A program determined as necessary or appropriate
for priorities and allocations support to promote the national defense
by the Secretary of Defense, the Secretary of Energy, or the Secretary
of Homeland Security, under the authority of the Defense Production Act,
the Stafford Act, and Executive Order 12919, or the Selective Service
Act and related statutes and Executive Order 12742.
Construction. The erection, addition, extension, or alteration of
any building, structure, or project, using materials or products which
are to be an integral and permanent part of the building, structure, or
project. Construction does not include maintenance and repair.
Delegate Agency. A government agency authorized by delegation from
the Department of Commerce to place priority ratings on contracts or
orders needed to support approved programs.
Defense Production Act. the Defense Production Act of 1950, as
amended (50 U.S.C. App. 2061, et seq.).
Industrial resources--all materials, services, and facilities,
including construction materials, the authority for which has not been
delegated to other agencies under Executive Order 12919. This term also
includes the term ``item'' as defined and used in this part.
Item. Any raw, in process, or manufactured material, article,
commodity, supply, equipment, component, accessory, part, assembly, or
product of any kind, technical information, process, or service.
Maintenance and repair and operating supplies (MRO):
(a) Maintenance is the upkeep necessary to continue any plant,
facility, or equipment in working condition.
(b) Repair is the restoration of any plant, facility, or equipment
to working condition when it has been rendered unsafe or unfit for
service by wear and tear, damage, or failure of parts.
(c) Operating supplies are any items carried as operating supplies
according to a person's established accounting practice. Operating
supplies may include hand tools and expendable tools, jigs, dies,
fixtures used on production equipment, lubricants, cleaners, chemicals
and other expendable items.
(d) MRO does not include items produced or obtained for sale to
other persons or for installation upon or attachment to the property of
another person, or items required for the production of such items;
items needed for the replacement of any plant, facility, or equipment;
or items for the improvement of any plant, facility, or equipment by
replacing items which are still in working condition with items of a new
or different kind, quality, or design.
Official action. An action taken by Commerce under the authority of
the Defense Production Act, the Selective Service Act and related
statutes, and this regulation. Such actions include the issuance of Set-
asides, Rating Authorizations, Directives, Letters of Understanding,
Demands for Information, Inspection Authorizations, and Administrative
Subpoenas.
Person--any individual, corporation, partnership, association, or
any other organized group of persons, or legal successor or
representative thereof; or any authorized State or local government or
agency thereof; and for purposes of administration of this part,
includes the United States Government and any authorized foreign
government or agency thereof, delegated authority as provided in this
part.
Production equipment. Any item of capital equipment used in
producing materials or furnishing services that has a unit acquisition
cost of $2,500 or more, an anticipated service life in excess of one
year, and the potential for maintaining its integrity as a capital item.
Rated order. A prime contract, a subcontract, or a purchase order in
support of an approved program issued in accordance with the provisions
of this regulation.
[[Page 89]]
Selective Service Act and related statutes--Section 18 of the
Selective Service Act of 1948 (50 U.S.C. app. 468), 10 U.S.C. 2538, and
50 U.S.C. 82.
Set-aside. The amount of an item for which a supplier must reserve
order book space in anticipation of the receipt of rated orders.
Stafford Act--Title VI (Emergency Preparedness) of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act, as amended (42
U.S.C. 5195 et seq.).
[49 FR 30414, July 30, 1984; 49 FR 50172, Dec. 27, 1984. Redesignated at
54 FR 601, Jan. 9, 1989, as amended at 63 FR 31921, June 11, 1998; 71 FR
39528, July 13, 2006]
Subpart D_Industrial Priorities
Sec. 700.10 Delegation of authority.
(a) The priorities and allocations authorities of the President
under Title I of the Defense Production Act with respect to industrial
resources have been delegated to the Secretary of Commerce under
Executive Order 12919 of June 3, 1994 (59 FR 29525). The priorities
authorities of the President under the Selective Service Act and related
statutes with respect to industrial resources have also been delegated
to the Secretary of Commerce under Executive Order 12742 of January 8,
1991 (56 FR 1079).
(b) Within the Department of Commerce, these responsibilities have
been assigned to the Office of Strategic Industries and Economic
Security. The Department of Commerce has authorized the Delegate
Agencies to assign priority ratings to orders for items needed for
approved programs.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31922, June 11, 1998; 71 FR 39528, July 13, 2006]
Sec. 700.11 Priority ratings.
(a) Levels of priority. (1) There are two levels of priority
established by this regulation, identified by the rating symbols ``DO''
and ``DX''.
(2) All DO rated orders have equal priority with each other and take
preference over unrated orders. All DX rated orders have equal priority
with each other and take preference over DO rated orders and unrated
orders. (For resolution of conflicts among rated orders of equal
priority, see Sec. 700.14(c).)
(3) In addition, a Directive issued by Commerce takes preference
over any DX rated order, DO rated order, or unrated order, as stipulated
in the Directive. (For a full discussion of Directives, see Sec.
700.62.)
(b) Program identification symbols. Program identification symbols
indicate which approved program is being supported by a rated order. The
list of approved programs and their identification symbols are listed in
Schedule I. For example, A1 identifies defense aircraft programs and A7
signifies defense electronic programs. Program identification symbols,
in themselves, do not connote any priority.
(c) Priority ratings. A priority rating consists of the rating
symbol--DO and DX--and the program identification symbol, such as A1,
C2, or N1. Thus, a contract for the production of an aircraft will
contain a DO-A1 or DX-A1 priority rating. A contract for a radar set
will contain a DO-A7 or DX-A7 priority rating.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31922, June 11, 1998; 71 FR 39528, July 13, 2006]
Sec. 700.12 Elements of a rated order.
Each rated order must include:
(a) The appropriate priority rating (e.g. DO-A1, DX-A4, DO-H1);
(b) A required delivery date or dates. The words ``immediately'' or
``as soon as possible'' do not constitute a delivery date. A
``requirements contract'', ``basic ordering agreement'', ``prime vendor
contract'', or similar procurement document bearing a priority rating
may contain no specific delivery date or dates and may provide for the
furnishing of items from time-to-time or within a stated period against
specific purchase orders, such as ``calls'', ``requisitions'', and
``delivery orders''. These purchase orders must specify a required
delivery date or dates and are to be considered as rated as of the date
of their receipt by the supplier and not as of the date of the original
procurement document;
(c) The written signature on a manually placed order, or the digital
signature or name on an electronically
[[Page 90]]
placed order, of an individual authorized to sign rated orders for the
person placing the order. The signature or use of the name certifies
that the rated order is authorized under this part and that the
requirements of this part are being followed; and
(d) A statement that reads in substance:
This is a rated order certified for national defense use, and you
are required to follow all the provisions of the Defense Priorities and
Allocations System regulation (15 CFR part 700).
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31922, June 11, 1998]
Sec. 700.13 Acceptance and rejection of rated orders.
(a) Mandatory acceptance. (1) Except as otherwise specified in this
section, a person shall accept every rated order received and must fill
such orders regardless of any other rated or unrated orders that have
been accepted.
(2) A person shall not discriminate against rated orders in any
manner such as by charging higher prices or by imposing different terms
and conditions than for comparable unrated orders.
(b) Mandatory rejection. Unless otherwise directed by Commerce:
(1) A person shall not accept a rated order for delivery on a
specific date if unable to fill the order by that date. However, the
person must inform the customer of the earliest date on which delivery
can be made and offer to accept the order on the basis of that date.
Scheduling conflicts with previously accepted lower rated or unrated
orders are not sufficient reason for rejection under this section.
(2) A person shall not accept a DO rated order for delivery on a
date which would interfere with delivery of any previously accepted DO
or DX rated orders. However, the person must offer to accept the order
based on the earliest delivery date otherwise possible.
(3) A person shall not accept a DX rated order for delivery on a
date which would interfere with delivery of any previously accepted DX
rated orders, but must offer to accept the order based on the earliest
delivery date otherwise possible.
(4) If a person is unable to fill all the rated orders of equal
priority status received on the same day, the person must accept, based
upon the earliest delivery dates, only those orders which can be filled,
and reject the other orders. For example, a person must accept order A
requiring delivery on December 15 before accepting order B requiring
delivery on December 31. However, the person must offer to accept the
rejected orders based on the earliest delivery dates otherwise possible.
(c) Optional rejection. Unless otherwise directed by Commerce, rated
orders may be rejected in any of the following cases as long as a
supplier does not discriminate among customers:
(1) If the person placing the order is unwilling or unable to meet
regularly established terms of sale or payment;
(2) If the order is for an item not supplied or for a service not
performed;
(3) If the order is for an item produced, acquired, or provided only
for the supplier's own use for which no orders have been filled for two
years prior to the date of receipt of the rated order. If, however, a
supplier has sold some of these items, the supplier is obligated to
accept rated orders up to that quantity or portion of production,
whichever is greater, sold within the past two years;
(4) If the person placing the rated order, other than the U.S.
Government, makes the item or performs the service being ordered;
(5) If acceptance of a rated order or performance against a rated
order would violate any other regulation, official action, or order of
the Department of Commerce issued under the authority of the Defense
Production Act or the Selective Service Act and related statutes [See
Sec. 700.75].
(d) Customer notification requirements. (1) A person must accept or
reject a rated order and transmit the acceptance or rejection in writing
(hard copy), or in electronic format, within fifteen (15) working days
after receipt of a DO rated order and within ten (10) working days after
receipt of a DX rated order. If the order is rejected, the person must
also provide the reasons
[[Page 91]]
for the rejection, pursuant to paragraphs (b) and (c) of this section,
in writing (hard copy) or electronic format.
(2) If a person has accepted a rated order and subsequently finds
that shipment or performance will be delayed, the person must notify the
customer immediately, give the reasons for the delay, and advise of a
new shipment or performance date. If notification is given verbally,
written or electronic confirmation must be provided within five (5)
working days.
(The information collection requirements in paragraphs (d)(1) and (d)(2)
are approved by the Office of Management and Budget under OMB control
number 0694-0053)
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31922, June 11, 1998; 70 FR 10864, Mar. 7, 2005]
Sec. 700.14 Preferential scheduling.
(a) A person must schedule operations, including the acquisition of
all needed production items, in a timely manner to satisfy the delivery
requirements of each rated order. Modifying production or delivery
schedules is necessary only when required delivery dates for rated
orders cannot otherwise be met.
(b) DO rated orders must be given production preference over unrated
orders, if necessary to meet required delivery dates, even if this
requires the diversion of items being processed or ready for delivery
against unrated orders. Similarly, DX rated orders must be given
preference over DO rated orders and unrated orders.
Examples: If a person receives a DO rated order with a delivery date
of June 3 and if meeting that date would mean delaying production or
delivery of an item for an unrated order, the unrated order must be
delayed. If a DX rated order is received calling for delivery on July 15
and a person has a DO rated order requiring delivery on June 2 and
operations can be scheduled to meet both deliveries, there is no need to
alter production schedules to give any additional preference to the DX
rated order.
(c) Conflicting rated orders. (1) If a person finds that delivery or
performance against any accepted rated orders conflicts with the
delivery or performance against other accepted rated orders of equal
priority status, the person shall give preference to the conflicting
orders in the sequence in which they are to be delivered or performed
(not to the receipt dates). If the conflicting rated orders are
scheduled to be delivered or performed on the same day, the person shall
give preference to those orders which have the earliest receipt dates.
(2) If a person is unable to resolve rated order delivery or
performance conflicts under this section, the person should promptly
seek special priorities assistance as provided in Sec. Sec. 700.50
through 700.54. If the person's customer objects to the rescheduling of
delivery or performance of a rated order, the customer should promptly
seek special priorities assistance as provided in Sec. Sec. 700.50
through 700.54. For any rated order against which delivery or
performance will be delayed, the person must notify the customer as
provided in Sec. 700.13(d)(2).
(d) If a person is unable to purchase needed production items in
time to fill a rated order by its required delivery date, the person
must fill the rated order by using inventoried production items. A
person who uses inventoried items to fill a rated order may replace
those items with the use of a rated order as provided in Sec.
700.17(b).
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31922, June 11, 1998]
Sec. 700.15 Extension of priority ratings.
(a) A person must use rated orders with suppliers to obtain items
needed to fill a rated order. The person must use the priority rating
indicated on the customer's rated order, except as otherwise provided in
this regulation or as directed by the Department of Commerce.
For example, if a person is in receipt of a DO-A3 rated order for a
navigation system and needs to purchase semiconductors for its
manufacture, that person must use a DO-A3 rated order to obtain the
needed semiconductors.
(b) The priority rating must be included on each successive order
placed to obtain items needed to fill a customer's rated order. This
continues from contractor to subcontractor to supplier throughout the
entire procurement chain.
[[Page 92]]
Sec. 700.16 Changes or cancellations of priority ratings and rated orders.
(a) The priority rating on a rated order may be changed or cancelled
by:
(1) An official action of the Department of Commerce; or
(2) Written notification from the person who placed the rated order
(including a Delegate Agency).
(b) If an unrated order is amended so as to make it a rated order,
or a DO, rating is changed to a DX rating, the supplier must give the
appropriate preferential treatment to the order as of the date the
change is received by the supplier.
(c) An amendment to a rated order that significantly alters a
supplier's original production or delivery schedule shall constitute a
new rated order as of the date of its receipt. The supplier must accept
or reject the amended order according to the provisions of Sec. 700.13.
(d) The following amendments do not constitute a new rated order: a
change in shipping destination; a reduction in the total amount of the
order; an increase in the total amount of the order which has negligible
impact upon deliveries; a minor variation in size or design; or a change
which is agreed upon between the supplier and the customer.
(e) If a person no longer needs items to fill a rated order, any
rated orders placed with suppliers for the items, or the priority rating
on those orders, must be cancelled.
(f) When a priority rating is added to an unrated order, or is
changed or cancelled, all suppliers must be promptly notified in
writing.
Sec. 700.17 Use of rated orders.
(a) A person must use rated orders to obtain:
(1) Items which will be physically incorporated into other items to
fill rated orders, including that portion of such items normally
consumed, or converted into scrap or by-products, in the course of
processing;
(2) Containers or other packaging materials required to make
delivery of the finished items against rated orders;
(3) Services, other than contracts of employment, needed to fill
rated orders; and
(4) MRO needed to produce the finished items to fill rated orders.
However, for MRO, the priority rating used must contain the program
identification symbol H7 along with the rating symbol contained on the
customer's rated order. For example, a person in receipt of a DO-A3
rated order, who needs MRO, would place a DO-H7 rated order with the
person's supplier.
(b) A person may use a rated order to replace inventoried items
(including finished items) if such items were used to fill rated orders,
as follows:
(1) The order must be placed within 90 days of the date of use of
the inventory.
(2) A DO rating symbol and the program identification symbol
indicated on the customer's rated order must be used on the order. A DX
rating symbol may not be used even if the inventory was used to fill a
DX rated order.
(3) If the priority ratings on rated orders from one customer or
several customers contain different program identification symbols, the
rated orders may be combined. In this case, the program identification
symbol H1 must be used (i.e., DO-H1).
(c) A person may combine DX and DO rated orders from one customer or
several customers if the items covered by each level of priority are
identified separately and clearly. If different program identification
symbols are indicated on those rated orders of equal priority, the
person must use the program identification symbol H1 (i.e., DO-H1 or DX-
H1).
(d) Combining rated and unrated orders. (1) A person may combine
rated and unrated order quantities on one purchase order provided that:
(i) The rated quantities are separately and clearly identified; and
(ii) The four elements of a rated order, as required by Sec.
700.12, are included on the order with the statement required in Sec.
700.12(d) modified to read in substance:
This purchase order contains rated order quantities certified for
national defense use, and you are required to follow all the provisions
of the Defense Priorities and Allocations System regulation (15 CFR part
700) only as it pertains to the rated quantities.
(2) A supplier must accept or reject the rated portion of the
purchase order
[[Page 93]]
as provided in Sec. 700.13 and give preferential treatment only to the
rated quantities as required by this part. This part may not be used to
give preferential treatment to the unrated portion of the order.
(3) Any supplier who believes that rated and unrated orders are
being combined in a manner contrary to the intent of this regulation or
in a fashion that causes undue or exceptional hardship may submit a
request for adjustment or exception under Sec. 700.80.
(e) A person may place a rated order for the minimum commercially
procurable quantity even if the quantity needed to fill a rated order is
less than that minimum. However, a person must combine rated orders as
provided in paragraph (c) of this section, if possible, to obtain
minimum procurable quantities.
(f) A person is not required to place a priority rating on an order
for less than $50,000, or one half of the Federal Acquisition Regulation
(FAR) Simplified Acquisition Threshold (see FAR 2.101), whichever amount
is larger, provided that delivery can be obtained in a timely fashion
without the use of the priority rating.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31923, June 11, 1998]
Sec. 700.18 Limitations on placing rated orders.
(a) General limitations. (1) A person may not place a DO or DX rated
order unless entitled to do so under this regulation.
(2) Rated orders may not be used to obtain:
(i) Delivery on a date earlier than needed;
(ii) A greater quantity of the item than needed, except to obtain a
minimum procurable quantity. Separate rated orders may not be placed
solely for the purpose of obtaining minimum procurable quantities on
each order;
(iii) Items in advance of the receipt of a rated order, except as
specifically authorized by Commerce (see Sec. 700.51(c) for information
on obtaining authorization for a priority rating in advance of a rated
order); or
(iv) Any of the following items unless specific priority rating
authority has been obtained from a Delegate Agency or Commerce:
(A) Items for plant improvement, expansion or construction, unless
they will be physically incorporated into a construction project covered
by a rated order; and
(B) Production or construction equipment or items to be used for the
manufacture of production equipment. [For information on requesting
priority rating authority, see Sec. 700.51.]
(v) Any items related to the development of chemical or biological
warfare capabilities or the production of chemical or biological
weapons, unless such development or production has been authorized by
the President or the Secretary of Defense.
(b) Jurisdiction limitations. (1) The priorities and allocations
authority for certain items have been delegated under Executive Orders
12919 and 12742, other executive order, or Interagency Memoranda of
Understanding to other agencies. Unless otherwise agreed to by the
concerned agencies, the provisions of this part are not applicable to
these items which include:
(i) Food resources, food resource facilities, and the domestic
distribution of farm equipment and commercial fertilizer (Department of
Agriculture) (The Department of Agriculture and the Department of
Commerce have agreed that the Department of Defense may place rated
contracts and orders for food resources in support of troops, including
but not limited to, meals ready to eat (MREs), ``tray-packs'' (T-
rations), A-rations, and B-rations);
(ii) All forms of energy, including radioisotopes, stable isotopes,
source material, and special nuclear material produced in Government-
owned plants or facilities operated by or for the Department of Energy
(Department of Energy);
(iii) Health resources (Department of Health and Human Services);
(iv) All forms of civil transportation (Department of
Transportation);
(v) Water resources (Department of Defense/U.S. Army Corps of
Engineers); and
(vi) Communications services (National Communications System under
Executive Order 12472 of April 3, 1984).
[[Page 94]]
(2) The jurisdiction of the Department of Commerce and the
Departments of Energy and Agriculture over certain specific items
included in the categories listed above has been clarified by
Interagency Memoranda of Understanding.
(3) The following items under the jurisdiction of Commerce are
currently excluded from the rating provisions of this regulation;
however, these items are subject to Commerce Directives. These excluded
items are:
Copper raw materials
Crushed stone
Gravel
Sand
Scrap
Slag
Steam heat, central
Waste paper
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31923, June 11, 1998; 71 FR 39528, July 13, 2006]
Subpart E_Industrial Priorities for Energy Programs
Sec. 700.20 Use of priority ratings.
(a) Section 101(c) of the Defense Production Act authorizes the use
of priority ratings for projects which maximize domestic energy
supplies.
(b) Projects which maximize domestic energy supplies include those
which maintain or further domestic energy exploration, production,
refining, and transportation; maintain or further the conservation of
energy; or are involved in the construction or maintenance of energy
facilities.
Sec. 700.21 Application for priority rating authority.
(a) For projects believed to maximize domestic energy supplies, a
person may request priority rating authority for scarce, critical, and
essential supplies of materials, equipment, and services (related to the
production of materials or equipment, or the installation, repair, or
maintenance of equipment) by submitting a request to the Department of
Energy. Further information may be obtained from the U.S. Department of
Energy, Office of Electricity Delivery and Energy Reliability, 1000
Independence Avenue, SW., Washington, DC 20585.
(b) On receipt of the application, the Department of Energy will:
(1) Determine if the project maximizes domestic energy supplies; and
(2) Find whether the materials, equipment, or services involved in
the application are critical and essential to the project.
(c) If the Department of Energy notifies Commerce that the project
maximizes domestic energy supplies and that the materials, equipment, or
services are critical and essential, Commerce must find whether the
items in question are scarce and whether there is a need to use the
priorities and allocations authorities.
(1) Scarcity implies an unusual difficulty in obtaining the
materials, equipment, or services in a timeframe consistent with the
timely completion of the energy project. Among the factors to be used in
making the scarcity finding will be the following:
(i) Value and volume of material or equipment shipments;
(ii) Consumption of material and equipment;
(iii) Volume and market trends of imports and exports;
(iv) Domestic and foreign sources of supply;
(v) Normal levels of inventories;
(vi) Rates of capacity utilization;
(vii) Volume of new orders; and
(viii) Lead times for new orders.
(2) In finding whether there is a need to use the priorities and
allocations authorities, Commerce will consider alternative supply
solutions and other measures.
(d) If Commerce does not find that the items of materials,
equipment, or services are scarce, it will not proceed to analyze the
need to use the priorities and allocations authorities.
(e) Commerce will inform the Department of Energy of the results of
its analysis. If Commerce has made the two required findings, it will
authorize the Department of Energy to grant the use of a priority rating
to the applicant.
(f) Schedule I includes a list of approved programs to support the
maximization of domestic energy supplies. A Department of Energy
regulation
[[Page 95]]
setting forth the procedures and criteria used by the Department of
Energy in making its determination and findings is published in 10 CFR
part 216.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31923, June 11, 1998; 73 FR 34, Jan. 2, 2008]
Subpart F_National Emergency Preparedness and Critical Items
Source: 63 FR 31923, June 11, 1998, unless otherwise noted.
Sec. 700.30 Priorities and allocations in a national emergency.
(a) In the event of a national emergency, special rules may be
established as needed to supplement this part, thus ensuring rapid
industrial response and the timely availability of critical industrial
items and facilities to meet the urgent national defense requirements,
including domestic emergency preparedness requirements, of approved
programs.
(1) Emergency official actions. (i) As needed, this part may be
supplemented to include additional definitions to cover civilian
emergency preparedness industrial items, support for essential civilian
programs, and provisions for the taking of certain emergency official
actions under sections Sec. Sec. 700.60 through 700.63.
(ii) Emergency official actions may include:
(A) Controlling inventories of critical and scarce defense and/or
emergency preparedness items;
(B) Restricting the purchase, use, or distribution of critical and
scarce defense and/or emergency preparedness items, or the use of
production or distribution facilities, for non-essential purposes; and
(C) Converting the production or distribution of non-essential items
to the production or distribution of critical and scarce defense and/or
emergency preparedness items.
(2) Allocation of critical and scarce items and facilities. (i) As
needed, this part may be supplemented to establish special rules for the
allocation of scarce and critical items and facilities to ensure the
timely availability of these items and facilities for approved programs,
and to provide for an equitable and orderly distribution of requirements
for such items among all suppliers of the items. These rules may provide
for the allocation of individual items or they may be broad enough to
direct general industrial activity as required in support of emergency
requirements.
(ii) Allocation rules (i.e., controlled materials programs) were
established in response to previous periods of national security
emergency such as World War II and the Korean Conflict. The basic
elements of the controlled materials programs were the set-aside (the
amount of an item for which a producer or supplier must reserve order
book space in anticipation of the receipt of rated orders), the
production directive (requires a producer to supply a specific quantity,
size, shape, and type of an item within a specific time period), and the
allotment (the maximum quantity of an item authorized for use in a
specific program or application). These elements can be used to assure
the availability of any scarce and critical item for approved programs.
Currently, a set-aside applies only to metalworking machines (see Sec.
700.31).
(3) In the event that certain critical items become scarce, and
approved program requirements for these items cannot be met without
creating a significant dislocation in the civilian market place so as to
create appreciable hardship, Commerce may establish special rules under
section 101(b) of the Defense Production Act to control the general
distribution of such items in the civilian market.
(b) [Reserved]
[63 FR 31923, June 11, 1998, as amended at 71 FR 39528, July 13, 2006]
Sec. 700.31 Metalworking machines.
(a) ``Metalworking machines'' include power driven, manual or
automatic, metal cutting and metal forming machines and complete
machines not supported in the hands of an operator when in use. Basic
machines with a list price of $2,500 or less are not covered by this
section.
(b) Metalworking machines covered by this section include:
Bending and forming machines
[[Page 96]]
Boring machines
Broaching machines
Drilling and tapping machines
Electrical discharge, ultrasonic and chemical erosion machines
Forging machinery and hammers
Gear cutting and finishing machines
Grinding machines
Hydraulic and pneumatic presses, power driven
Machining centers and way-type machines
Manual presses
Mechanical presses, power driven
Milling machines
Miscellaneous machine tools
Miscellaneous secondary metal forming and cutting machines
Planers and shapers
Polishing, lapping, boring, and finishing machines
Punching and shearing machines
Riveting machines
Saws and filing machines
Turning machines, lathes, including automatic
Wire and metal ribbon forming machines
(c) A metalworking machine producer is not required to accept DO
rated orders calling for delivery in any month of a total quantity of
any size of machine in excess of 60 percent of scheduled production of
that size of machine for that month, or any DO rated orders received
less than three months prior to the beginning of the month for which
delivery is requested. However, DX rated orders must be accepted without
regard to a set-aside or the lead time, if delivery can be made by the
required date.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989.
Further redesignated at 63 FR 31924, June 11, 1998]
Subpart G [Reserved]
Subpart H_Special Priorities Assistance
Sec. 700.50 General provisions.
(a) The DPAS is designed to be largely self-executing. However, it
is anticipated that from time-to-time problems will occur. In this
event, a person should immediately contact the appropriate contract
administration officer for guidance or assistance. If additional formal
aid is needed, special priorities assistance should be sought from the
Delegate Agency through the contract administration officer. If the
Delegate Agency is unable to resolve the problem or to authorize the use
of a priority rating and believes additional assistance is warranted,
the Delegate Agency may forward the request to the Department of
Commerce for action. Special priorities assistance is a service provided
to alleviate problems that do arise.
(b) Special priorities assistance can be provided for any reason in
support of this regulation, such as assisting in obtaining timely
deliveries of items needed to satisfy rated orders or authorizing the
use of priority ratings on orders to obtain items not automatically
ratable under this regulation.
(c) A request for special priorities assistance or priority rating
authority must be submitted on Form BIS-999 (OMB control number 0694-
0057) to the local contract administration representative. Form BIS-999
may be obtained from the Delegate Agency representative or from the
Department of Commerce. A sample Form BIS-999 is attached at Appendix I.
[49 FR 30414, July 30, 1984; 49 FR 50171, Dec. 27, 1984. Redesignated at
54 FR 601, Jan. 9, 1989, as amended at 63 FR 31924, June 11, 1998]
Sec. 700.51 Requests for priority rating authority.
(a) If a rated order is likely to be delayed because a person is
unable to obtain items not normally rated under this regulation, the
person may request the authority to use a priority rating in ordering
the needed items. Examples of items for which priority ratings can be
authorized include:
(1) Production or construction equipment;
(2) Computers when not used as production items; and
(3) Expansion, rebuilding or replacing plant facilities.
(b) Rating authority for production or construction equipment. (1) A
request for priority rating authority for production or construction
equipment must be submitted to the appropriate Delegate Agency. The
Delegate Agency may establish particular forms to be used for these
requests (e.g., Department of Defense Form DD 691.)
(2) When the use of a priority rating is authorized for the
procurement of production or construction equipment,
[[Page 97]]
a rated order may be used either to purchase or to lease such equipment.
However, in the latter case, the equipment may be leased only from a
person engaged in the business of leasing such equipment or from a
person willing to lease rather than sell.
(c) Rating authority in advance of a rated prime contract. (1) In
certain cases and upon specific request, Commerce, in order to promote
the national defense, may authorize a person to place a priority rating
on an order to a supplier in advance of the issuance of a rated prime
contract. In these instances, the person requesting advance rating
authority must obtain sponsorship of the request from the appropriate
Delegate Agency. The person shall also assume any business risk
associated with the placing of rated orders if these orders have to be
cancelled in the event the rated prime contract is not issued.
(2) The person must state the following in the request:
It is understood that the authorization of a priority rating in
advance of our receiving a rated prime contract from a Delegate Agency
and our use of that priority rating with our suppliers in no way commits
the Delegate Agency, the Department of Commerce or any other government
agency to enter into a contract or order or to expend funds. Further, we
understand that the Federal Government shall not be liable for any
cancellation charges, termination costs, or other damages that may
accrue if a rated prime contract is not eventually placed and, as a
result, we must subsequently cancel orders placed with the use of the
priority rating authorized as a result of this request.
(3) In reviewing requests for rating authority in advance of a rated
prime contract, Commerce will consider, among other things, the
following criteria:
(i) The probability that the prime contract will be awarded;
(ii) The impact of the resulting rated orders on suppliers and on
other authorized programs;
(iii) Whether the contractor is the sole source;
(iv) Whether the item being produced has a long lead time;
(v) The political sensitivity of the project; and
(vi) The time period for which the rating is being requested.
(4) Commerce may require periodic reports on the use of the rating
authority granted under paragraph (c) of this section.
(5) If a rated prime contract is not issued, the person shall
promptly notify all suppliers who have received rated orders pursuant to
the advanced rating authority that the priority rating on those orders
is cancelled.
Sec. 700.52 Examples of assistance.
(a) While special priorities assistance may be provided for any
reason in support of this regulation, it is usually provided in
situations where:
(1) A person is experiencing difficulty in obtaining delivery
against a rated order by the required delivery date; or
(2) A person cannot locate a supplier for an item needed to fill a
rated order.
(b) Other examples of special priorities assistance include:
(1) Ensuring that rated orders receive preferential treatment by
suppliers;
(2) Resolving production or delivery conflicts between various rated
orders;
(3) Assisting in placing rated orders with suppliers;
(4) Verifying the urgency of rated orders; and
(5) Determining the validity of rated orders.
Sec. 700.53 Criteria for assistance.
Requests for special priorities assistance should be timely, i.e.,
the request has been submitted promptly and enough time exists for the
Delegate Agency or Commerce to effect a meaningful resolution to the
problem, and must establish that:
(a) There is an urgent need for the item; and
(b) The applicant has made a reasonable effort to resolve the
problem.
Sec. 700.54 Instances where assistance will not be provided.
Special priorities assistance is provided at the discretion of the
Delegate Agencies and Commerce when it is determined that such
assistance is warranted to meet the objectives of this regulation.
Examples where assistance may not be provided include situations when a
person is attempting to:
(a) Secure a price advantage;
[[Page 98]]
(b) Obtain delivery prior to the time required to fill a rated
order;
(c) Gain competitive advantage;
(d) Disrupt an industry apportionment program in a manner designed
to provide a person with an unwarranted share of scarce items; or
(e) Overcome a supplier's regularly established terms of sale or
conditions of doing business.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, June 11, 1998]
Sec. 700.55 Assistance programs with Canada and other nations.
(a) To promote military assistance to foreign nations, this section
provides for authorizing priority ratings to persons in Canada and in
other foreign nations to obtain items in the United States in support of
approved programs. Although priority ratings have no legal authority
outside of the United States, this section also provides information on
how persons in the United States may obtain informal assistance in
Canada, Italy, The Netherlands, Sweden, and the United Kingdom in
support of approved programs.
(b) Canada. (1) The joint U.S.-Canadian military arrangements for
the defense of North America and the integrated nature of their defense
industries as set forth in the U.S.-Canadian Statement of Principles for
Economic Cooperation (October 26, 1950) require close coordination and
the establishment of a means to provide mutual assistance to the defense
industries located in both countries.
(2) The Department of Commerce coordinates with the Canadian Public
Works and Government Services Canada on all matters of mutual concern
relating to the administration of this regulation.
(3) Any person in the United States ordering defense items in Canada
in support of an approved program should inform the Canadian supplier
that the items being ordered are to be used to fill a rated order. The
Canadian supplier should be informed that if production materials are
needed from the United States by the supplier or the supplier's vendor
to fill the order, the supplier or vendor should contact the Canadian
Public Works and Government Services Canada, for authority to place
rated orders in the United States: Public Works and Government Services
Canada, Acquisitions Branch, Business Management Directorate, Phase 3,
Place du Portage, Level 0A1, 11 Laurier Street, Gatineau, Quebec, K1A
0S5, Canada; telephone: (819) 956-6825; Fax: (819) 956-7827.
(4) Any person in Canada producing defense items for the Canadian
government may also obtain priority rating authority for items to be
purchased in the United States by applying to the Canadian Public Works
and Government Services Canada, Acquisitions Branch, Business Management
Directorate, in accordance with its procedures.
(5) Persons in Canada needing special priorities assistance in
obtaining defense items in the United States may apply to the Canadian
Public Works and Government Services Canada, Acquisitions Branch,
Business Management Directorate, for such assistance. Public Works and
Government Services Canada will forward appropriate requests to the U.S.
Department of Commerce.
(6) Any person in the United States requiring assistance in
obtaining items in Canada must submit a request through the Delegate
Agency to Commerce on Form BIS-999. Commerce will forward appropriate
requests to the Canadian Public Works and Government Services Canada.
(c) Foreign nations. (1) Any person in a foreign nation other than
Canada requiring assistance in obtaining defense items in the United
States or priority rating authority for defense items to be purchased in
the United States, should submit a request for such assistance or rating
authority to the Office of the Deputy Under Secretary of Defense
(Industrial Policy): Office of the Deputy Under Secretary of Defense
(Industrial Policy), 3330 Defense Pentagon, Washington, DC 20301;
telephone: (703) 697-0051; Fax: (703) 695-4277.
(i) If the end product is being acquired by a U.S. government
agency, the request should be submitted to the Office of the Deputy
Under Secretary of Defense (Industrial Policy) through the U.S. contract
administration representative.
[[Page 99]]
(ii) If the end product is being acquired by a foreign nation, the
request must be sponsored prior to its submission to the Office of the
Deputy Under Secretary of Defense (Industrial Policy) by the government
of the foreign nation that will use the end product.
(2) If the Department of Defense endorses the request, it will be
forwarded to Commerce for appropriate action.
(d) Requesting assistance in Italy, The Netherlands, Sweden, and the
United Kingdom. (1) The U.S. Department of Defense has entered into
bilateral security of supply arrangements with Italy, The Netherlands,
Sweden, and the United Kingdom that allow the U.S. Department of Defense
to request the priority delivery for U.S. Department of Defense
contracts, subcontracts, and orders from companies in these countries.
(2) Any person in the United States requiring assistance in
obtaining the priority delivery of a contract, subcontract, or order in
Italy, The Netherlands, Sweden, or the United Kingdom to support an
approved program should contact the Office of the Deputy Under Secretary
of Defense (Industrial Policy) for assistance. Persons in Italy, The
Netherlands, Sweden, and the United Kingdom should request assistance in
accordance with Sec. 700.55(c)(1).
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, June 11, 1998; 71 FR 39528, July 13, 2006; 71 FR
54904, Sept. 20, 2006]
Subpart I_Official Actions
Sec. 700.60 General provisions.
(a) Commerce may, from time-to-time, take specific official actions
to implement or enforce the provisions of this regulation.
(b) Several of these official actions (Rating Authorizations,
Directives, and Letters of Understanding) are discussed in this subpart.
Other official actions which pertain to compliance (Administrative
Subpoenas, Demands for Information, and Inspection Authorizations) are
discussed in Sec. 700.71(c).
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 71 FR 39528, July 13, 2006]
Sec. 700.61 Rating Authorizations.
(a) A Rating Authorization is an official action granting specific
priority rating authority that:
(1) Permits a person to place a priority rating on an order for an
item not normally ratable under this regulation; or
(2) Authorizes a person to modify a priority rating on a specific
order or series of contracts or orders.
(b) To request priority rating authority, see Sec. 700.51.
Sec. 700.62 Directives.
(a) A Directive is an official action which requires a person to
take or refrain from taking certain actions in accordance with its
provisions.
(b) A person must comply with each Directive issued. However, a
person may not use or extend a Directive to obtain any items from a
supplier, unless expressly authorized to do so in the Directive.
(c) Directives take precedence over all DX rated orders, DO rated
orders, and unrated orders previously or subsequently received, unless a
contrary instruction appears in the Directive.
Sec. 700.63 Letters of Understanding.
(a) A Letter of Understanding is an official action which may be
issued in resolving special priorities assistance cases to reflect an
agreement reached by all parties (Commerce, the Delegate Agency, the
supplier, and the customer).
(b) A Letter of Understanding is not used to alter scheduling
between rated orders, to authorize the use of priority ratings, to
impose restrictions under this regulation, or to take other official
actions. Rather, Letters of Understanding are used to confirm production
or shipping schedules which do not require modifications to other rated
orders.
Subpart J_Compliance
Sec. 700.70 General provisions.
(a) Compliance actions may be taken for any reason necessary or
appropriate to the enforcement or the administration of the Defense
Production Act, the
[[Page 100]]
Selective Service Act and related statutes, this regulation, or an
official action. Such actions include audits, investigations, or other
inquiries.
(b) Any person who places or receives a rated order should be
thoroughly familiar with, and must comply with, the provisions of this
regulation.
(c) Willful violation of any of the provisions of Title I or section
705 of the Defense Production Act, this regulation, or an official
action of the Department of Commerce, is a criminal act, punishable as
provided in the Defense Production Act and as set forth in Sec. 700.74
of this regulation.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, June 11, 1998]
Sec. 700.71 Audits and investigations.
(a) Audits and investigations are official examinations of books,
records, documents, other writings and information to ensure that the
provisions of the Defense Production Act, the Selective Service Act and
related statutes, this regulation, and official actions have been
properly followed. An audit or investigation may also include interviews
and a systems evaluation to detect problems or failures in the
implementation of this regulation.
(b) When undertaking an audit, investigation, or other inquiry, the
Department of Commerce shall:
(1) Define the scope and purpose in the official action given to the
person under investigation, and
(2) Have ascertained that the information sought or other adequate
and authoritative data are not available from any Federal or other
responsible agency.
(c) In administering this regulation, Commerce may issue the
following documents which constitute official actions:
(1) Administrative Subpoenas. An Administrative Subpoena requires a
person to appear as a witness before an official designated by the
Department of Commerce to testify under oath on matters of which that
person has knowledge relating to the enforcement or the administration
of the Defense Production Act, the Selective Service Act and related
statutes, this regulation, or official actions. An Administrative
Subpoena may also require the production of books, papers, records,
documents and physical objects or property.
(2) Demand for Information. A Demand for Information requires a
person to furnish to a duly authorized representative of the Department
of Commerce any information necessary or appropriate to the enforcement
or the administration of the Defense Production Act, the Selective
Service Act and related statutes, this regulation, or official actions.
(3) Inspection Authorizations. An Inspection Authorization requires
a person to permit a duly authorized representative of Commerce to
interview the person's employees or agents, to inspect books, records,
documents, other writings and information in the person's possession or
control at the place where that person usually keeps them, and to
inspect a person's property when such interviews and inspections are
necessary or appropriate to the enforcement or the administration of the
Defense Production Act, the Selective Service Act and related statutes,
this regulation, or official actions.
(d) The production of books, records, documents, other writings and
information will not be required at any place other than where they are
usually kept if, prior to the return date specified in the
Administrative Subpoena or Demand for Information, a duly authorized
official of Commerce is furnished with copies of such material that are
certified under oath to be true copies. As an alternative, a person may
enter into a stipulation with a duly authorized official of Commerce as
to the content of the material.
(e) An Administrative Subpoena, Demand for Information, or
Inspection Authorization, shall include the name, title or official
position of the person to be served, the evidence sought to be adduced,
and its general relevance to the scope and purpose of the audit,
investigation, or other inquiry. If employees or agents are to be
interviewed; if books, records, documents, other writings, or
information are to be produced; or if property is to be inspected; the
Administrative Subpoena, Demand
[[Page 101]]
for Information, or Inspection Authorization will describe them with
particularity.
(f) Service of documents shall be made in the following manner:
(1) Service of a Demand for Information or Inspection Authorization
shall be made personally, or by Certified Mail--Return Receipt Requested
at the person's last known address. Service of an Administrative
Subpoena shall be made personally. Personal service may also be made by
leaving a copy of the document with someone of suitable age and
discretion at the person's last known dwelling or place of business.
(2) Service upon other than an individual may be made by serving a
partner, corporate officer, or a managing or general agent authorized by
appointment or by law to accept service of process. If an agent is
served, a copy of the document shall be mailed to the person named in
the document.
(3) Any individual 18 years of age or over may serve an
Administrative Subpoena, Demand for Information, or Inspection
Authorization. When personal service is made, the individual making the
service shall prepare an affidavit as to the manner in which service was
made and the identity of the person served, and return the affidavit,
and in the case of subpoenas, the original document, to the issuing
officer. In case of failure to make service, the reasons for the failure
shall be stated on the original document.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, June 11, 1998]
Sec. 700.72 Compulsory process.
(a) If a person refuses to permit a duly authorized representative
of Commerce to have access to any premises or source of information
necessary to the administration or the enforcement of the Defense
Production Act, the Selective Service Act and related statutes, this
regulation, or official actions, the Commerce representative may seek
compulsory process. Compulsory process means the institution of
appropriate legal action, including ex parte application for an
inspection warrant or its equivalent, in any forum of appropriate
jurisdiction.
(b) Compulsory process may be sought in advance of an audit,
investigation, or other inquiry, if, in the judgment of the Director of
the Office of Strategic Industries and Economic Security, U.S.
Department of Commerce, in consultation with the Chief Counsel for
Industry and Security, U.S. Department of Commerce, there is reason to
believe that a person will refuse to permit an audit, investigation, or
other inquiry, or that other circumstances exist which make such process
desirable or necessary.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, June 11, 1998; 67 FR 45633, July 10, 2002; 71 FR
39528, July 13, 2006]
Sec. 700.73 Notification of failure to comply.
(a) At the conclusion of an audit, investigation, or other inquiry,
or at any other time, Commerce may inform the person in writing where
compliance with the requirements of the Defense Production Act, the
Selective Service Act and related statutes, this regulation, or an
official action were not met.
(b) In cases where Commerce determines that failure to comply with
the provisions of the Defense Production Act, the Selective Service Act
and related statutes, this regulation, or an official action was
inadvertent, the person may be informed in writing of the particulars
involved and the corrective action to be taken. Failure to take
corrective action may then be construed as a willfull violation of the
Defense Production Act, this regulation, or an official action.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, June 11, 1998]
Sec. 700.74 Violations, penalties, and remedies.
(a) Willful violation of the provisions of Title I or Sections 705
or 707 of the Defense Production Act, the priorities provisions of the
Selective Service Act and related statutes, this part, or an official
action, is a crime and upon conviction, a person may be punished by fine
or imprisonment, or both. The maximum penalty provided by the Defense
Production Act is a $10,000 fine, or one year in prison, or both. The
[[Page 102]]
maximum penalty provided by the Selective Service Act and related
statutes is a $50,000 fine, or three years in prison, or both.
(b) The government may also seek an injunction from a court of
appropriate jurisdiction to prohibit the continuance of any violation
of, or to enforce compliance with, the Defense Production Act, this
regulation, or an official action.
(c) In order to secure the effective enforcement of the Defense
Production Act, this regulation, and official actions, the following are
prohibited (see section 704 of the Defense Production Act; see also, for
example, sections 2 and 371 of Title 18, United States Code):
(1) No person may solicit, influence or permit another person to
perform any act prohibited by, or to omit any act required by, the
Defense Production Act, this regulation, or an official action.
(2) No person may conspire or act in concert with any other person
to perform any act prohibited by, or to omit any act required by, the
Defense Production Act, this regulation, or an official action.
(3) No person shall deliver any item if the person knows or has
reason to believe that the item will be accepted, redelivered, held, or
used in violation of the Defense Production Act, this regulation, or an
official action. In such instances, the person must immediately notify
the Department of Commerce that, in accordance with this provision,
delivery has not been made.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, June 11, 1998]
Sec. 700.75 Compliance conflicts.
If compliance with any provision of the Defense Production Act, the
Selective Service Act and related statutes, this regulation, or an
official action would prevent a person from filling a rated order or
from complying with another provision of the Defense Production Act,
this regulation, or an official action, the person must immediately
notify the Department of Commerce for resolution of the conflict.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, June 11, 1998]
Subpart K_Adjustments, Exceptions, and Appeals
Sec. 700.80 Adjustments or exceptions.
(a) A person may submit a request to the Office of Strategic
Industries and Economic Security, U.S. Department of Commerce, for an
adjustment or exception on the ground that:
(1) A provision of this regulation or an official action results in
an undue or exceptional hardship on that person not suffered generally
by others in similar situations and circumstances; or
(2) The consequence of following a provision of this regulation or
an official action is contrary to the intent of the Defense Production
Act, the Selective Service Act and related statutes, or this regulation.
(b) Each request for adjustment or exception must be in writing and
contain a complete statement of all the facts and circumstances related
to the provision of this regulation or official action from which
adjustment is sought and a full and precise statement of the reasons why
relief should be provided.
(c) The submission of a request for adjustment or exception shall
not relieve any person from the obligation of complying with the
provision of this regulation or official action in question while the
request is being considered unless such interim relief is granted in
writing by the Office of Strategic Industries and Economic Security.
(d) A decision of the Office of Strategic Industries and Economic
Security under this section may be appealed to the Assistant Secretary
for Export Administration, U.S. Department of Commerce. (For information
on the appeal procedure, see Sec. 700.81.)
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, 31925, June 11, 1998]
Sec. 700.81 Appeals.
(a) Any person who has had a request for adjustment or exception
denied by the Office of Strategic Industries and Economic Security under
Sec. 700.80, may appeal to the Assistant Secretary for
[[Page 103]]
Export Administration, U.S. Department of Commerce, who shall review and
reconsider the denial.
(b) An appeal must be received by the Office of the Assistant
Secretary for Export Administration, Bureau of Industry and Security,
U.S. Department of Commerce, Washington, D. C. 20230, Ref: DPAS, no
later than 45 days after receipt of a written notice of denial from the
Office of Strategic Industries and Economic Security. After this 45-day
period, an appeal may be accepted at the discretion of the Assistant
Secretary for Export Administration for good cause shown.
(c) Each appeal must be in writing and contain a complete statement
of all the facts and circumstances related to the action appealed from
and a full and precise statement of the reasons the decision should be
modified or reversed.
(d) In addition to the written materials submitted in support of an
appeal, an appellant may request, in writing, an opportunity for an
informal hearing. This request may be granted or denied at the
discretion of the Assistant Secretary for Export Administration.
(e) When a hearing is granted, the Assistant Secretary for Export
Administration may designate an employee of the Department of Commerce
to conduct the hearing and to prepare a report. The hearing officer
shall determine all procedural questions and impose such time or other
limitations deemed reasonable. In the event that the hearing officer
decides that a printed transcript is necessary, all expenses shall be
borne by the appellant.
(f) When determining an appeal, the Assistant Secretary for Export
Administration may consider all information submitted during the appeal
as well as any recommendations, reports, or other relevant information
and documents available to the Department of Commerce, or consult with
any other persons or groups.
(g) The submission of an appeal under this section shall not relieve
any person from the obligation of complying with the provision of this
regulation or official action in question while the appeal is being
considered unless such relief is granted in writing by the Assistant
Secretary for Export Administration.
(h) The decision of the Assistant Secretary for Export
Administration shall be made within a reasonable time after receipt of
the appeal and shall be the final administrative action. It shall be
issued to the appellant in writing with a statement of the reasons for
the decision.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31925, June 11, 1998; 71 FR 39528, July 13, 2006]
Subpart L_Miscellaneous Provisions
Sec. 700.90 Protection against claims.
A person shall not be held liable for damages or penalties for any
act or failure to act resulting directly or indirectly from compliance
with any provision of this regulation, or an official action,
notwithstanding that such provision or action shall subsequently be
declared invalid by judicial or other competent authority.
Sec. 700.91 Records and reports.
(a) Persons are required to make and preserve for at least three
years, accurate and complete records of any transaction covered by this
regulation (OMB control number 0694-0053) or an official action.
(b) Records must be maintained in sufficient detail to permit the
determination, upon examination, of whether each transaction complies
with the provisions of this regulation or any official action. However,
this regulation does not specify any particular method or system to be
used.
(c) Records required to be maintained by this regulation must be
made available for examination on demand by duly authorized
representatives of Commerce as provided in Sec. 700.71.
(d) In addition, persons must develop, maintain, and submit any
other records and reports to Commerce that may be required for the
administration of the Defense Production Act, the Selective Service Act
and related statutes, and this regulation.
(e) Section 705(e) of the Defense Production Act provides that
information obtained under this section which the
[[Page 104]]
President deems confidential, or with reference to which a request for
confidential treatment is made by the person furnishing such
information, shall not be published or disclosed unless the President
determines that the withholding of this information is contrary to the
interest of the national defense. Information required to be submitted
to Commerce in connection with the enforcement or administration of the
Act, this regulation, or an official action, is deemed to be
confidential under section 705(e) of the Act and shall not be published
or disclosed except as required by law.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, 31925, June 11, 1998]
Sec. 700.92 Applicability of this regulation and official actions.
(a) This regulation and all official actions, unless specifically
stated otherwise, apply to transactions in any state, territory, or
possession of the United States and the District of Columbia.
(b) This regulation and all official actions apply not only to
deliveries to other persons but also include deliveries to affiliates
and subsidiaries of a person and deliveries from one branch, division,
or section of a single entity to another branch, division, or section
under common ownership or control.
(c) This regulation and its schedules shall not be construed to
affect any administrative actions taken by Commerce, or any outstanding
contracts or orders placed pursuant to any of the regulations, orders,
schedules or delegations of authority under the Defense Materials System
and Defense Priorities System previously issued by Commerce. Such
actions, contracts, or orders shall continue in full force and effect
under this regulation unless modified or terminated by proper authority.
(d) The repeal of the regulations, orders, schedules and delegations
of authority of the Defense Materials System (DMS) and Defense
Priorities System (DPS) shall not have the effect to release or
extinguish any penalty or liability incurred under the DMS/DPS. The DMS/
DPS shall be treated as still remaining in force for the purpose of
sustaining any action for the enforcement of such penalty or liability.
Sec. 700.93 Communications.
All communications concerning this regulation, including requests
for copies of the regulation and explanatory information, requests for
guidance or clarification, and requests for adjustment or exception
shall be addressed to the Office of Strategic Industries and Economic
Security, Room 3876, U.S. Department of Commerce, Washington, DC 20230,
Ref: DPAS; telephone: (202) 482-3634 or fax: (202) 482-5650.
[71 FR 39528, July 13, 2006]
Sec. Schedule I to Part 700--Approved Programs and Delegate Agencies
The programs listed in this schedule have been approved for
priorities and allocations support under this part. They have equal
preferential status. The Department of Commerce has authorized the
Delegate Agencies to use this part in support of those programs assigned
to them, as indicated below.
----------------------------------------------------------------------------------------------------------------
Program identification symbol Approved program Delegate agency
----------------------------------------------------------------------------------------------------------------
Defense programs:
A1.................................... Aircraft................ Department of Defense. \1\
A2.................................... Missiles................ Do.
A3.................................... Ships................... Do.
A4.................................... Tank--Automotive........ Do.
A5.................................... Weapons................. Do.
A6.................................... Ammunition.............. Do.
A7.................................... Electronic and Do.
communications
equipment.
B1.................................... Military building Do.
supplies.
B8.................................... Production equipment Do.
(for defense
contractor's account).
B9.................................... Production equipment Do.
(Government owned).
C1.................................... Food resources (combat Do.
rations).
C2.................................... Department of Defense Do.
construction.
[[Page 105]]
C3.................................... Maintenance, repair, and Do.
operating supplies
(MRO) for Department of
Defense facilities.
C9.................................... Miscellaneous........... Do.
International defense programs:
Canada:
D1................................ Canadian military Department of Commerce.
programs.
D2................................ Canadian production and Do.
construction.
D3................................ Canadian atomic energy Do.
program.
Other Foreign Nations:
G1................................ Certain munitions items Department of Commerce.
purchased by foreign
governments through
domestic commercial
channels for export.
G2................................ Certain direct defense Do.
needs of foreign
governments other than
Canada.
G3................................ Foreign nations (other Do.
than Canada) production
and construction.
Co-Production:
J1................................ F-16 Co-Production Departments of Commerce and Defense.
Program.
Atomic energy programs:
E1.................................... Construction............ Department of Energy.
E2.................................... Operations--including Do.
maintenance, repair,
and operating supplies
(MRO).
E3.................................... Privately owned Do.
facilities.
Domestic energy programs:
F1.................................... Exploration, production, Department of Energy.
refining, and
transportation.
F2.................................... Conservation............ Do.
F3.................................... Construction, repair, Do.
and maintenance.
Other defense, energy, and related
programs:
H1.................................... Certain combined orders Department of Commerce.
(see section 700.17(c)).
H5.................................... Private domestic Do.
production.
H6.................................... Private domestic Do.
construction.
H7.................................... Maintenance, repair, and Do.
operating supplies
(MRO).
H8.................................... Designated Programs..... Do.
K1.................................... Federal supply items.... General Services Administration.
Homeland security programs:
N1.................................... Federal emergency Department of Homeland Security.
preparedness,
mitigation, response,
and recovery.
N2.................................... State, local, tribal Do.
government emergency
preparedness,
mitigation, response,
and recovery.
N3.................................... Intelligence and warning Do.
systems.
N4.................................... Border and Do.
transportation security.
N5.................................... Domestic counter- Do.
terrorism, including
law enforcement.
N6.................................... Chemical, biological, Do.
radiological, and
nuclear countermeasures.
N7.................................... Critical infrastructure Do.
protection and
restoration.
N8.................................... Miscellaneous........... Do.
----------------------------------------------------------------------------------------------------------------
\1\ Department of Defense includes: The Office of the Secretary of Defense, the Military Departments, the Joint
Staff, the Combatant Commands, the Defense Agencies, the Defense Field Activities, all other organizational
entities in the Department of Defense, and, for purposes of this regulation, the Central Intelligence Agency
and the National Aeronautics and Space Administration as Associated Agencies.
[63 FR 31925, June 11, 1998, as amended at 71 FR 39529, July 13, 2006;
72 FR 3944, Jan. 29, 2007]
[[Page 106]]
Sec. Appendix I to Part 700--Form BIS-999--Request for Special
Priorities Assistance
[GRAPHIC] [TIFF OMITTED] TR13JY06.000
[[Page 107]]
[GRAPHIC] [TIFF OMITTED] TR13JY06.001
[[Page 108]]
[GRAPHIC] [TIFF OMITTED] TR13JY06.002
[[Page 109]]
[GRAPHIC] [TIFF OMITTED] TR13JY06.003
[71 FR 39529, July 13, 2006]
[[Page 110]]
PART 701_REPORTING OF OFFSETS AGREEMENTS IN SALES OF WEAPON SYSTEMS OR
DEFENSE-RELATED ITEMS TO FOREIGN COUNTRIES OR FOREIGN FIRMS--Table of Contents
Sec.
701.1 Purpose.
701.2 Definitions.
701.3 Applicability and scope.
701.4 Procedures.
701.5 Confidentiality.
701.6 Violations, penalties, and remedies.
Authority: 50 U.S.C. App. 2099 and Executive Order 12919, 59 FR
29525, 3 CFR, 1994 Comp. 901 and Executive Order 13286, 68 FR 10619, 3
CFR, 2003 Comp. 166.
Source: 59 FR 61796, Dec. 2, 1994, unless otherwise noted.
Sec. 701.1 Purpose.
The Defense Production Act Amendments of 1992 require the Secretary
of Commerce to promulgate regulations for U.S. firms entering into
contracts for the sale of defense articles or defense services to
foreign countries or foreign firms that are subject to offset agreements
exceeding $5,000,000 in value to furnish information regarding such
agreements. The Secretary of Commerce has designated the Bureau of
Industry and Security as the organization responsible for implementing
this provision. The information provided by U.S. firms will be
aggregated and used to determine the impact of offset transactions on
the defense preparedness, industrial competitiveness, employment, and
trade of the United States. Summary reports are submitted annually to
Congress pursuant to Section 309 of the Defense Production Act of 1950,
as amended.
[59 FR 61796, Dec. 2, 1994, as amended at 74 FR 68140, Dec. 23, 2009]
Sec. 701.2 Definitions.
(a) Offsets--Compensation practices required as a condition of
purchase in either government-to-government or commercial sales of
defense articles and/or defense services as defined by the Arms Export
Control Act and the International Traffic in Arms Regulations.
(b) Military Export Sales--Exports that are either Foreign Military
Sales (FMS) or commercial (direct) sales of defense articles and/or
defense services as defined by the Arms Export Control Act and
International Traffic in Arms Regulations.
(c) Prime Contractor--A firm that has a sales contract with a
foreign entity or with the U.S. Government for military export sales.
(d) United States--Includes the 50 states, the District of Columbia,
Puerto Rico, and U.S. territories.
(e) Offset Agreement--Any offset as defined above that the U.S. firm
agrees to in order to conclude a military export sales contract. This
includes all offsets, whether they are ``best effort'' agreements or are
subject to penalty clauses.
(f) Offset Transaction--Any activity for which the U.S. firm claims
credit for full or partial fulfillment of the offset agreement.
Activities to implement offset agreements are categorized as co-
production, technology transfer, subcontracting, credit assistance,
training, licensed production, investment, purchases and other.
Paragraphs (f)(1) through (f)(8) of this section provide examples of the
categories of offset transactions.
(1) Example 1. Company A, a U.S. firm, contracts for Company B, a
foreign firm located in country C, to produce a component of a U.S.-
origin defense article subject to an offset agreement between Company A
and country C. The defense article will be sold to country C pursuant to
a Foreign Military Sale and the production role of Company B is
described in the Letter of Offer and Acceptance associated with that
sale and a government-to-government co-production memorandum of
understanding. This transaction would be categorized as co-production
and would, like all co-production transactions, be direct.
(2) Example 2. Company A, a U.S. firm, transfers technology to
Company B, a foreign firm located in country C, which allows Company B
to conduct research and development directly related to a defense
article that is subject to an offset agreement between Company A and
country C. This transaction would be categorized as technology transfer
and would be direct because the research and development is
[[Page 111]]
directly related to an item subject to the offset agreement.
(3) Example 3. Company A, a U.S. firm, contracts for Company B, a
foreign firm located in country C, to produce a component of a U.S.-
origin defense article subject to an offset agreement between Company A
and country C. The contract with Company B is for a direct commercial
sale and Company A does not license Company B to use any technology. The
transaction would be categorized as subcontracting and would, like all
subcontracting transactions, be direct.
(4) Example 4. Company A, a U.S. firm, makes arrangements for a line
of credit at a financial institution for Company B, a foreign firm
located in country C, so that Company B can produce an item that is not
subject to the offset agreement between Company A and country C. The
transaction would be categorized as credit assistance and would be
indirect because the credit assistance is unrelated to an item covered
by the offset agreement.
(5) Example 5. Company A, a U.S. firm, arranges for training of
personnel from Company B, a foreign firm located in country C. The
training is related to the production and maintenance of a U.S.-origin
defense article that is subject to an offset agreement between Company A
and country C. The transaction would be categorized as training and
would be direct because the training is directly related to the
production and maintenance of an item covered by the offset agreement.
(6) Example 6. Company A, a U.S. firm, contracts for Company B, a
foreign firm located in country C, to produce a component of a U.S.-
origin defense article that is subject to an offset agreement between
Company A and country C. The contract with Company B is a Foreign
Military Sale and Company A licenses Company B to use Company A's
production technology to produce the component. There is no co-
production agreement between the United States and country C. The
transaction would be categorized as licensed production and would be
direct because it involves the item covered by the offset agreement.
(7) Example 7. Company A, a U.S. firm, makes an investment in
Company B, a foreign firm located in country C, so that Company B can
create a new production line to produce a component of a defense article
that is subject to an offset agreement between Company A and country C.
The transaction would be categorized as investment and would be direct
because the investment involves an item covered by the offset agreement.
(8) Example 8. Company A, a U.S. firm, purchases various off-the-
shelf items from Company B, a foreign firm located in country C, but
none of these items will be used by Company A to produce the defense
article subject to the offset agreement between Company A and country C.
The transaction would be categorized as purchases and would, like all
purchase transactions, be indirect.
(g) Direct Offset--an offset transaction directly related to the
article(s) or service(s) exported or to be exported pursuant to the
military export sales agreement. See the examples illustrating offset
transactions of this type in Sec. Sec. 701.2(f)(1), 701.2(f)(2),
701.2(f)(3), 701.2(f)(5), 701.2(f)(6) and 701.2(f)(7) of this part.
(h) Indirect Offset--an offset transaction unrelated to the
article(s) or service(s) exported or to be exported pursuant to the
military export sales agreement. See the examples illustrating offset
transactions of this type in Sec. Sec. 701.2(f)(4) and 701.2(f)(8) of
this part.
[59 FR 61796, Dec. 2, 1994, as amended at 74 FR 68140, Dec. 23, 2009]
Sec. 701.3 Applicability and scope.
(a) This rule applies to U.S. firms entering contracts for the sale
of defense articles or defense services (as defined in the Arms Export
Control Act and International Traffic in Arms Regulations) to a foreign
country or foreign firm for which the contract is subject to an offset
agreement exceeding $5,000,000 in value.
(b) This rule applies to all offset transactions completed in
performance of existing offset commitments since January 1, 1993 for
which offset credit of $250,000 or more has been claimed from the
foreign representative, and new offset agreements entered into since
that time.
[[Page 112]]
Sec. 701.4 Procedures.
(a) Reporting period. The Department of Commerce publishes a notice
in the Federal Register annually reminding the public that U.S. firms
are required to report annually on contracts for the sale of defense-
related items or defense-related services to foreign governments or
foreign firms that are subject to offset agreements exceeding $5,000,000
in value. U.S. firms are also required to report annually on offset
transactions completed in performance of existing offset commitments for
which offset credit of $250,000 or more has been claimed from the
foreign representative. Such reports must be submitted to the Department
of Commerce no later than June 15 of each year and must contain offset
agreement and transaction data for the previous calendar year.
(b) Reporting instructions. (1) U.S. firms must only report on
offset agreements they have entered into with a foreign customer. U.S.
firms must report offset transactions that they are directly responsible
for reporting to the foreign customer, regardless of who performs the
transaction (i.e., prime contractors must report for their
subcontractors if the subcontractors are not a direct party to the
offset agreement).
(2) Reports must be submitted in hardcopy to the Offset Program
Manager, U.S. Department of Commerce, Bureau of Industry and Security,
Room 3876, 14th Street and Constitution Avenue, NW., Washington, DC
20230, and as an e-mail attachment to [email protected]. E-mail
attachments must include the information in a computerized spreadsheet
or database format. If unable to submit a report in computerized format,
companies should contact the Offset Program Manager for guidance. All
submissions must include a point of contact (name and telephone number)
and must be submitted by a company official authorized to provide such
information.
(c) Reports must include the information described below. Any
necessary comments or explanations relating to the information shall be
footnoted and supplied on separate sheets attached to the reports.
(1) Reporting on offset agreements. U.S. firms shall provide an
itemized list of new offset agreements entered into during the reporting
period, including the information about each such agreement described in
paragraphs (c)(1)(i) through (c)(1)(ix) of this section.
(i) Name of foreign country. Identify the country of the foreign
entity involved in the military export sale associated with the offset
agreement.
(ii) Description of the military export sale. Provide a name and
description of the defense article and/or defense service referenced in
the military export sale, as well as the date (month and year) that the
related offset agreement was signed.
(iii) Military export sale classification. Identify the six-digit
North American Industry Classification System (``NAICS'') code(s)
associated with the military export sale. Refer to U.S. Census Bureau's
U.S. NAICS Manual for a listing of applicable NAICS codes (http://
www.census.gov/epcd/www/naics.html). Paragraphs (c)(1)(iii)(A) through
(c)(1)(iii)(E) of this section provide examples that illustrate how to
select the appropriate NAICS code(s).
(A) Example 1. Company A enters into an offset agreement associated
with the sale of 24 fighter aircraft and guided missiles to country B.
Fighter aircraft manufacturing is classified in the NAICS as NAICS
336411, Aircraft Manufacturing. Guided missiles are classified in the
NAICS as NAICS 336414, Guided Missile and Space Vehicle Manufacturing.
This military export sale should be classified under NAICS 336411 and
NAICS 336414.
(B) Example 2. Company B enters into an offset agreement associated
with the sale of a navigation system for a fleet of military aircraft to
country C. Navigation system manufacturing is classified in the NAICS as
NAICS 334511, Search, Detection, Navigation, Guidance, Aeronautical, and
Nautical System and Instrument Manufacturing. This military export sale
should be classified under NAICS 334511.
(C) Example 3. Company C enters into an offset agreement associated
with the sale of radio communication equipment to country D. Radio
communication equipment is classified in the
[[Page 113]]
NAICS as NAICS 334220, Radio and Television Broadcasting and Wireless
Communication Equipment Manufacturing. This military export sale should
be classified under NAICS 334220.
(D) Example 4. Company D enters into an offset agreement associated
with the sale of 30 aircraft engines to country E. Aircraft engines are
classified in the NAICS as NAICS 336412, Aircraft Engine and Engine
Parts Manufacturing. This military export sale should be classified
under NAICS 336412.
(E) Example 5. Company E enters into an offset agreement associated
with the sale of armored vehicles to country F. Armored vehicles are
classified in the NAICS as NAICS 336992, Military Armored Vehicle, Tank,
and Tank Component Manufacturing. This military export sale should be
classified under NAICS 336992.
(iv) Foreign party to offset agreement. Identify the foreign
government agency or branch that is the signatory to the offset
agreement.
(v) Military export sale value. Provide the U.S. dollar value of the
military export sale. Should the military export sale involve more than
one NAICS code, please separately list the values associated with each
NAICS code.
(vi) Offset agreement value. Provide the U.S. dollar value of the
offset agreement.
(vii) Offset agreement term. Identify the term of the offset
agreement in months.
(viii) Offset agreement performance measures. Identify each category
that describes the offset agreement's performance measures: best
efforts, accomplishment of obligation, or other (please describe).
(ix) Offset agreement penalties for non-performance. Identify each
category that describes the offset agreement's penalties for non-
performance. For example, the agreement may include penalties such as
liquidated damages, debarment from future contracts, added offset
requirements, fees, commissions, bank credit guarantees, or other
(please describe).
(2) Reporting on offset transactions. U.S. firms shall provide an
itemized list of offset transactions completed during the reporting
period, including the elements listed in paragraphs (c)(2)(i) through
(c)(2)(x) of this section for each such transaction (numerical estimates
are acceptable when actual figures are unavailable; estimated figures
shall be followed by the letter ``E'').
(i) Name of foreign country. Identify the country of the foreign
entity involved in the military export sale associated with the offset
transaction.
(ii) Description of the military export sale. Provide a name and
description of the defense article and/or defense service referenced in
the military export sale associated with the offset transaction, as well
as the date the offset agreement was signed (month and year).
(iii) Offset transaction category. Identify each category that
describes the offset transaction as co-production, technology transfer,
subcontracting, training, licensing of production, investment,
purchasing, credit assistance or other (please describe).
(iv) Offset transaction classification. Identify the six-digit NAICS
code(s) associated with the offset transaction. Refer to U.S. Census
Bureau's U.S. NAICS Manual for a listing of applicable NAICS codes
(http://www.census.gov/epcd/www/naics.html). Paragraphs (c)(2)(iv)(A)
through (c)(2)(iv)(E) of this section provide examples that illustrate
how to select the appropriate NAICS code in the instances described
therein.
(A) Example 1. Company A completes an offset transaction by co-
producing aircraft engines in country B. Aircraft engine manufacturing
is classified in the NAICS as NAICS 336412, Aircraft Engine and Engine
Parts Manufacturing. This offset transaction should be classified under
NAICS 336412.
(B) Example 2. Company B completes an offset transaction by
licensing the production of automotive electrical switches in country C.
Company B also assists in structuring a wholesale distribution network
for these products. Automotive electrical switch manufacturing is
classified in the NAICS as NAICS 335931, Current Carrying Wiring Device
Manufacturing, and the wholesale distribution network is classified in
the NAICS as NAICS 423120, Motor
[[Page 114]]
Vehicle Supplies and New Parts Merchant Wholesalers. This offset
transaction should be classified under NAICS 335931 and NAICS 423120.
(C) Example 3. Company C completes an offset transaction by
transferring technology to establish a biotechnology research center in
country D. Biotechnology research and development is classified in the
NAICS as NAICS 541711, Research and Development in Biotechnology. This
offset transaction should be classified under NAICS 541711.
(D) Example 4. Company D completes an offset transaction by
purchasing steel forgings from a steel mill in country E. Steel forgings
are classified in the NAICS as NAICS 331111, Iron and Steel Mills. This
offset transaction should be classified under NAICS 331111.
(E) Example 5. Company E completes an offset transaction by
providing training assistance services in country F to certain plant
managers. Training assistance is classified in the NAICS as NAICS
611430, Professional and Management Development Training. This offset
transaction should be classified under NAICS 611430.
(v) Offset transaction type. Identify the offset transaction as a
direct offset transaction, an indirect offset transaction, or a
combination of both.
(vi) Name of offset performing entity. Identify, by name, the entity
performing the offset transaction on behalf of the U.S. entity that
entered into the offset agreement.
(vii) Name of offset receiving entity. Identify the foreign entity
receiving benefits from the offset transaction.
(viii) Actual offset value. Provide the U.S. dollar value of the
offset transaction without taking into account multipliers or intangible
factors. Should the offset transaction involve more than one NAICS code,
please list the U.S. dollar values associated with each NAICS code.
(ix) Offset credit value. Provide the U.S. dollar value credits
claimed by the offset performing entity, including any multipliers or
intangible factors.
(x) Offset transaction performance location. Name the country where
each offset transaction was fulfilled, such as the purchasing country,
the United States, or a third country.
[74 FR 68141, Dec. 23, 2009]
Sec. 701.5 Confidentiality.
(a) As provided by Sec. 309(c) of the Defense Production Act of
1950, as amended, BIS shall not publicly disclose the information it
receives pursuant to this part, unless the firm furnishing the
information subsequently specifically authorizes public disclosure.
(b) Public disclosure must be authorized in writing by an official
of the firm competent to make such an authorization.
(c) Nothing in this provision shall prevent the use of data
aggregated from information provided pursuant to this part in the
summary report to the Congress described in Sec. 701.1.
Sec. 701.6 Violations, penalties, and remedies.
(a) Willful violation of the Defense Production Act may result in
punishment by fine or imprisonment, or both. The maximum penalty
provided by the Defense Production Act is a $10,000 fine, or one year in
prison, or both.
(b) The Government may seek an injunction from a court of
appropriate jurisdiction to prohibit the continuance of any violation
of, or to enforce compliance with, the Defense Production Act and this
regulation.
[74 FR 68141, Dec. 23, 2009]
PARTS 702-704 [RESERVED]
PART 705_EFFECT OF IMPORTED ARTICLES ON THE NATIONAL SECURITY--Table of
Contents
Sec.
705.1 Definitions.
705.2 Purpose.
705.3 Commencing an investigation.
705.4 Criteria for determining effect of imports on the national
security.
705.5 Request or application for an investigation.
705.6 Confidential information.
705.7 Conduct of an investigation.
705.8 Public hearings.
705.9 Emergency action.
705.10 Report of an investigation and recommendation.
[[Page 115]]
705.11 Determination by the President and adjustment of imports.
705.12 Disposition of an investigation and report to the Congress.
Authority: Sec. 232, Trade Expansion Act of 1962, as amended (19
U.S.C. 1862).
Source: 47 FR 14693, Apr. 6, 1982, unless otherwise noted.
Redesignated at 54 FR 601, Jan. 9, 1989.
Sec. 705.1 Definitions.
As used in this part:
Department means the United States Department of Commerce and
includes the Secretary of Commerce and the Secretary's designees.
Secretary means the Secretary of Commerce or the Secretary's
designees.
Applicant means the person or entity submitting a request or
application for an investigation pursuant to this part.
Sec. 705.2 Purpose.
These regulations set forth the procedures by which the Department
shall commence and conduct an investigation to determine the effect on
the national security of the imports of any article. Based on this
investigation, the Secretary shall make a report and recommendation to
the President for action or inaction regarding an adjustment of the
imports of the article.
Sec. 705.3 Commencing an investigation.
(a) Upon request of the head of any government department or agency,
upon application of an interested party, or upon motion of the
Secretary, the Department shall immediately conduct an investigation to
determine the effect on the national security of the imports of any
article.
(b) The Secretary shall immediately provide notice to the Secretary
of Defense of any investigation initiated under this part.
[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989, and
amended at 63 FR 31623, June 10, 1998]
Sec. 705.4 Criteria for determining effect of imports on the national
security.
(a) To determine the effect on the national security of the imports
of the article under investigation, the Department shall consider the
quantity of the article in question or other circumstances related to
its import. With regard for the requirements of national security, the
Department shall also consider the following:
(1) Domestic production needed for projected national defense
requirements;
(2) The capacity of domestic industries to meet projected national
defense requirements;
(3) The existing and anticipated availabilities of human resources,
products, raw materials, production equipment and facilities, and other
supplies and services essential to the national defense;
(4) The growth requirements of domestic industries to meet national
defense requirements and the supplies and services including the
investment, exploration and development necessary to assure such growth;
and
(5) Any other relevant factors.
(b) In recognition of the close relation between the strength of our
national economy and the capacity of the United States to meet national
security requirements, the Department shall also, with regard for the
quantity, availability, character and uses of the imported article under
investigation, consider the following:
(1) The impact of foreign competition on the economic welfare of any
domestic industry essential to our national security;
(2) The displacement of any domestic products causing substantial
unemployment, decrease in the revenues of government, loss of investment
or specialized skills and productive capacity, or other serious effects;
and
(3) Any other relevant factors that are causing or will cause a
weakening of our national economy.
Sec. 705.5 Request or application for an investigation.
(a) A request or application for an investigation shall be in
writing. The original and 1 copy shall be filed with the Director,
Office of Technology Evaluation, Room H-1093, U.S. Department of
Commerce, Washington, DC 20230.
(b) When a request, application or motion is under investigation, or
when an investigation has been completed pursuant to Sec. 705.10 of
this part, any
[[Page 116]]
subsequently filed request or application concerning imports of the same
or related article that does not raise new or different issues may be
either consolidated with the investigation in progress as provided in
Sec. 705.7(e) of this part, or rejected. In either event, an
explanation for taking such action shall be promptly given to the
applicant. If the request or application is rejected, it will not be
returned unless requested by the applicant.
(c) Requests or applications shall describe how the quantity,
availability, character, and uses of a particular imported article, or
other circumstances related to its import, affect the national security,
and shall contain the following information to the fullest extent
possible:
(1) Identification of the applicant;
(2) A precise description of the article;
(3) Description of the domestic industry affected, including
pertinent information regarding companies and their plants, locations,
capacity and current output of the industry;
(4) Pertinent statistics on imports and domestic production showing
the quantities and values of the article;
(5) Nature, sources, and degree of the competition created by
imports of the article;
(6) The effect that imports of the article may have upon the
restoration of domestic production capacity in the event of national
emergency;
(7) Employment and special skills involved in the domestic
production of the article;
(8) Extent to which the national economy, employment, investment,
specialized skills, and productive capacity is or will be adversely
affected;
(9) Revenues of Federal, State, or local Governments which are or
may be adversely affected;
(10) National security supporting uses of the article including data
on applicable contracts or sub-contracts, both past and current; and
(11) Any other information or advice relevant and material to the
subject matter of the investigation.
(d) Statistical material presented should be, if possible, on a
calendar-year basis for sufficient periods of time to indicate trends.
Monthly or quarterly data for the latest complete years should be
included as well as any other breakdowns which may be pertinent to show
seasonal or short-term factors.
[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989, and
amended at 63 FR 31623, June 10, 1998; 65 FR 62600, Oct. 19, 2000; 72 FR
25195, May 4, 2007]
Sec. 705.6 Confidential information.
(a) Any information or material which the applicant or any other
party desires to submit in confidence at any stage of the investigation
that would disclose national security classified information or business
confidential information (trade secrets, commercial or financial
information, or any other information considered senstitive or
privileged), shall be submitted on separate sheets with the clear legend
``National Security Classified'' or ``Business Confidential,'' as
appropriate, marked at the top of each sheet. Any information or
material submitted that is identified as national security classified
must be accompanied at the time of filing by a statement indicating the
degree of classification, the authority for the classification, and the
identity of the classifying entity. By submitting information or
material identified as business confidential, the applicant or other
party represents that the information is exempted from public
disclosure, either by the Freedom of Information Act (5 U.S.C. 552 et
seq.) or by some other specific statutory exemption. Any request for
business confidential treatment must be accompanied at the time of
filing by a statement justifying non-disclosure and referring to the
specific legal authority claimed.
(b) The Department may refuse to accept as business confidential any
information or material it considers not intended to be protected under
the legal authority claimed by the applicant, or under other applicable
legal authority. Any such information or material so refused shall be
promptly returned to the submitter and will not be considered. However,
such information or material may be resubmitted as non-confidential in
which case it will be made part of the public record.
[[Page 117]]
Sec. 705.7 Conduct of an investigation.
(a) If the Department determines that it is appropriate to afford
interested parties an opportunity to present information and advice
relevant and material to an investigation, a public notice shall be
published in the Federal Register soliciting from any interested party
written comments, opinions, data, information or advice relative to the
investigation. This material shall be submitted as directed within a
reasonable time period to be specified in the notice. All material shall
be submitted with 6 copies. In addition, public hearings may be held
pursuant to Sec. 705.8 of this part.
(b) All requests and applications filed and all material submitted
by interested parties, except information on material that is classified
or determined to be confidential as provided in Sec. 705.6 of this
part, will be available for public inspection and copying in the Bureau
of Industry and SecurityFreedom of Information Records Inspection
Facility, Room H-4525, U.S. Department of Commerce, Washington, DC
20230, in accordance with regulations published in part 4 of title 15,
Code of Federal Regulations.
(c) Further information may be requested by the Department from
other sources through the use of questionnaires, correspondence, or
other appropriate means.
(d) The Department shall, as part of an investigation, seek
information and advice from, and consult with, appropriate officers of
the United States or their designees, as shall be determined. The
Department shall also consult with the Secretary of Defense regarding
the methodological and policy questions raised in the investigation.
Upon the request of the Secretary, the Secretary of Defense shall
provide the Secretary with an assessment of the defense requirements of
the article in question. Communications received from agencies of the
U.S. government or foreign governments will not be made available for
public inspection.
(e) Any request or application that is filed while an investigation
is in progress, concerning imports of the same or related article and
raising similar issues, may be consolidated with the request,
application or motion that initiated the investigation.
[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989 and
amended at 54 FR 19355, May 5, 1989; 63 FR 31623, June 10, 1998]
Sec. 705.8 Public hearings.
(a) If it is deemed appropriate by the Department, public hearings
may be held to elicit further information.
(1) A notice of hearing shall be published in the Federal Register
describing the date, time, place, the subject matter of each hearing and
any other information relevant to the conduct of the hearing. The name
of a person to contact for additional information or to request time to
speak at the hearing shall also be included. Public hearings may be held
in more than one location.
(2) Hearings shall be open to the public unless national security
classified information will be presented. In that event the presiding
officer at the hearing shall close the hearing, as necessary, to all
persons not having appropriate security clearances or not otherwise
authorized to have access to such information. If it is known in
sufficient time prior to the hearing that national security classified
information will be presented the notice of hearing published in the
Federal Register shall state that national security classified
information will be presented and that the hearing will be open only to
those persons having appropriate security clearances or otherwise
specifically authorized to have access to such information.
(b) Hearings shall be conducted as follows:
(1) The Department shall appoint the presiding officer;
(2) The presiding officer shall determine all procedural matters
during the hearing;
(3) Interested parties may appear, either in person or by
representation, and produce oral or written information relevant and
material to the subject matter of the investigation;
(4) Hearings will be fact-finding proceedings without formal
pleadings or adverse parties. Formal rules of evidence will not apply;
[[Page 118]]
(5) After a witness has testified, the presiding officer may
question the witness. Questions submitted to the presiding officer in
writing by any interested party may, at the discretion of the presiding
officer, be posed to the witness. No cross examination of any witness by
a party shall be allowed.
(6) Each hearing will be stenographically reported. Transcripts of
the hearing, excluding any national security classified information, may
be purchased from the Department at actual cost of duplication, and will
be available for public inspection in the Bureau of Industry and
Security Freedom of Information Records Inspection Facility, Room H-
4525, U.S. Department of Commerce, Washington, DC 20230.
[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989 and
amended at 54 FR 19355, May 5, 1989; 63 FR 31623, June 10, 1998]
Sec. 705.9 Emergency action.
In emergency situations, or when in the judgment of the Department,
national security interests require it, the Department may vary or
dispense with any or all of the procedures set forth in Sec. 705.7 of
this part.
Sec. 705.10 Report of an investigation and recommendation.
(a) When an investigation conducted pursuant to this part is
completed, a report of the investigation shall be promptly prepared.
(b) The Secretary shall report to the President the findings of the
investigation and a recommendation for action or inaction within 270
days after beginning an investigation under this part.
(c) An Executive Summary of the Secretary's report to the President
of an investigation, excluding any classified or proprietary
information, shall be published in the Federal Register. Copies of the
full report, excluding any classified or proprietary information, will
be available for public inspection and copying in the Bureau of Industry
and Security Freedom of Information Records Inspection Facility, Room H-
4525, U.S. Department of Commerce, 14th Street, N.W., Washington, D.C.
20230; tel. (202) 482-5653.
[63 FR 31623, June 10, 1998]
Sec. 705.11 Determination by the President and adjustment of imports.
(a) Upon the submission of a report to the President by the
Secretary under Sec. 705.10(b) of this part, in which the Department
has found that an article is being imported into the United States in
such quantities or under such circumstances as to threaten to impair the
national security, the President is required by Section 232(c) of the
Trade Expansion Act of 1962, as amended (19 U.S.C. 1862(c)) to take the
following action
(1) Within 90 days after receiving the report from the Secretary,
the President shall determine:
(i) Whether the President concurs with the Department's finding; and
(ii) If the President concurs, the nature and duration of the action
that must be taken to adjust the imports of the article and its
derivatives so that the such imports will not threaten to impair the
national security.
(2) If the President determines to take action under this section,
such action must be taken no later than fifteen (15) days after making
the determination.
(3) By no later than thirty (30) days after making the
determinations under paragraph (a)(1) of this section, the President
shall submit to the Congress a written statement of the reasons why the
President has decided to take action, or refused to take action.
(b) If the action taken by the President under this section is the
negotiation of an agreement to limit or restrict the importation into
the United States of the article in question, and either no such
agreement is entered into within 180 days after making the determination
to take action, or an executed agreement is not being carried out or is
ineffective in eliminating the threat to the national security, the
President shall either:
(1) Take such other action as deemed necessary to adjust the imports
of the article so that such imports will not threaten to impair the
national security. Notice of any such additional action taken shall be
published in the Federal Register; or
(2) Not take any additional action. This determination and the
reasons on
[[Page 119]]
which it is based, shall be published in the Federal Register.
[63 FR 31623, June 10, 1998]
Sec. 705.12 Disposition of an investigation and report to the Congress.
(a) Upon the disposition of each request, application, or motion
made under this part, a report of such disposition shall be submitted by
the Secretary to the Congress and published in the Federal Register.
(b) As required by Section 232(e) of the Trade Expansion Act of
1962, as amended (19 U.S.C. 1862(c)), the President shall submit to the
Congress an annual report on the operation of this part.
[63 FR 31623, June 10, 1998]
PARTS 706-709 [RESERVED]
[[Page 120]]
SUBCHAPTER B_CHEMICAL WEAPONS CONVENTION REGULATIONS
PART 710_GENERAL INFORMATION AND OVERVIEW OF THE CHEMICAL WEAPONS CONVENTION
REGULATIONS (CWCR)--Table of Contents
Sec.
710.1 Definitions of terms used in the Chemical Weapons Convention
Regulations (CWCR).
710.2 Scope of the CWCR.
710.3 Purposes of the Convention and CWCR.
710.4 Overview of scheduled chemicals and examples of affected
industries.
710.5 Authority.
710.6 Relationship between the Chemical Weapons Convention Regulations
and the Export Administration Regulations, the International
Traffic in Arms Regulations, and the Alcohol, Tobacco,
Firearms, and Explosives Regulations.
Supplement No. 1 to Part 710--States Parties to the Convention on the
Prohibition of the Development, Production, Stockpiling and
Use of Chemical Weapons and on Their Destruction
Supplement No. 2 to Part 710--Definitions of Production
Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR
1999 Comp., p. 199.
Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.
Sec. 710.1 Definitions of terms used in the Chemical Weapons Convention
Regulations (CWCR).
The following are definitions of terms used in the CWCR (parts 710
through 729 of this subchapter, unless otherwise noted):
Act (The). Means the Chemical Weapons Convention Implementation Act
of 1998 (22 U.S.C. 6701 et seq.).
Advance Notification. Means a notice informing BIS of a company's
intention to export to or import from a State Party a Schedule 1
chemical. This advance notification must be submitted to BIS at least 45
days prior to the date of export or import (except for transfers of 5
milligrams or less of saxitoxin for medical/diagnostic purposes, which
must be submitted to BIS at least 3 days prior to export or import). BIS
will inform the company in writing of the earliest date the shipment may
occur under the advance notification procedure. This advance
notification requirement is imposed in addition to any export license
requirements under the Department of Commerce's Export Administration
Regulations (15 CFR parts 730 through 774) or the Department of State's
International Traffic in Arms Regulations (22 CFR parts 120 through 130)
or any import license requirements under the Department of Justice's
Bureau of Alcohol, Tobacco, Firearms and Explosives Regulations (27 CFR
part 447).
Bureau of Industry and Security (BIS). Means the Bureau of Industry
and Security of the United States Department of Commerce, including
Export Administration and Export Enforcement.
By-product. Means any chemical substance or mixture produced without
a separate commercial intent during the manufacture, processing, use or
disposal of another chemical substance or mixture.
Chemical Weapon. Means the following, together or separately:
(1) Toxic chemicals and their precursors, except where intended for
purposes not prohibited under the Chemical Weapons Convention (CWC),
provided that the type and quantity are consistent with such purposes;
(2) Munitions and devices, specifically designed to cause death or
other harm through the toxic properties of those toxic chemicals
specified in paragraph (1) of this definition, which would be released
as a result of the employment of such munitions and devices;
(3) Any equipment specifically designed for use directly in
connection with the employment of munitions or devices specified in
paragraph (2) of this definition.
Chemical Weapons Convention (CWC or Convention). Means the
Convention on the Prohibition of the Development, Production,
Stockpiling and Use of Chemical Weapons and on Their Destruction, and
its annexes opened for signature on January 13, 1993.
[[Page 121]]
Chemical Weapons Convention Regulations (CWCR). Means the
regulations contained in 15 CFR parts 710 through 729.
Consumption. Consumption of a chemical means its conversion into
another chemical via a chemical reaction. Unreacted material must be
accounted for as either waste or as recycled starting material.
Declaration or report form. Means a multi-purpose form to be
submitted to BIS regarding activities involving Schedule 1, Schedule 2,
Schedule 3, or unscheduled discrete organic chemicals. Declaration forms
will be used by facilities that have data declaration obligations under
the CWCR and are ``declared'' facilities whose facility-specific
information will be transmitted to the OPCW. Report forms will be used
by entities that are ``undeclared'' facilities or trading companies that
have limited reporting requirements for only export and import
activities under the CWCR and whose facility-specific information will
not be transmitted to the OPCW. Information from declared facilities,
undeclared facilities and trading companies will also be used to compile
U.S. national aggregate figures on the production, processing,
consumption, export and import of specific chemicals. See also related
definitions of declared facility, undeclared facility and report.
Declared facility or plant site. Means a facility or plant site that
submits declarations of activities involving Schedule 1, Schedule 2,
Schedule 3, or unscheduled discrete organic chemicals above specified
threshold quantities.
Discrete organic chemical. Means any chemical belonging to the class
of chemical compounds consisting of all compounds of carbon, except for
its oxides, sulfides, and metal carbonates, identifiable by chemical
name, by structural formula, if known, and by Chemical Abstract Service
registry number, if assigned. (Also see the definition for unscheduled
discrete organic chemical.)
Domestic transfer. Means, with regard to declaration requirements
for Schedule 1 chemicals under the CWCR, any movement of any amount of a
Schedule 1 chemical outside the geographical boundary of a facility in
the United States to another destination in the United States, for any
purpose. Also means, with regard to declaration requirements for
Schedule 2 and Schedule 3 chemicals under the CWCR, movement of a
Schedule 2 or Schedule 3 chemical in quantities and concentrations
greater than specified thresholds, outside the geographical boundary of
a facility in the United States, to another destination in the United
States, for any purpose. Domestic transfer includes movement between two
divisions of one company or a sale from one company to another. Note
that any movement to or from a facility outside the United States is
considered an export or import for reporting purposes, not a domestic
transfer. (Also see definition of United States.)
EAR. Means the Export Administration Regulations (15 CFR parts 730
through 774).
Explosive. Means a chemical (or a mixture of chemicals) that is
included in Class 1 of the United Nations Organization hazard
classification system.
Facility. Means any plant site, plant or unit.
Facility Agreement. Means a written agreement or arrangement between
a State Party and the Organization relating to a specific facility
subject to on-site verification pursuant to Articles IV, V, and VI of
the Convention.
Host Team. Means the U.S. Government team that accompanies the
inspection team from the Organization for the Prohibition of Chemical
Weapons during a CWC inspection for which the regulations in the CWCR
apply.
Host Team Leader. Means the representative from the Department of
Commerce who heads the U.S. Government team that accompanies the
Inspection Team during a CWC inspection for which the regulations in the
CWCR apply.
Hydrocarbon. Means any organic compound that contains only carbon
and hydrogen.
Impurity. Means a chemical substance unintentionally present with
another chemical substance or mixture.
Inspection Notification. Means a written announcement to a plant
site by the United States National Authority
[[Page 122]]
(USNA) or the BIS Host Team of an impending inspection under the
Convention.
Inspection Site. Means any facility or area at which an inspection
is carried out and which is specifically defined in the respective
facility agreement or inspection request or mandate or inspection
request as expanded by the alternative or final perimeter.
Inspection Team. Means the group of inspectors and inspection
assistants assigned by the Director-General of the Technical Secretariat
to conduct a particular inspection.
Intermediate. Means a chemical formed through chemical reaction that
is subsequently reacted to form another chemical.
ITAR. Means the International Traffic in Arms Regulations (22 CFR
parts 120-130).
Organization for the Prohibition of Chemical Weapons (OPCW). Means
the international organization, located in The Hague, the Netherlands,
that administers the CWC.
Person. Means any individual, corporation, partnership, firm,
association, trust, estate, public or private institution, any State or
any political subdivision thereof, or any political entity within a
State, any foreign government or nation or any agency, instrumentality
or political subdivision of any such government or nation, or other
entity located in the United States.
Plant. Means a relatively self-contained area, structure or building
containing one or more units with auxiliary and associated
infrastructure, such as:
(1) Small administrative area;
(2) Storage/handling areas for feedstock and products;
(3) Effluent/waste handling/treatment area;
(4) Control/analytical laboratory;
(5) First aid service/related medical section; and
(6) Records associated with the movement into, around, and from the
site, of declared chemicals and their feedstock or product chemicals
formed from them, as appropriate.
Plant site. Means the local integration of one or more plants, with
any intermediate administrative levels, which are under one operational
control, and includes common infrastructure, such as:
(1) Administration and other offices;
(2) Repair and maintenance shops;
(3) Medical center;
(4) Utilities;
(5) Central analytical laboratory;
(6) Research and development laboratories;
(7) Central effluent and waste treatment area; and
(8) Warehouse storage.
Precursor. Means any chemical reactant which takes part, at any
stage in the production, by whatever method, of a toxic chemical. The
term includes any key component of a binary or multicomponent chemical
system.
Processing. Means a physical process such as formulation, extraction
and purification in which a chemical is not converted into another
chemical.
Production. Means the formation of a chemical through chemical
reaction, including biochemical or biologically mediated reaction (see
Supplement No. 2 to this part).
(1) Production of Schedule 1 chemicals means formation through
chemical synthesis as well as processing to extract and isolate Schedule
1 chemicals.
(2) Production of a Schedule 2 or Schedule 3 chemical means all
steps in the production of a chemical in any units within the same plant
through chemical reaction, including any associated processes (e.g.,
purification, separation, extraction, distillation, or refining) in
which the chemical is not converted into another chemical. The exact
nature of any associated process (e.g., purification, etc.) is not
required to be declared.
Production by synthesis. Means production of a chemical from its
reactants.
Protective purposes in relation to Schedule 1 chemicals. Means any
purpose directly related to protection against toxic chemicals and to
protection against chemical weapons. Further means the Schedule 1
chemical is used for determining the adequacy of defense equipment and
measures.
Purposes not prohibited by the CWC. Means the following:
[[Page 123]]
(1) Any peaceful purpose related to an industrial, agricultural,
research, medical or pharmaceutical activity or other activity;
(2) Any purpose directly related to protection against toxic
chemicals and to protection against chemical weapons;
(3) Any military purpose of the United States that is not connected
with the use of a chemical weapon and that is not dependent on the use
of the toxic or poisonous properties of the chemical weapon to cause
death or other harm; or
(4) Any law enforcement purpose, including any domestic riot control
purpose and including imposition of capital punishment.
Report. Means information due to BIS on exports and imports of
Schedule 1, Schedule 2 or Schedule 3 chemicals above applicable
thresholds. Such information is included in the national aggregate
declaration transmitted to the OPCW. Facility-specific information is
not included in the national aggregate declaration. Note: This
definition does not apply to parts 719 and 720 of the CWCR (see the
definition of ``report'' in Sec. 719.1(b) of the CWCR).
Schedules of Chemicals. Means specific lists of toxic chemicals,
groups of chemicals, and precursors contained in the CWC. See
Supplements No. 1 to parts 712 through 714 of the CWCR.
State Party. Means a country for which the CWC is in force. See
Supplement No. 1 to this part.
Storage. For purposes of Schedule 1 chemical reporting, means any
quantity that is not accounted for under the categories of production,
export, import, consumption or domestic transfer.
Technical Secretariat. Means the organ of the OPCW charged with
carrying out administrative and technical support functions for the
OPCW, including carrying out the verification measures delineated in the
CWC.
Toxic Chemical. Means any chemical which, through its chemical
action on life processes, can cause death, temporary incapacitation, or
permanent harm to humans or animals. The term includes all such
chemicals, regardless of their origin or of their method of production,
and regardless of whether they are produced in facilities, in munitions,
or elsewhere. Toxic chemicals that have been identified for the
application of verification measures are in schedules contained in
Supplements No. 1 to parts 712 through 714 of the CWCR.
Trading company. Means any person involved in the export and/or
import of scheduled chemicals in amounts greater than specified
thresholds, but not in the production, processing or consumption of such
chemicals in amounts greater than threshold amounts requiring
declaration. If such persons exclusively export or import scheduled
chemicals in amounts greater than specified thresholds, they are subject
to reporting requirements but are not subject to routine inspections.
Such persons must be the principal party in interest of the exports or
imports and may not delegate CWC reporting responsibilities to a
forwarding or other agent.
Transfer. See domestic transfer.
Transient intermediate. Means any chemical which is produced in a
chemical process but, because it is in a transition state in terms of
thermodynamics and kinetics, exists only for a very short period of
time, and cannot be isolated, even by modifying or dismantling the
plant, or altering process operating conditions, or by stopping the
process altogether.
Undeclared facility or plant site. Means a facility or plant site
that is not subject to declaration requirements because of past or
anticipated production, processing or consumption involving scheduled or
unscheduled discrete organic chemicals above specified threshold
quantities. However, such facilities and plant sites may have a
reporting requirement for exports or imports of such chemicals.
Unit. Means the combination of those items of equipment, including
vessels and vessel set up, necessary for the production, processing or
consumption of a chemical.
United States. Means the several States of the United States, the
District of Columbia, and the commonwealths, territories, and
possessions of the United States, and includes all places under the
jurisdiction or control of the United States, including any of
[[Page 124]]
the places within the provisions of paragraph (41) of section 40102 of
Title 49 of the United States Code, any civil aircraft of the United
States or public aircraft, as such terms are defined in paragraphs (1)
and (37), respectively, of section 40102 of Title 49 of the United
States Code, and any vessel of the United States, as such term is
defined in section 3(b) of the Maritime Drug Enforcement Act, as amended
(section 1903(b) of Title 46 App. of the United States Code).
United States National Authority (USNA). Means the Department of
State serving as the national focal point for the effective liaison with
the Organization for the Prohibition of Chemical Weapons and other
States Parties to the Convention and implementing the provisions of the
Chemical Weapons Convention Implementation Act of 1998 in coordination
with an interagency group designated by the President consisting of the
Secretary of Commerce, Secretary of Defense, Secretary of Energy, the
Attorney General, and the heads of other agencies considered necessary
or advisable by the President, or their designees. The Secretary of
State is the Director of the USNA.
Unscheduled chemical. Means a chemical that is not contained in
Schedule 1, Schedule 2, or Schedule 3 (see Supplements No. 1 to parts
712 through 714 of the CWCR).
Unscheduled Discrete Organic Chemical (UDOC). Means any ``discrete
organic chemical'' that is not contained in the Schedules of Chemicals
(see Supplements No. 1 to parts 712 through 714 of the CWCR) and subject
to the declaration requirements of part 715 of the CWCR. Unscheduled
discrete organic chemicals subject to declaration under the CWCR are
those produced by synthesis that are isolated for use or sale as a
specific end-product.
You. The term ``you'' or ``your'' means any person (see also
definition of ``person''). With regard to the declaration and reporting
requirements of the CWCR, ``you'' refers to persons that have an
obligation to report certain activities under the provisions of the
CWCR.
[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]
Sec. 710.2 Scope of the CWCR.
The Chemical Weapons Convention Regulations (parts 710 through 729
of this subchapter), or CWCR, implement certain obligations of the
United States under the Convention on the Prohibition of the
Development, Production, Stockpiling and Use of Chemical Weapons and on
Their Destruction, known as the CWC or Convention.
(a) Persons and facilities subject to the CWCR. (1) The CWCR apply
to all persons and facilities located in the United States, except the
following U.S. Government facilities:
(i) Department of Defense facilities;
(ii) Department of Energy facilities; and
(iii) Facilities of other U.S. Government agencies that notify the
USNA of their decision to be excluded from the CWCR.
(2) For purposes of the CWCR, ``United States Government
facilities'' are those facilities owned and operated by a U.S.
Government agency (including those operated by contractors to the
agency), and those facilities leased to and operated by a U.S.
Government agency (including those operated by contractors to the
agency). ``United States Government facilities'' do not include
facilities owned by a U.S. Government agency and leased to a private
company or other entity such that the private company or entity may
independently decide for what purposes to use the facilities.
(b) Activities subject to the CWCR. The activities subject to the
CWCR (parts 710 through 729 of this subchapter) are activities,
including production, processing, consumption, exports and imports,
involving chemicals further described in parts 712 through 715 of the
CWCR. These do not include activities involving inorganic chemicals
other than those listed in the Schedules of Chemicals, or other
specifically exempted unscheduled discrete organic chemicals.
Sec. 710.3 Purposes of the Convention and CWCR.
(a) Purposes of the Convention. (1) The Convention imposes upon the
United States, as a State Party, certain declaration, inspection, and
other obligations. In addition, the United States
[[Page 125]]
and other States Parties to the Convention undertake never under any
circumstances to:
(i) Develop, produce, otherwise acquire, stockpile, or retain
chemical weapons, or transfer, directly or indirectly, chemical weapons
to anyone;
(ii) Use chemical weapons;
(iii) Engage in any military preparations to use chemical weapons;
or
(iv) Assist, encourage or induce, in any way, anyone to engage in
any activity prohibited by the Convention.
(2) One objective of the Convention is to assure States Parties that
lawful activities of chemical producers and users are not converted to
unlawful activities related to chemical weapons. To achieve this
objective and to give States Parties a mechanism to verify compliance,
the Convention requires the United States and all other States Parties
to submit declarations concerning chemical production, consumption,
processing and other activities, and to permit international inspections
within their borders.
(b) Purposes of the Chemical Weapons Convention Regulations. To
fulfill the United States' obligations under the Convention, the CWCR
(parts 710 through 729 of this subchapter) prohibit certain activities,
and compel the submission of information from all facilities in the
United States, except for Department of Defense and Department of Energy
facilities and facilities of other U.S. Government agencies that notify
the USNA of their decision to be excluded from the CWCR on activities,
including exports and imports of scheduled chemicals and certain
information regarding unscheduled discrete organic chemicals as
described in parts 712 through 715 of the CWCR. U.S. Government
facilities are those owned by or leased to the U.S. Government,
including facilities that are contractor-operated. The CWCR also require
access for on-site inspections and monitoring by the OPCW, as described
in parts 716 and 717 of the CWCR.
Sec. 710.4 Overview of scheduled chemicals and examples of affected
industries.
The following provides examples of the types of industries that may
be affected by the CWCR (parts 710 through 729 of this subchapter).
These examples are not exhaustive, and you should refer to parts 712
through 715 of the CWCR to determine your obligations.
(a) Schedule 1 chemicals are listed in Supplement No. 1 to part 712
of the CWCR. Schedule 1 chemicals have little or no use in industrial
and agricultural industries, but may have limited use for research,
pharmaceutical, medical, public health, or protective purposes.
(b) Schedule 2 chemicals are listed in Supplement No. 1 to part 713
of the CWCR. Although Schedule 2 chemicals may be useful in the
production of chemical weapons, they also have legitimate uses in areas
such as:
(1) Flame retardant additives and research;
(2) Dye and photographic industries (e.g., printing ink, ball point
pen fluids, copy mediums, paints, etc.);
(3) Medical and pharmaceutical preparation (e.g., anticholinergics,
arsenicals, tranquilizer preparations);
(4) Metal plating preparations;
(5) Epoxy resins; and
(6) Insecticides, herbicides, fungicides, defoliants, and
rodenticides.
(c) Schedule 3 chemicals are listed in Supplement No. 1 to part 714
of the CWCR. Although Schedule 3 chemicals may be useful in the
production of chemical weapons, they also have legitimate uses in areas
such as:
(1) The production of:
(i) Resins;
(ii) Plastics;
(iii) Pharmaceuticals;
(iv) Pesticides;
(v) Batteries;
(vi) Cyanic acid;
(vii) Toiletries, including perfumes and scents;
(viii) Organic phosphate esters (e.g., hydraulic fluids, flame
retardants, surfactants, and sequestering agents); and
(2) Leather tannery and finishing supplies.
(d) Unscheduled discrete organic chemicals are used in a wide
variety of commercial industries, and include acetone, benzoyl peroxide
and propylene glycol.
[[Page 126]]
Sec. 710.5 Authority.
The CWCR (parts 710 through 729 of this subchapter) implement
certain provisions of the Chemical Weapons Convention under the
authority of the Chemical Weapons Convention Implementation Act of 1998
(Act), the National Emergencies Act, the International Emergency
Economic Powers Act (IEEPA), as amended, and the Export Administration
Act of 1979, as amended, by extending verification and trade restriction
requirements under Article VI and related parts of the Verification
Annex of the Convention to U.S. persons. In Executive Order 13128 of
June 25, 1999, the President delegated authority to the Department of
Commerce to promulgate regulations to implement the Act, and consistent
with the Act, to carry out appropriate functions not otherwise assigned
in the Act but necessary to implement certain reporting, monitoring and
inspection requirements of the Convention and the Act.
Sec. 710.6 Relationship between the Chemical Weapons Convention Regulations
and the Export Administration Regulations, the International Traffic in Arms
Regulations, and the Alcohol, Tobacco, Firearms and Explosives Regulations.
Certain obligations of the U.S. Government under the CWC pertain to
exports and imports. The obligations on exports are implemented in the
Export Administration Regulations (EAR) (15 CFR parts 730 through 774)
and the International Traffic in Arms Regulations (ITAR) (22 CFR parts
120 through 130). See in particular Sec. Sec. 742.2 and 742.18 and part
745 of the EAR, and Export Control Classification Numbers 1C350, 1C351,
1C355 and 1C395 of the Commerce Control List (supplement no. 1 to part
774 of the EAR). The obligations on imports are implemented in the
Chemical Weapons Convention Regulations (Sec. Sec. 712.2 and 713.1) and
the Alcohol, Tobacco, Firearms and Explosives Regulations in 27 CFR part
447.
[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]
Sec. Supplement No. 1 to Part 710--States Parties to the Convention on
the Prohibition of the Development, Production, Stockpiling, and Use of
Chemical Weapons and on Their Destruction
List of States Parties as of December 20, 2008
Afghanistan
Albania
Algeria
Andorra
Antigua and Barbuda
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahrain
Bangladesh
Belarus
Belgium
Belize
Benin
Bhutan
Bolivia
Bosnia-Herzegovina
Botswana
Brazil
Brunei Darussalam*
Bulgaria
Burkina Faso
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Central African Republic
Chad
Chile
China***
Colombia
Comoros
Congo (Republic of the)
Cook Islands**
Costa Rica
Cote d'Ivoire (Ivory Coast)
Croatia
Cuba
Cyprus
Czech Republic
Denmark
Djibouti
Dominica
Ecuador
El Salvador
Equatorial Guinea
Eritrea
Estonia
Ethiopia
Fiji
Finland
France
Gabon
Gambia
Georgia
Germany
Ghana
Greece
Grenada
Guatemala
Guinea
Guinea-Bissau
Guyana
Haiti
Holy See*
Honduras
Hungary
Iceland
India
Indonesia
Iran (Islamic Republic of)
Ireland
Italy
Jamaica
Japan
Jordan
Kazakhstan
Kenya
Kiribati
Korea (Republic of)
Kuwait
Kyrgyzstan
Laos (P.D.R.)*
Latvia
Lebanon
Lesotho
Liberia
Libya
Liechtenstein
Lithuania
Luxembourg
Macedonia (The Former Yugoslav Republic of)
Madagascar
Malawi
Malaysia
Maldives
Mali
Malta
Marshall Islands
Mauritania
Mauritius
Mexico
[[Page 127]]
Micronesia (Federated States of)
Moldova (Republic of)*
Monaco
Mongolia
Montenegro
Morocco
Mozambique
Namibia
Nauru
Nepal
Netherlands***
New Zealand
Nicaragua
Niger
Nigeria
Niue**
Norway
Oman
Pakistan
Palau
Panama
Papua New Guinea
Paraguay
Peru
Philippines
Poland
Portugal
Qatar
Romania
Russian Federation
Rwanda
Saint Kitts and Nevis
Saint Lucia
Saint Vincent and the Grenadines
Samoa
San Marino
Sao Tome and Principe
Saudi Arabia
Senegal
Serbia
Seychelles
Sierra Leone
Singapore
Slovak Republic*
Slovenia
Solomon Islands
South Africa
Spain
Sri Lanka
Sudan
Suriname
Swaziland
Sweden
Switzerland
Tajikistan
Tanzania, United Republic of
Thailand
Timor Leste (East Timor)
Togo
Tonga
Trinidad and Tobago
Tunisia
Turkey
Turkmenistan
Tuvalu
Uganda
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Uzbekistan
Vanuatu
Venezuela
Vietnam
Yemen
Zambia
Zimbabwe
* For export control purposes, these destinations are identified
using a different nomenclature under the Commerce Country Chart in
Supplement No. 1 to part 738 of the Export Administration Regulations
(EAR) (15 CFR parts 730 through 774).
** For export control purposes, Cook Islands and Niue are not
identified on the Commerce Country Chart in Supplement No. 1 to part 738
of the EAR and are treated the same as New Zealand, in accordance with
Sec. 738.3(b) of the EAR.
*** For CWC States Parties purposes, a territory, possession, or
department of any country that is listed in this Supplement as a State
Party to the CWC, is treated the same as the country of which it is a
territory, possession, or department (e.g., China includes Hong Kong and
Macau; the Netherlands includes Aruba and the Netherlands Antilles).
[71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14408, Mar. 28, 2007;
73 FR 78182, Dec. 22, 2008]
Supplement No. 2 to Part 710--Definitions of Production
----------------------------------------------------------------------------------------------------------------
Unscheduled discrete organic
Schedule 1 chemicals Schedule 2 and Schedule 3 chemicals chemicals (UDOCs)
----------------------------------------------------------------------------------------------------------------
Produced by a biochemical or biologically mediated reaction Produced by synthesis*
----------------------------------------------------------------------------------------------------------------
Formation through chemical All production steps in any units
synthesis. within the same plant which
Processing to extract and isolate includes associated processes--
Schedule 1 chemicals. purification, separation,
extraction distillation or
refining.**
----------------------------------------------------------------------------------------------------------------
* Intermediates used in a single or multi-step process to produce another declared UDOC are not declarable.
** Intermediates are subject to declaration, except ``transient intermediates,'' which are those chemicals in a
transition state in terms of thermodynamics and kinetics, that exist only for a very short period of time, and
cannot be isolated, even by modifying or dismantling the plant, or by altering process operating conditions,
or by stopping the process altogether are not subject to declaration.
PART 711_GENERAL INFORMATION REGARDING DECLARATION, REPORTING, AND ADVANCE
NOTIFICATION REQUIREMENTS, AND THE ELECTRONIC FILING OF DECLARATIONS AND
REPORTS
Sec.
711.1 Overviews of declaration, reporting, and advance notification
requirements.
711.2 Who submits declarations, reports and advance notifications?
711.3 Compliance review.
711.4 Assistance in determining your obligations.
711.5 Numerical precision of submitted data.
711.6 Where to obtain forms.
711.7 Where to submit declarations, reports and advance notifications.
711.8 How to request authorization from BIS to make electronic
submissions of declarations or reports.
[[Page 128]]
Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR
1999 Comp., p. 199.
Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.
Sec. 711.1 Overviews of declaration, reporting, and advance notification
requirements.
Parts 712 through 715 of the CWCR (parts 710 through 729 of this
subchapter) describe the declaration, advance notification and reporting
requirements for Schedule 1, 2 and 3 chemicals and for unscheduled
discrete organic chemicals (UDOCs). For each type of chemical, the
Convention requires annual declarations. If, after reviewing parts 712
through 715 of the CWCR, you determine that you have declaration,
advance notification or reporting requirements, you may obtain the
appropriate forms by contacting the Bureau of Industry and Security
(BIS) (see Sec. 711.6 of the CWCR).
Sec. 711.2 Who submits declarations, reports, and advance notifications.
The owner, operator, or senior management official of a facility
subject to declaration, reporting, or advance notification requirements
under the CWCR (parts 710 through 729 of this subchapter) is responsible
for the submission of all required documents in accordance with all
applicable provisions of the CWCR.
Sec. 711.3 Compliance review.
Periodically, BIS will request information from persons and
facilities subject to the CWCR to determine compliance with the
reporting, declaration and notification requirements set forth herein.
Information requested may relate to the production, processing,
consumption, export, import, or other activities involving scheduled
chemicals and unscheduled discrete organic chemicals described in parts
712 through 715 of the CWCR. Any person or facility subject to the CWCR
and receiving such a request for information will be required to provide
a response to BIS within 30 working days of receipt of the request. This
requirement does not, in itself, impose a requirement to create new
records or maintain existing records in a manner other than that
directed by the recordkeeping provisions set forth in part 721 of the
CWCR.
Sec. 711.4 Assistance in determining your obligations.
(a) Determining if your chemical is subject to declaration,
reporting or advance notification requirements. (1) If you need
assistance in determining if your chemical is classified as a Schedule
1, Schedule 2, or Schedule 3 chemical, or is an unscheduled discrete
organic chemical, submit your written request for a chemical
determination to BIS. Such requests must be sent via facsimile to (202)
482-1731, e-mailed to [email protected], or mailed to the Treaty
Compliance Division, Bureau of Industry and Security, U.S. Department of
Commerce, Room 4515, 14th Street and Pennsylvania Avenue, NW.,
Washington, DC 20230, and must be marked ``Attn: Chemical
Determination.'' Your request should include the information noted in
paragraph (a)(2) of this section to ensure an accurate determination.
Also include any additional information that you feel is relevant to the
chemical or process involved (see part 718 of the CWCR for provisions
regarding treatment of confidential business information). If you are
unable to provide all of the information required in paragraph (a)(2) of
this section, you should include an explanation identifying the reasons
or deficiencies that preclude you from supplying the information. If BIS
cannot make a determination based upon the information submitted, BIS
will return the request to you and identify the additional information
that is necessary to complete a chemical determination. BIS will provide
a written response to your chemical determination request within 10
working days of receipt of the request.
(2) Include the following information in each chemical determination
request:
(i) Date of request;
(ii) Company name and complete street address;
(iii) Point of contact;
(iv) Phone and facsimile number of contact;
(v) E-mail address of contact, if you want an acknowledgment of
receipt sent via e-mail;
[[Page 129]]
(vi) Chemical Name;
(vii) Structural formula of the chemical, if the chemical is not
specifically identified by name and chemical abstract service registry
number in Supplements No. 1 to parts 712 through 714 of the CWCR; and
(viii) Chemical Abstract Service registry number, if assigned.
(b) Other inquiries. If you need assistance in interpreting the
provisions of the CWCR or need assistance with declaration, forms,
reporting, advance notification, inspection or facility agreement
issues, contact BIS's Treaty Compliance Division by phone at (202) 482-
1001. If you require a response from BIS in writing, submit a detailed
request to BIS that explains your question, issue, or request. Send the
request to the address or facsimile included in paragraph (a) of this
section, or e-mail the request to [email protected]. Your request must
be marked, ``ATTN: CWCR Assistance.''
[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]
Sec. 711.5 Numerical precision of submitted data.
Numerical information submitted in declarations and reports is to be
provided per applicable rounding rules in each part (i.e., parts 712
through 715 of the CWCR) with a precision equal to that which can be
reasonably provided using existing documentation, equipment, and
measurement techniques.
Sec. 711.6 Where to obtain forms.
(a) Forms to complete declarations and reports required by the CWCR
may be obtained by contacting: Treaty Compliance Division, Bureau of
Industry and Security, U.S. Department of Commerce, Room 4515, 14th
Street and Pennsylvania Avenue, NW., Washington, DC 20230, Telephone:
(202) 482-1001. Forms and forms software may also be downloaded from the
Internet at www.cwc.gov.
(b) If the amount of information you are required to submit is
greater than the given form will allow, multiple copies of forms may be
submitted.
[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]
Sec. 711.7 Where to submit declarations, reports and advance notifications.
Declarations, reports and advance notifications required by the CWCR
must be sent either by fax to (202) 482-1731 or by mail or courier
delivery to the following address: Treaty Compliance Division, Bureau of
Industry and Security, U.S. Department of Commerce, Room 4515, 14th
Street and Pennsylvania Avenue, NW., Washington, DC 20230, Telephone:
(202) 482-1001. Specific types of declarations and reports and due dates
are outlined in Supplement No. 2 to parts 712 through 715 of the CWCR.
[73 FR 78182, Dec. 22, 2008]
Sec. 711.8 How to request authorization from BIS to make electronic
submissions of declarations or reports.
(a) Scope. This section provides an optional method of submitting
declarations or reports. Specifically, this section applies to the
electronic submission of declarations and reports required under the
CWCR. If you choose to submit declarations and reports by electronic
means, all such electronic submissions must be made through the Web-Data
Entry System for Industry (Web-DESI), which can be accessed on the CWC
web site at www.cwc.gov.
(b) Authorization. If you or your company has a facility, plant
site, or trading company that has been assigned a U.S. Code Number (USC
Number), you may submit declarations and reports electronically, once
you have received authorization from BIS to do so. An authorization to
submit declarations and reports electronically may be limited or
withdrawn by BIS at any time. There are no prerequisites for obtaining
permission to submit electronically, nor are there any limitations with
regard to the types of declarations or reports that are eligible for
electronic submission. However, BIS may direct, for any reason, that any
electronic declaration or report be resubmitted in writing, either in
whole or in part.
(1) Requesting approval to submit declarations and reports
electronically. To submit declarations and reports electronically, you
or your company must submit a written request to BIS at the address
identified in Sec. 711.6 of the
[[Page 130]]
CWCR. Both the envelope and letter must be marked, ``ATTN: Electronic
Declaration or Report Request.'' Your request should be on company
letterhead and must contain your name or the company's name, your
mailing address at the company, the name of the facility, plant site or
trading company and its U.S. Code Number, the address of the facility,
plant site or trading company (this address may be different from the
mailing address), the list of persons who are authorized to view, edit,
and/or submit declarations and reports on behalf of your company, and
the telephone number and name and title of the owner, operator, or
senior management official responsible for certifying that each person
listed in the request is authorized to view, edit, and/or submit
declarations and reports on behalf of you or your company (i.e., the
certifying official). Additional information required for submitting
electronic declarations and reports may be found on BIS's Web site at
www.cwc.gov. Once you have completed and submitted the necessary
certifications, BIS will review your request for authorization to view,
edit, and/or submit declarations and reports electronically. BIS will
notify you if additional information is required and/or upon completion
of its review.
Note to Sec. 711.8(b)(1): You must submit a separate request for
each facility, plant site or trading company owned by your company
(e.g., each site that is assigned a unique U.S. Code Number).
(2) Assignment and use of passwords for facilities, plant sites and
trading companies (USC password) and Web-DESI user accounts (user name
and password). (i) Each person, facility, plant site or trading company
authorized to submit declarations and reports electronically will be
assigned a password (USC password) that must be used in conjunction with
the U.S.C. Number. Each person authorized by BIS to view, edit, and/or
submit declarations and reports electronically for a facility, plant
site or trading company will be assigned a Web-DESI user account (user
name and password) telephonically by BIS. A Web-DESI user account will
be assigned to you only if your company has certified to BIS that you
are authorized to act for it in viewing, editing, and/or submitting
electronic declarations and reports under the CWCR.
Note to Sec. 711.8(b)(2)(i): When persons must have access to
multiple Web-DESI accounts, their companies must identify such persons
on the approval request for each of these Web-DESI accounts. BIS will
coordinate with such persons to ensure that the assigned user name and
password is the same for each account.
(ii) Your company may reveal the facility, plant site or trading
company password (USC password) only to Web-DESI users with valid
passwords, their supervisors, and employees or agents of the company
with a commercial justification for knowing the password.
(iii) If you are an authorized Web-DESI account user, you may not:
(A) Disclose your user name or password to anyone;
(B) Record your user name or password, either in writing or
electronically;
(C) Authorize another person to use your user name or password; or
(D) Use your user name or password following termination, either by
BIS or by your company, of your authorization or approval for Web-DESI
use.
(iv) To prevent misuse of the Web-DESI account:
(A) If Web-DESI user account information (i.e., user name and
password) is lost, stolen or otherwise compromised, the company and the
user must report the loss, theft or compromise of the user account
information, immediately, by calling BIS at (202) 482-1001. Within two
business days of making the report, the company and the user must submit
written confirmation to BIS at the address provided in Sec. 711.6 of
the CWCR.
(B) Your company is responsible for immediately notifying BIS
whenever a Web-DESI user leaves the employ of the company or otherwise
ceases to be authorized by the company to submit declarations and
reports electronically on its behalf.
(v) No person may use, copy, appropriate or otherwise compromise a
Web-DESI account user name or password assigned to another person. No
person, except a person authorized access by the company, may use or
copy the facility, plant site or trading company password (USC
password), nor may any
[[Page 131]]
person steal or otherwise compromise this password.
(c) Electronic submission of declarations and reports--(1) General
instructions. Upon submission of the required certifications and
approval of the company's request to use electronic submission, BIS will
provide instructions on both the method for transmitting declarations
and reports electronically and the process for submitting required
supporting documents, if any. These instructions may be modified by BIS
from time to time.
(2) Declarations and reports. The electronic submission of a
declaration or report will constitute an official document as required
under parts 712 through 715 of the CWCR. Such submissions must provide
the same information as written declarations and reports and are subject
to the recordkeeping provisions of part 720 of the CWCR. The company and
Web-DESI user submitting the declaration or report will be deemed to
have made all representations and certifications as if the submission
were made in writing by the company and signed by the certifying
official. Electronic submission of a declaration or report will be
considered complete upon transmittal to BIS.
(d) Updating. A company approved for electronic submission of
declarations or reports under Web-DESI must promptly notify BIS of any
change in its name, ownership or address. If your company wishes to have
a person added as a Web-DESI user, your company must inform BIS and
follow the instructions provided by BIS. Your company should conduct
periodic reviews to ensure that the company's designated certifying
official and Web-DESI users are persons whose current responsibilities
make it necessary and appropriate that they act for the company in
either capacity.
[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]
PART 712_ACTIVITIES INVOLVING SCHEDULE 1 CHEMICALS--Table of Contents
Sec.
712.1 Round to zero rule that applies to activities involving Schedule 1
chemicals.
712.2 Restrictions on activities involving Schedule 1 chemicals.
712.3 Initial declaration requirements for declared facilities which are
engaged in the production of Schedule 1 chemicals for purposes
not prohibited by the CWC.
712.4 New Schedule 1 production facility.
712.5 Annual declaration requirements for facilities engaged in the
production of Schedule 1 chemicals for purposes not prohibited
by the CWC.
712.6 Advance notification and annual report of all exports and imports
of Schedule 1 chemicals to, or from, other States Parties.
712.7 Amended declaration or report.
712.8 Declarations and reports returned without action by BIS.
712.9 Deadlines for submission of Schedule 1 declarations, reports,
advance notifications, and amendments.
Supplement No. 1 to Part 712--Schedule 1 Chemicals
Supplement No. 2 to Part 712--Deadlines for Submission of Schedule 1
Declarations, Reports, Advance Notifications, Reports, and
Amendments
Authority: 22 U.S.C. 6701 et seq.; 50 U.S.C. 1601 et seq.; 50 U.S.C.
1701 et seq.; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950, as
amended by E.O. 13094, 63 FR 40803, 3 CFR, 1998 Comp., p. 200; E.O.
13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.
Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.
Sec. 712.1 Round to zero rule that applies to activities involving Schedule 1
chemicals.
Facilities that produce, export or import mixtures containing less
than 0.5% aggregate quantities of Schedule 1 chemicals (see Supplement
No. 1 to this part) as unavoidable by-products or impurities may round
to zero and are not subject to the provisions of this part 712. Schedule
1 content may be calculated by volume or weight, whichever yields the
lesser percent. Note that such mixtures may be subject to the regulatory
requirements of other federal agencies.
Sec. 712.2 Restrictions on activities involving Schedule 1 chemicals.
(a) You may not produce Schedule 1 chemicals for protective
purposes.
(b) You may not import any Schedule 1 chemical unless:
(1) The import is from a State Party;
[[Page 132]]
(2) The import is for research, medical, pharmaceutical, or
protective purposes;
(3) The import is in types and quantities strictly limited to those
that can be justified for such purposes; and
(4) You have notified BIS at least 45 calendar days prior to the
import, pursuant to Sec. 712.6 of the CWCR.
Note 1 to Sec. 712.2(b): Pursuant to Sec. 712.6, advance
notifications of import of saxitoxin of 5 milligrams or less for
medical/diagnostic purposes must be submitted to BIS at least 3 days
prior to import.
Note 2 to Sec. 712.2(b): For specific provisions relating to the
prior advance notification of exports of all Schedule 1 chemicals, see
Sec. 745.1 of the Export Administration Regulations (EAR) (15 CFR parts
730 through 774). For specific provisions relating to license
requirements for exports of Schedule 1 chemicals, see Sec. 742.2 and
Sec. 742.18 of the EAR for Schedule 1 chemicals subject to the
jurisdiction of the Department of Commerce and see the International
Traffic in Arms Regulations (22 CFR parts 120 through 130) for Schedule
1 chemicals subject to the jurisdiction of the Department of State.
(c)(1) The provisions of paragraphs (a) and (b) of this section do
not apply to the retention, ownership, possession, transfer, or receipt
of a Schedule 1 chemical by a department, agency, or other entity of the
United States, or by a person described in paragraph (c)(2) of this
section, pending destruction of the Schedule 1 chemical;
(2) A person referred to in paragraph (c)(1) of this section is:
(i) Any person, including a member of the Armed Forces of the United
States, who is authorized by law or by an appropriate officer of the
United States to retain, own, possess transfer, or receive the Schedule
1 chemical; or
(ii) In an emergency situation, any otherwise non-culpable person if
the person is attempting to seize or destroy the Schedule 1 chemical.
[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]
Sec. 712.3 Initial declaration requirements for declared facilities which are
engaged in the production of Schedule 1 chemicals for purposes not prohibited
by the CWC.
Initial declarations submitted in February 2000 remain valid until
amended or rescinded. If you plan to change/amend the technical
description of your facility submitted with your initial declaration,
you must submit an amended initial declaration to BIS 200 calendar days
prior to implementing the change (see Sec. 712.5(b)(1)(ii) of the
CWCR).
Sec. 712.4 New Schedule 1 production facility.
(a) Establishment of a new Schedule 1 production facility. (1) If
your facility has never before been declared under Sec. 712.5 of the
CWCR, or the initial declaration for your facility has been withdrawn
pursuant to Sec. 712.5(g) of the CWCR, and you intend to begin
production of Schedule 1 chemicals at your facility in quantities
greater than 100 grams aggregate per year for research, medical, or
pharmaceutical purposes, you must provide an initial declaration (with a
current detailed technical description of your facility) to BIS in no
less than 200 calendar days in advance of commencing such production.
Such facilities are considered to be ``new Schedule 1 production
facilities'' and are subject to an initial inspection within 200
calendar days of submitting an initial declaration.
(2) New Schedule 1 production facilities that submit an initial
declaration pursuant to paragraph (a)(1) of this section are considered
approved Schedule 1 production facilities for purposes of the CWC,
unless otherwise notified by BIS within 30 days of receipt by BIS of
that initial declaration.
(b) Types of declaration forms required. If your new Schedule 1
production facility will produce in excess of 100 grams aggregate of
Schedule 1 chemicals, you must complete the Certification Form, Form 1-1
and Form A. You must also provide a detailed technical description of
the new facility or its relevant parts, and a detailed diagram of the
declared areas in the facility.
(c) Two hundred days after a new Schedule 1 production facility
submits its initial declaration, it is subject to the declaration
requirements in Sec. 712.5(a)(1) and (a)(2) and Sec. 712.5(b)(1)(ii)
of the CWCR.
[[Page 133]]
Sec. 712.5 Annual declaration requirements for facilities engaged in the
production of Schedule 1 chemicals for purposes not prohibited by the CWC.
(a) Declaration requirements--(1) Annual declaration on past
activities. You must complete the forms specified in paragraph (b)(2) of
this section if you produced at your facility in excess of 100 grams
aggregate of Schedule 1 chemicals in the previous calendar year. As a
declared Schedule 1 facility, in addition to declaring the production of
each Schedule 1 chemical that comprises your aggregate production of
Schedule 1 chemicals, you must also declare any Schedule 1, Schedule 2,
or Schedule 3 precursor used to produce the declared Schedule 1
chemical. You must further declare each Schedule 1 chemical used
(consumed) and stored at your facility, and domestically transferred
from your facility during the previous calendar year, whether or not you
produced that Schedule 1 chemical at your facility.
(2) Annual declaration on anticipated activities. You must complete
the forms specified in paragraph (b)(3) of this section if you
anticipate that you will produce at your facility more than 100 grams
aggregate of Schedule 1 chemicals in the next calendar year. If you are
not already a declared facility, you must complete an initial
declaration (see Sec. 712.4 of the CWCR) 200 calendar days before
commencing operations or increasing production which will result in
production of more than 100 grams aggregate of Schedule 1 chemicals.
(b) Declaration forms to be used--(1) Initial declaration. (i) You
must have completed the Certification Form, Form 1-1 and Form A if you
produced at your facility in excess of 100 grams aggregate of Schedule 1
chemicals in calendar years 1997, 1998, or 1999. You must have provided
a detailed current technical description of your facility or its
relevant parts including a narrative statement, and a detailed diagram
of the declared areas in the facility.
(ii) If you plan to change the technical description of your
facility from your initial declaration completed and submitted pursuant
to Sec. 712.3 or Sec. 712.4 of the CWCR, you must submit an amended
initial declaration to BIS 200 calendar days prior to the change. Such
amendments to your initial declaration must be made by completing a
Certification Form, Form 1-1 and Form A, including the new description
of the facility. See Sec. 712.7 of the CWCR for additional instructions
on amending Schedule 1 declarations.
(2) Annual declaration on past activities. If you are subject to the
declaration requirement of paragraph (a)(1) of this section, you must
complete the Certification Form and Forms 1-1, 1-2, 1-2A, 1-2B, and Form
A if your facility was involved in the production of Schedule 1
chemicals in the previous calendar year. Form B is optional.
(3) Annual declaration on anticipated activities. If you anticipate
that you will produce at your facility in excess of 100 grams aggregate
of Schedule 1 chemicals in the next calendar year you must complete the
Certification Form and Forms 1-1, 1-4, and Form A. Form B is optional.
(c) Quantities to be declared. If you produced in excess of 100
grams aggregate of Schedule 1 chemicals in the previous calendar year,
you must declare the entire quantity of such production, rounded to the
nearest gram. You must also declare the quantity of any Schedule 1,
Schedule 2 or Schedule 3 precursor used to produce the declared Schedule
1 chemical, rounded to the nearest gram. You must further declare the
quantity of each Schedule 1 chemical consumed or stored by, or
domestically transferred from, your facility, whether or not the
Schedule 1 chemical was produced by your facility, rounded to the
nearest gram. In calculating the amount of Schedule 1 chemical you
produced, consumed or stored, count only the amount of the Schedule 1
chemical(s) in a mixture, not the total weight of the mixture (i.e., do
not count the weight of the solution, solvent, or container).
(d) For the purpose of determining if a Schedule 1 chemical is
subject to declaration, you must declare a Schedule 1 chemical that is
an intermediate, but not a transient intermediate.
(e) ``Declared'' Schedule 1 facilities and routine inspections. Only
facilities that submitted a declaration pursuant to paragraph (a)(1) or
(a)(2) of this section
[[Page 134]]
or Sec. 712.4 of the CWCR are considered ``declared'' Schedule 1
facilities. A ``declared'' Schedule 1 facility is subject to initial and
routine inspection by the OPCW (see part 716 of the CWCR).
(f) Approval of declared Schedule 1 production facilities.
Facilities that submit declarations pursuant to this section are
considered approved Schedule 1 production facilities for purposes of the
CWC, unless otherwise notified by BIS within 30 days of receipt by BIS
of an annual declaration on past activities or annual declaration on
anticipated activities (see paragraphs (a)(1) and (a)(2) of this
section). If your facility does not produce more than 100 grams
aggregate of Schedule 1 chemicals, no approval by BIS is required.
(g) Withdrawal of Schedule 1 initial declarations. A facility
subject to Sec. Sec. 712.3, 712.4 and 712.5 of the CWCR may withdraw
its initial declaration at any time by notifying BIS in writing. A
notification requesting the withdrawal of the initial declaration should
be sent on company letterhead to the address in Sec. 711.6 of the CWCR.
BIS will acknowledge receipt of the withdrawal of the initial
declaration. Facilities withdrawing their initial declaration may not
produce subsequently in excess of 100 grams aggregate of Schedule 1
chemicals within a calendar year unless pursuant to Sec. 712.4.
Sec. 712.6 Advance notification and annual report of all exports and imports
of Schedule 1 chemicals to, or from, other States Parties.
Pursuant to the Convention, the United States is required to notify
the OPCW not less than 30 days in advance of every export or import of a
Schedule 1 chemical, in any quantity, to or from another State Party. In
addition, the United States is required to provide a report of all
exports and imports of Schedule 1 chemicals to or from other States
Parties during each calendar year. If you plan to export or import any
quantity of a Schedule 1 chemical from or to your declared facility,
undeclared facility or trading company, you must notify BIS in advance
of the export or import and complete an annual report of exports and
imports that actually occurred during the previous calendar year. The
United States will transmit to the OPCW the advance notifications and a
detailed annual declaration of each actual export or import of a
Schedule 1 chemical from/to the United States. Note that the advance
notification and annual report requirements of this section do not
relieve you of any requirement to obtain a license for export of
Schedule 1 chemicals subject to the EAR or ITAR or a license for import
of Schedule 1 chemicals from the Department of Justice under the
Alcohol, Tobacco, Firearms and Explosives Regulations in 27 CFR part
447. Only ``declared'' facilities, as defined in Sec. 712.5(e) of the
CWCR, are subject to initial and routine inspections pursuant to part
716 of the CWCR.
(a) Advance notification of exports and imports. You must notify BIS
at least 45 calendar days prior to exporting or importing any quantity
of a Schedule 1 chemical, except for exports or imports of 5 milligrams
or less of Saxitoxin--B (7)--for medical/diagnostic purposes, listed in
Supplement No. 1 to this part to or from another State Party. Advance
notification of export or import of 5 milligrams or less of Saxitoxin
for medical/diagnostic purposes only, must be submitted to BIS at least
3 calendar days prior to export or import. Note that advance
notifications for exports may be sent to BIS prior to or after
submission of a license application to BIS for Schedule 1 chemicals
subject to the EAR and controlled under ECCN 1C351 or to the Department
of State for Schedule 1 chemicals controlled under the ITAR. Such
advance notifications must be submitted separately from license
applications.
(1) Advance notifications should be on company letterhead or must
clearly identify the reporting entity by name of company, complete
address, name of contact person and telephone and facsimile numbers,
along with the following information:
(i) Chemical name;
(ii) Structural formula of the chemical;
(iii) Chemical Abstract Service (CAS) Registry Number;
(iv) Quantity involved in grams;
(v) Planned date of export or import;
[[Page 135]]
(vi) Purpose (end-use) of export or import (i.e., research, medical,
pharmaceutical, or protective purposes);
(vii) Name(s) of exporter and importer;
(viii) Complete street address(es) of exporter and importer;
(ix) U.S. export license or control number, if known; and
(x) Company identification number, once assigned by BIS.
(2) Send the advance notification either by fax to (202) 482-1731 or
by mail or courier delivery to the following address: Treaty Compliance
Division, Bureau of Industry and Security, U.S. Department of Commerce,
Room 4515, 14th Street and Pennsylvania Avenue, NW., Washington, DC
20230, and mark it ``Attn: Advance Notification of Schedule 1 Chemical
[Export] [Import].''
(3) Upon receipt of the advance notification, BIS will inform the
exporter or importer of the earliest date after which the shipment may
occur under the advance notification procedure. To export a Schedule 1
chemical subject to an export license requirement either under the EAR
or the ITAR, the exporter must have applied for and been granted a
license (see Sec. 742.2 and Sec. 742.18 of the EAR, or the ITAR at 22
CFR parts 120 through 130).
(b) Annual report requirements for exports and imports of Schedule 1
chemicals. Any person subject to the CWCR that exported or imported any
quantity of Schedule 1 chemical to or from another State Party during
the previous calendar year has a reporting requirement under this
section.
(1) Annual report on exports and imports. Declared and undeclared
facilities, trading companies, and any other person subject to the CWCR
that exported or imported any quantity of a Schedule 1 chemical to or
from another State Party in a previous calendar year must submit an
annual report on exports and imports.
(2) Report forms to submit--(i) Declared Schedule 1 facilities. (A)
If your facility declared production of a Schedule 1 chemical and you
also exported or imported any amount of that same Schedule 1 chemical,
you must report the export or import by submitting either:
(1) Combined declaration and report. Submit, along with your
declaration, Form 1-3 for that same Schedule 1 chemical to be reported.
Attach Form A, as appropriate; Form B is optional; or
(2) Report. Submit, separately from your declaration, a
Certification Form, Form 1-1, and a Form 1-3 for each Schedule 1
chemical to be reported. Attach Form A, as appropriate; Form B is
optional.
(B) If your facility declared production of a Schedule 1 chemical
and exported or imported any amount of a different Schedule 1 chemical,
you must report the export or import by submitting either:
(1) Combined declaration and report. Submit, along with your
declaration, a Form 1-3 for each Schedule 1 chemical to be reported.
Attach Form A, as appropriate; Form B is optional; or
(2) Report. Submit, separately from your declaration, a
Certification Form, Form 1-1, and a Form 1-3 for each Schedule 1
chemical to be reported. Attach Form A, as appropriate; Form B is
optional.
(ii) If you are an undeclared facility, trading company, or any
other person subject to the CWCR, and you exported or imported any
amount of a Schedule 1 chemical, you must report the export or import by
submitting a Certification Form, Form 1-1, and a Form 1-3 for each
Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form
B is optional.
(c) Paragraph (a) of this section does not apply to the activities
and persons set forth in Sec. 712.2(b) of the CWCR.
[71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]
Sec. 712.7 Amended declaration or report.
In order for BIS to maintain accurate information on previously
submitted facility declarations, including information necessary to
facilitate inspection notifications and activities or to communicate
declaration or report requirements, amended declarations or reports will
be required under the following circumstances described in this section.
This section applies only to annual declarations on past activities
[[Page 136]]
and annual reports on exports and imports submitted for the previous
calendar year or annual declarations on anticipated activities covering
the current calendar year, unless specified otherwise in a final
inspection report.
(a) Changes to information that directly affect inspection of a
declared facility's Annual Declaration of Past Activities (ADPA) or
Annual Declaration on Anticipated Activities (ADAA). You must submit an
amended declaration or report to BIS within 15 days of any change in the
following information:
(1) Types of Schedule 1 chemicals produced (e.g., additional
Schedule 1 chemicals);
(2) Quantities of Schedule 1 chemicals produced;
(3) Activities involving Schedule 1 chemicals; and
(4) End-use of Schedule 1 chemicals (e.g., additional end-use(s)).
(b) Changes to export or import information submitted in Annual
Reports on Exports and Imports from undeclared facilities, trading
companies and U.S. persons. You must submit an amended report or amended
combined declaration and report for changes to export or import
information within 15 days of any change in the following export or
import information:
(1) Types of Schedule 1 chemicals exported or imported (e.g.,
additional Schedule 1 chemicals);
(2) Quantities of Schedule 1 chemicals exported or imported;
(3) Destination(s) of Schedule 1 chemicals exported;
(4) Source(s) of Schedule 1 chemicals imported;
(5) Activities involving exports and imports of Schedule 1
chemicals; and
(6) End-use(s) of Schedule 1 chemicals exported or imported (e.g.,
additional end-use(s)).
(c) Changes to company and facility information previously submitted
to BIS in the ADPA, the ADAA, and the Annual Report on Exports and
Imports--(1) Internal company changes. You must submit an amended
declaration or report to BIS within 30 days of any change in the
following information:
(i) Name of declaration/report point of contact (D-POC), including
telephone number, facsimile number, and e-mail address;
(ii) Name(s) of inspection point(s) of contact (I-POC), including
telephone number(s), and facsimile number(s);
(iii) Company name (see Sec. 712.7(c)(2) of the CWCR for other
company changes);
(iv) Company mailing address;
(v) Facility name;
(vi) Facility owner, including telephone number, and facsimile
number; and
(vii) Facility operator, including telephone number, and facsimile
number.
(2) Change in ownership of company or facility. If you sold or
purchased a declared facility or trading company, you must submit an
amended declaration or report to BIS, either before the effective date
of the change or within 30 days after the effective date of the change.
The amended declaration or report must include the following
information:
(i) Information that must be submitted to BIS by the company selling
a declared facility:
(A) Name of seller (i.e., name of the company selling a declared
facility);
(B) Name of the declared facility and U.S. Code Number for that
facility;
(C) Name of purchaser (i.e., name of the new company purchasing a
declared facility) and identity of contact person for the purchaser, if
known;
(D) Date of ownership transfer or change;
(E) Additional details on sale of the declared facility relevant to
ownership or operational control over any portion of that facility
(e.g., whether the entire facility or only a portion of the declared
facility has been sold to a new owner); and
(F) Details regarding whether the new owner will submit the next
declaration or report for the entire calendar year during which the
ownership change occurred, or whether the previous owner and new owner
will submit separate declarations or reports for the periods of the
calendar year during which each owned the facility or trading company.
(1) If the new owner is responsible for submitting the declaration
or report for the entire current year, it must have in its possession
the records for
[[Page 137]]
the period of the year during which the previous owner owned the
facility.
(2) If the previous owner and new owner will submit separate
declarations for the periods of the calendar year during which each
owned the facility (``part-year declarations''), and if, at the time of
transfer of ownership, the previous owner's activities are not above the
declaration thresholds set forth in Sec. Sec. 712.4 and 712.5 of the
CWCR, the previous owner and the new owner must still submit
declarations to BIS with the below threshold quantities indicated.
(3) If the part-year declarations submitted by the previous owner
and the new owner are not, when combined, above the declaration
threshold set forth in Sec. Sec. 712.4 and 712.5 of the CWCR, BIS will
return the declarations without action as set forth in Sec. 712.8 of
the CWCR.
(4) If part-year reports are submitted by the previous owner and the
new owner as required in Sec. 712.5 of the CWCR, BIS will submit both
reports in the OPCW.
(ii) Information that must be submitted to BIS by the company
purchasing a declared facility:
(A) Name of purchaser (i.e., name of company purchasing a declared
facility;
(B) Mailing address of purchaser;
(C) Name of declaration point of contact (D-POC) for the purchaser,
including telephone number, facsimile number, and e-mail address;
(D) Name of inspection points of contact (I-POC) for the purchaser,
including telephone number(s), facsimile number(s) and e-mail
address(es);
(E) Name of the declared facility and U.S. Code Number for that
facility;
(F) Location of the declared facility;
(G) Owner and operator of the declared facility, including telephone
number, and facsimile number; and
(H) Details on the next declaration or report submission on whether
the new owner will submit the declaration or report for the entire
calendar year during which the ownership change occurred, or whether the
previous owner and new owner will submit separate declarations or
reports for the periods of the calendar year during which each owned the
facility or trading company.
(1) If the new owner is taking responsibility for submitting the
declaration or report for the entire current year, it must have in its
possession the records for the period of the year during which the
previous owner owned the facility.
(2) If the previous owner and new owner will submit separate
declarations for the periods of the calendar year during which each
owned the facility, and, at the time of transfer of ownership, the
previous owner's activities are not above the declaration thresholds set
forth in Sec. Sec. 712.4 and 712.5 of the CWCR, the previous owner and
the new owner must still submit declarations to BIS with the below
threshold quantities indicated.
(3) If the part-year declarations submitted by the previous owner
and the new owner are not, when combined, above the declaration
threshold set forth in Sec. Sec. 712.4 and 712.5 of the CWCR, BIS will
return the declarations without action as set forth in Sec. 712.8 of
the CWCR.
(4) If part-year reports are submitted by the previous owner and the
new owner as required in Sec. 712.5 of the CWCR, BIS will submit both
reports to the OPCW.
Note 1 to Sec. 712.7(c): You must submit an amendment to your most
recently submitted declaration or report for declaring changes to
internal company information (e.g., company name change) or changes in
ownership of a facility or trading company that have occurred since the
submission of this declaration or report. BIS will process the amendment
to ensure current information is on file regarding the facility or
trading company (e.g., for inspection notifications and correspondence)
and will also forward the amended declaration to the OPCW to ensure that
they also have current information on file regarding your facility or
trading company.
Note 2 to Sec. 712.7(c): You may notify BIS of change in ownership
via a letter to the address given in Sec. 711.6 of the CWCR. If you are
submitting an amended declaration or report, use Form B to address
details regarding the sale of the declared facility or trading company.
Note 3 to Sec. 712.7(c): For ownership changes, the declared
facility or trading company will maintain its original U.S. Code Number,
unless the facility or trading company is sold to multiple owners, at
which time BIS will assign new U.S. Code Numbers for the new facilities.
[[Page 138]]
(d) Inspection-related amendments. If, following completion of an
inspection (see parts 716 and 717 of the CWCR), you are required to
submit an amended declaration based on the final inspection report, BIS
will notify you in writing of the information that will be required
pursuant to Sec. Sec. 716.10 and 717.5 of the CWCR. You must submit an
amended declaration to BIS no later than 45 days following your receipt
of the BIS post-inspection letter.
(e) Non-substantive changes. If, subsequent to the submission of
your declaration or report to BIS, you discover one or more non-
substantive typographical errors in your declaration or report, you are
not required to submit an amended declaration or report to BIS. Instead,
you may correct these errors in a subsequent declaration or report.
(f) Documentation required for amended declarations or reports. If
you are required to submit an amended declaration or report to BIS
pursuant to paragraph (a), (b), (c), or (d) of this section, you must
submit either:
(1) A letter containing all of the corrected information required,
in accordance with the provisions of this section, to amend your
declaration or report; or
(2) Both of the following:
(i) A new Certification Form (i.e., Form 1-1); and
(ii) The specific forms (e.g., annual declaration on past
activities) containing the corrected information required, in accordance
with the provisions of this part 712, to amend your declaration or
report.
Sec. 712.8 Declarations and reports returned without action by BIS.
If you submit a declaration or report and BIS determines that the
information contained therein is not required by the CWCR, BIS will
return the original declaration or report to you, without action,
accompanied by a letter explaining BIS's decision. In order to protect
your confidential business information, BIS will not maintain a copy of
any declaration or report that is returned without action (RWA).
However, BIS will maintain a copy of the RWA letter.
Sec. 712.9 Deadlines for submission of Schedule 1 declarations, reports,
advance notifications, and amendments.
Declarations, reports, advance notifications, and amendments
required under this part must be postmarked by the appropriate date
identified in Supplement No. 2 to this part 712. Required declarations,
reports, advance notifications, and amendments include:
(a) Annual declaration on past activities (Schedule 1 chemical
production during the previous calendar year);
(b) Annual report on exports and imports of Schedule 1 chemicals
from facilities, trading companies, and other persons (during the
previous calendar year);
(c) Combined declaration and report (production of Schedule 1
chemicals, as well as exports or imports of the same or different
Schedule 1 chemicals, by a declared facility during the previous
calendar year);
(d) Annual declaration on anticipated activities (anticipated
production of Schedule 1 chemicals in the next calendar year);
(e) Advance notification of any export to or import from another
State Party;
(f) Initial declaration of a new Schedule 1 chemical production
facility; and
(g) Amended declaration or report, including combined declaration
and report.
Sec. Supplement No. 1 to Part 712--Schedule 1 Chemicals
------------------------------------------------------------------------
(CAS registry
number)
------------------------------------------------------------------------
A. Toxic chemicals:
(1) O-Alkyl (<=C10, incl. cycloalkyl) alkyl (Me,
Et, n-Pr or i-Pr)-phosphonofluoridates
e.g. Sarin: O-Isopropyl (107-44-8)
methylphosphonofluoridate.....................
Soman: O-Pinacolyl methylphosphonofluoridate... (96-64-0)
(2) O-Alkyl (<=C10, incl. cycloalkyl) N,N-dialkyl (77-81-6)
(Me, Et, n-Pr or i-Pr) phosphoramidocyanidates
e.g. Tabun: O-Ethyl N,N-dimethyl
phosphoramidocyanidate............................
[[Page 139]]
(3) O-Alkyl (H or <=C10, incl. cycloalkyl) S-2- (50782-69-9)
dialkyl (Me, Et, n-Pr or i-Pr)-aminoethyl alkyl
(Me, Et, n-Pr or i-Pr) phosphonothiolates and
corresponding alkylated or protonated salts e.g.
VX: O-Ethyl S-2-diisopropylaminoethyl methyl
phosphonothiolate.................................
(4) Sulfur mustards:
2-Chloroethylchloromethylsulfide............... (2625-76-5)
Mustard gas: Bis(2-chloroethyl)sulfide......... (505-60-2)
Bis(2-chloroethylthio)methane.................. (63869-13-6)
Sesquimustard: 1,2-Bis(2-chloroethylthio)ethane (3563-36-8)
1,3-Bis(2-chloroethylthio)-n-propane........... (63905-10-2)
1,4-Bis(2-chloroethylthio)-n-butane............ (142868-93-7)
1,5-Bis(2-chloroethylthio)-n-pentane........... (142868-94-8)
Bis(2-chloroethylthiomethyl)ether.............. (63918-90-1)
O-Mustard: Bis(2-chloroethylthioethyl)ether.... (63918-89-8)
(5) Lewisites:
Lewisite 1: 2-Chlorovinyldichloroarsine........ (541-25-3)
Lewisite 2: Bis(2-chlorovinyl)chloroarsine..... (40334-69-8)
Lewisite 3: Tris(2-chlorovinyl)arsine.......... (40334-70-1)
(6) Nitrogen mustards:
HN1: Bis(2-chloroethyl)ethylamine.............. (538-07-8)
HN2: Bis(2-chloroethyl)methylamine............. (51-75-2)
HN3: Tris(2-chloroethyl)amine.................. (555-77-1)
(7) Saxitoxin...................................... (35523-89-8)
(8) Ricin.......................................... (9009-86-3)
B. Precursors:
(9) Alkyl (Me, Et, n-Pr or i-Pr) (676-99-3)
phosphonyldifluorides e.g. DF:
Methylphosphonyldifluoride........................
(10) O-Alkyl (H or <=C10, incl. cycloalkyl) O-2- (57856-11-8)
dialkyl (Me, Et, n-Pr or i-Pr)-aminoethyl alkyl
(Me, Et, N-Pr or i-Pr) phosphonites and
corresponding alkylated or protonated salts e.g.
QL: O-Ethyl O-2-diisopropylaminoethyl
methylphosphonite.................................
(11) Chlorosarin: O-Isopropyl (1445-76-7)
methylphosphonochloridate.........................
(12) Chlorosoman: O-Pinacolyl (7040-57-5)
methylphosphonochloridate.........................
------------------------------------------------------------------------
Notes to Supplement No. 1
Note 1: Note that the following Schedule 1 chemicals are controlled for
export purposes under the Export Administration Regulations (see part
774 of the EAR, the Commerce Control List): Saxitoxin (35523-89-8) and
Ricin (9009-86-3).
Note 2: All Schedule 1 chemicals not listed in Note 1 to this Supplement
are controlled for export purposes by the Directorate of Defense Trade
Controls of the Department of State under the International Traffic in
Arms Regulations (22 CFR parts 120 through 130).
Sec. Supplement No. 2 to Part 712--Deadlines for Submission of Schedule
1 Declarations, Advance Notifications, Reports, and Amendments
------------------------------------------------------------------------
Declarations, advance
notifications and reports Applicable forms Due dates
------------------------------------------------------------------------
Annual Declaration on Past Certification, 1- February 28th of
Activities (previous calendar 1, 1-2,1-2A,1-2B, the year
year)--Declared facility (past A (as following any
production). appropriate), B calendar year in
(optional). which more than
100 grams
aggregate of
Schedule 1
chemicals were
produced,
Annual report on exports and Certification, 1- February 28th of
imports (previous calendar 1,1-3, A (as the year
year) (facility, trading appropriate), B following any
company, other persons). (optional). calendar year in
which Schedule 1
chemicals were
exported or
imported.
Combined Declaration and Report. Certification, 1- February 28th of
1, 1-2, 1-2A, 1- the year
2B, 1-3, A (as following any
appropriate), B calendar year in
(optional). which Schedule 1
chemicals were
produced,
exported, or
imported.
Annual Declaration of Certification, 1- September 3rd of
Anticipated Activities (next 1, 1-4, A (as the year prior to
calendar year). appropriate), B any calendar year
(optional). in which Schedule
1 activities are
anticipated to
occur.
Advance Notification of any Notify on 45 calendar days
export to or import from letterhead. See prior to any
another State Party. Sec. 712.6 of export or import
the CWCR. of Schedule 1
chemicals, except
3 days prior to
export or import
of 5 milligrams
or less of
saxitoxin for
medical/
diagnositc
purposes.
Initial Declaration of a new Certification, 1- 200 calendar days
Schedule 1 facility (technical 1, A (as prior to
description). appropriate), B producing in
(optional). excess of 100
grams aggregate
of Schedule 1
chemicals.
Amended Declaration............. Certification, 1-
1, 1-2, 1-2A.
--Chemicals/Activities: Sec. .................. --15 calendar days
712.7(a). after change in
information.
--Company information: Sec. .................. --30 calendar days
712.7(c). after change in
information.
--Post-inspection letter: .................. --45 calendar days
Sec. 712.7(d). after receipt of
letter.
[[Page 140]]
Amended Report Sec. 712.7(b).. Certification, 1- --15 calendar days
1, 1-3, A (as after change in
appropriate), B information.
(optional).
Amended Combined Declaration & Certification, 1- --15 calendar days
Report. 1, 1-2, 1-2A, 1- after change in
3, A (as information.
appropriate), B
(optional).
------------------------------------------------------------------------
PART 713_ACTIVITIES INVOLVING SCHEDULE 2 CHEMICALS--Table of Contents
Sec.
713.1 Prohibition on exports and imports of Schedule 2 chemicals to and
from States not Party to the CWC.
713.2 Annual declaration requirements for plant sites that produce,
process or consume Schedule 2 chemicals in excess of specified
thresholds.
713.3 Annual declaration and reporting requirements for exports and
imports of Schedule 2 chemicals.
713.4 Advance declaration requirements for additionally planned
production, processing or consumption of Schedule 2 chemicals.
713.5 Amended declaration or report.
713.6 Declarations and reports returned without action by BIS.
713.7 Deadlines for submission of Schedule 2 declarations, reports, and
amendments.
Supplement No. 1 to Part 713--Schedule 2 Chemicals
Supplement No. 2 to Part 713--Deadlines for Submission of Schedule 2
Declarations, Reports, and Amendments
Authority: 22 U.S.C. 6701 et seq.; 50 U.S.C. 1601 et seq.; 50 U.S.C.
1701 et seq; E.O. 12938 59 FR 59099, 3 CFR, 1994 Comp., p. 950, as
amended by E.O. 13094, 63 FR 40803, 3 CFR, 1998 Comp., p. 200; E.O.
13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.
Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.
Sec. 713.1 Prohibition on exports and imports of Schedule 2 chemicals to and
from States not Party to the CWC.
(a) You may not export any Schedule 2 chemical (see supplement no. 1
to this part) to any destination or import any Schedule 2 chemical from
any destination other than a State Party to the Convention. See
supplement no. 1 to part 710 of the CWCR for a list of States that are
party to the Convention.
Note to Sec. 713.1(a): See Sec. 742.18 of the Export
Administration Regulations (EAR) (15 CFR part 742) for prohibitions that
apply to exports of Schedule 2 chemicals to States not Party to the CWC.
(b) Paragraph (a) of this section does not apply to:
(1) The export or import of a Schedule 2 chemical to or from a State
not Party to the CWC by a department, agency, or other entity of the
United States, or by any person, including a member of the Armed Forces
of the United States, who is authorized by law, or by an appropriate
officer of the United States to transfer or receive the Schedule 2
chemical;
(2) Mixtures containing Schedule 2A chemicals, if the concentration
of each Schedule 2A chemical in the mixture is 1% or less by weight
(note, however, that such mixtures may be subject to the regulatory
requirements of other federal agencies);
(3) Mixtures containing Schedule 2B chemicals if the concentration
of each Schedule 2B chemical in the mixture is 10% or less by weight
(note, however, that such mixtures may be subject to the regulatory
requirements of other federal agencies); or
(4) Products identified as consumer goods packaged for retail sale
for personal use or packaged for individual use.
Sec. 713.2 Annual declaration requirements for plant sites that produce,
process or consume Schedule 2 chemicals in excess of specified thresholds.
(a) Declaration of production, processing or consumption of Schedule
2 chemicals for purposes not prohibited by the CWC--(1) Quantities of
production, processing or consumption that trigger declaration
requirements. You must complete the forms specified in paragraph (b) of
this section if you have been or will be involved in the following
activities:
(i) Annual declaration on past activities. (A) You produced,
processed or consumed at one or more plants on
[[Page 141]]
your plant site during any of the previous three calendar years, a
Schedule 2 chemical in excess of any of the following declaration
threshold quantities:
(1) 1 kilogram of chemical BZ: 3-Quinuclidinyl benzilate (see
Schedule 2, paragraph A.3 in Supplement No. 1 to this part);
(2) 100 kilograms of chemical PFIB: 1,1,3,3,3-Pentafluoro-
2(trifluoromethyl)-1-propene or 100 kilograms of chemical Amiton: 0,0-
Diethyl S-[2-(diethylamino) ethyl] phosphorothiolate and corresponding
alkylated or protonated salts (see Schedule 2, paragraphs A.1 and A.2 in
Supplement No. 1 to this part); or
(3) 1 metric ton of any chemical listed in Schedule 2, Part B (see
Supplement No. 1 to this part).
(B) In order to trigger a declaration requirement for a past
activity (i.e., production, processing or consumption) involving a
Schedule 2 chemical, a plant on your plant site must have exceeded the
applicable declaration threshold for that particular activity during one
or more of the previous three calendar years. For example, if a plant on
your plant site produced 800 kilograms of thiodiglycol and consumed 300
kilograms of the same Schedule 2 chemical, during the previous calendar
year, you would not have a declaration requirement based on these
activities, because neither activity at your plant would have exceeded
the declaration threshold of 1 metric ton for that Schedule 2 chemical.
However, a declaration requirement would apply if an activity involving
a Schedule 2 chemical at the plant exceeded the declaration threshold in
an earlier year (i.e., during the course of any other calendar year
within the past three calendar years), as indicated in the example
provided in the note to this paragraph.
Note to Sec. 713.2(a)(1)(i)(B): To determine whether or not you
have an annual declaration on past activities requirement for Schedule 2
chemicals, you must determine whether you produced, processed or
consumed a Schedule 2 chemical above the applicable threshold at one or
more plants on your plant site in any one of the three previous calendar
years. For example, for the 2004 annual declaration on past activities
period, if you determine that one plant on your plant site produced
greater than 1 kilogram of the chemical BZ in calendar year 2002, and no
plants on your plant site produced, processed or consumed any Schedule 2
chemical above the applicable threshold in calendar years 2003 or 2004,
you still have a declaration requirement under this paragraph for the
previous calendar year (2004). However, you must only declare on Form 2-
3 (question 2-3.1), production data for calendar year 2004. You would
declare ``0'' production because you did not produce BZ above the
applicable threshold in calendar year 2004. Since the plant site did not
engage in any other declarable activity (i.e., consumption, processing)
in the 2002-2004 declaration period, you would leave blank questions 2-
3.2 and 2-3.3 on Form 2-3. Note that declaring a ``0'' production
quantity for 2004, as opposed to leaving the question blank, permits BIS
to distinguish the activity that triggered the declaration requirement
from activities that were not declarable during that period.
(ii) Annual declaration on anticipated activities. You anticipate
that you will produce, process or consume at one or more plants on your
plant site during the next calendar year, a Schedule 2 chemical in
excess of the applicable declaration threshold set forth in paragraphs
(a)(1)(i)(A)(1) through (3) of this section.
Note to Sec. 713.2(a)(1)(ii): A null ``0'' declaration is not
required if you do not plan to produce, process or consume a Schedule 2
chemical in the next calendar year.
(2) Schedule 2 chemical production. (i) For the purpose of
determining Schedule 2 production, you must include all steps in the
production of a chemical in any units within the same plant through
chemical reaction, including any associated processes (e.g.,
purification, separation, extraction, distillation, or refining) in
which the chemical is not converted into another chemical. The exact
nature of any associated process (e.g., purification, etc.) is not
required to be declared.
(ii) For the purpose of determining if a Schedule 2 chemical is
subject to declaration, you must declare an intermediate Schedule 2
chemical, but not a transient intermediate Schedule 2 chemical.
(3) Mixtures containing a Schedule 2 chemical. (i) Mixtures that
must be counted. You must count the quantity of each Schedule 2 chemical
in a mixture, when determining the total quantity of
[[Page 142]]
a Schedule 2 chemical produced, processed, or consumed at a plant on
your plant site, if the concentration of each Schedule 2 chemical in the
mixture is 30% or more by volume or by weight, whichever yields the
lesser percent. Do not count a Schedule 2 chemical in the mixture that
represents less than 30% by volume or by weight.
(ii) How to count the quantity of each Schedule 2 chemical in a
mixture. If your mixture contains 30% or more concentration of a
Schedule 2 chemical, you must count the quantity (weight) of each
Schedule 2 chemical in the mixture, not the total weight of the mixture.
You must separately declare each Schedule 2 chemical with a
concentration in the mixture that is 30% or more and exceeds the
quantity threshold detailed in paragraphs (a)(1)(i)(A)(1) through (3) of
this section.
(iii) Determining declaration requirements for production,
processing and consumption. If the total quantity of a Schedule 2
chemical produced, processed or consumed at a plant on your plant site,
including mixtures that contain 30% or more concentration of a Schedule
2 chemical, exceeds the applicable declaration threshold set forth in
paragraphs (a)(1)(i)(A)(1) through (3) of this section, you have a
declaration requirement. For example, if during calendar year 2001, a
plant on your plant site produced a mixture containing 300 kilograms of
thiodiglycol in a concentration of 32% and also produced 800 kilograms
of thiodiglycol, the total amount of thiodiglycol produced at that plant
for CWCR purposes would be 1100 kilograms, which exceeds the declaration
threshold of 1 metric ton for that Schedule 2 chemical. You must declare
past production of thiodiglycol at that plant site for calendar year
2001. If, on the other hand, a plant on your plant site processed a
mixture containing 300 kilograms of thiodiglycol in a concentration of
25% and also processed 800 kilograms of thiodiglycol in other than
mixture form, the total amount of thiodiglycol processed at that plant
for CWCR purposes would be 800 kilograms and would not trigger a
declaration requirement. This is because the concentration of
thiodiglycol in the mixture is less than 30% and therefore did not have
to be ``counted'' and added to the other 800 kilograms of processed
thiodiglycol at that plant.
(b) Types of declaration forms to be used--(1) Annual declaration on
past activities. You must complete the Certification Form and Forms 2-1,
2-2, 2-3, 2-3A, and Form A if one or more plants on your plant site
produced, processed or consumed more than the applicable threshold
quantity of a Schedule 2 chemical described in paragraphs
(a)(1)(i)(A)(1) through (3) of this section in any of the three previous
calendar years. Form B is optional. If you are subject to annual
declaration requirements, you must include data for the previous
calendar year only.
(2) Annual declaration on anticipated activities. You must complete
the Certification Form and Forms 2-1, 2-2, 2-3, 2-3A, 2-3C, and Form A
if you plan to produce, process, or consume at any plant on your plant
site a Schedule 2 chemical above the applicable threshold set forth in
paragraphs (a)(1)(i)(A)(1) through (3) of this section during the
following calendar year. Form B is optional.
(c) Quantities to be declared--(1) Production, processing and
consumption of a Schedule 2 chemical above the declaration threshold--
(i) Annual declaration on past activities. If you are required to
complete forms pursuant to paragraph (a)(1)(i) of this section, you must
declare the aggregate quantity resulting from each type of activity
(production, processing or consumption) from each plant on your plant
site that exceeds the applicable threshold for that Schedule 2 chemical.
Do not include in these aggregate production, processing, and
consumption quantities any data from plants on the plant site that did
not individually produce, process or consume a Schedule 2 chemical in
amounts greater than the applicable threshold. For example, if a plant
on your plant site produced a Schedule 2 chemical in an amount greater
than the applicable declaration threshold during the previous calendar
year, you would have to declare only the production quantity from that
plant, provided that the total amount of the Schedule 2 chemical
processed or consumed at the plant did not exceed the applicable
declaration threshold during any one of the previous three calendar
years. If in
[[Page 143]]
the previous calendar year your production, processing and consumption
activities all were below the applicable declaration threshold, but your
declaration requirement is triggered because of production activities
occurring in an earlier year, you would declare ``0'' only for the
declared production activities.
(ii) Annual declaration on anticipated activities. If you are
required to complete forms pursuant to paragraph (a)(1)(ii) of this
section, you must declare the aggregate quantity of any Schedule 2
chemical that you plan to produce, process or consume at any plant(s) on
your plant site above the applicable thresholds set forth in paragraphs
(a)(1)(i)(A)(1) through (3) of this section during the next calendar
year. Do not include in these anticipated aggregate production,
processing, and consumption quantities any data from plants on the plant
site that you do not anticipate will individually produce, process or
consume a Schedule 2 chemical in amounts greater than the applicable
thresholds.
(2) Rounding. For the chemical BZ, report quantities to the nearest
hundredth of a kilogram (10 grams). For PFIB and the Amiton family,
report quantities to the nearest 1 kilogram. For all other Schedule 2
chemicals, report quantities to the nearest 10 kilograms.
(d) ``Declared'' Schedule 2 plant site. A plant site that submitted
a declaration pursuant to paragraph (a)(1) of this section is a
``declared'' plant site.
(e) Declared Schedule 2 plant sites subject to initial and routine
inspections. A ``declared'' Schedule 2 plant site is subject to initial
and routine inspection by the Organization for the Prohibition of
Chemical Weapons if it produced, processed or consumed in any of the
three previous calendar years, or is anticipated to produce, process or
consume in the next calendar year, in excess of ten times the applicable
declaration threshold set forth in paragraphs (a)(1)(i)(A)(1) through
(3) of this section (see part 716 of the CWCR). A ``declared'' Schedule
2 plant site that has received an initial inspection is subject to
routine inspection.
Sec. 713.3 Annual declaration and reporting requirements for exports and
imports of Schedule 2 chemicals.
(a) Declarations and reports of exports and imports of Schedule 2
chemicals--(1) Declarations. A Schedule 2 plant site that is declared
because it produced, processed or consumed a Schedule 2 chemical at one
or more plants above the applicable threshold set forth in paragraph (b)
of this section, and also exported from or imported to the plant site
that same Schedule 2 chemical above the applicable threshold, must
submit export and import information as part of its declaration.
(2) Reports. The following persons must submit a report if they
individually exported or imported a Schedule 2 chemical above the
applicable threshold indicated in paragraph (b) of this section:
(i) A declared plant site that exported or imported a Schedule 2
chemical that was different than the Schedule 2 chemical produced,
processed or consumed at one or more plants at the plant site above the
applicable declaration threshold;
(ii) An undeclared plant site;
(iii) A trading company; or
(iv) Any other person subject to the CWCR.
Note to Sec. 713.3(a)(1) and (a)(2)(i): A declared Schedule 2 plant
site may need to declare exports or imports of Schedule 2 chemicals that
it produced, processed or consumed above the applicable threshold and
also report exports or imports of different Schedule 2 chemicals that it
did not produce, process or consume above the applicable threshold
quantities. The report may be submitted to BIS either with or separately
from the annual declaration on past activities (see Sec. 713.3(d) of
the CWCR).
Note to Sec. 713.3(a)(2): The U.S. Government will not submit to
the OPCW company-specific information relating to the export or import
of Schedule 2 chemicals contained in reports. The U.S. Government will
add all export and import information contained in reports to export and
import information contained in declarations to establish the U.S.
national aggregate declaration on exports and imports.
Note to Sec. 713.3(a)(1) and (2): Declared and undeclared plant
sites must count, for declaration or reporting purposes, all exports
from and imports to the entire plant site, not only from or to
individual plants on the plant site.
[[Page 144]]
(b) Quantities of exports or imports that trigger a declaration or
reporting requirement. (1) You have a declaration or reporting
requirement and must complete the forms specified in paragraph (d) of
this section if you exported or imported a Schedule 2 chemical in excess
of the following threshold quantities:
(i) 1 kilogram of chemical BZ: 3-Quinuclidinyl benzilate (See
Schedule 2, paragraph A.3 included in Supplement No. 1 to this part);
(ii) 100 kilograms of chemical PFIB: 1,1,3,3,3-Pentafluoro-
2(trifluoromethyl)-1-propene or 100 kilograms of Amiton: O,O Diethyl S-
[2(diethylamino)ethyl] phosphorothiolate and corresponding alkylated or
protonated salts (see Schedule 2, paragraphs A.1 and A.2 included in
Supplement No.1 to this part); or
(iii) 1 metric ton of any chemical listed in Schedule 2, Part B (see
Supplement No.1 to this part).
(2) Mixtures containing a Schedule 2 chemical. The quantity of each
Schedule 2 chemical contained in a mixture must be counted for the
declaration or reporting of an export or import only if the
concentration of each Schedule 2 chemical in the mixture is 30% or more
by volume or by weight, whichever yields the lesser percent. You must
declare separately each Schedule 2 chemical whose concentration in the
mixture is 30% or more.
Note 1 to Sec. 713.3(b)(2): See Sec. 713.2(a)(2)(ii) of the CWCR
for information on counting amounts of Schedule 2 chemicals contained in
mixtures and determining declaration and reporting requirements.
Note 2 to Sec. 713.3(b)(2): The ``30% and above'' mixtures rule
applies only for declaration and reporting purposes. This rule does not
apply for purposes of determining whether the export of your mixture to
a non-State Party requires an End-Use Certificate or for determining
whether you need an export license from BIS (see Sec. 742.2, Sec.
742.18 and Sec. 745.2 of the Export Administration Regulations) or from
the Department of State (see the International Traffic in Arms
Regulations (22 CFR parts 120 through130)).
(c) Declaration and reporting requirements--(1) Annual declaration
on past activities. A plant site described in paragraph (a)(1) of this
section that has an annual declaration requirement for the production,
processing, or consumption of a Schedule 2 chemical for the previous
calendar year also must declare the export and/or import of that same
Schedule 2 chemical if the amount exceeded the applicable threshold set
forth in paragraph (b) of this section. The plant site must declare such
export or import information as part of its annual declaration of past
activities.
(2) Annual report on exports and imports. Declared plant sites
described in paragraph (a)(2)(i) of this section, and undeclared plant
sites, trading companies or any other person (described in paragraphs
(a)(2)(ii) through (iv) of this section) subject to the CWCR that
exported or imported a Schedule 2 chemical in a previous calendar year
in excess of the applicable thresholds set forth in paragraph (b) of
this section must submit an annual report on such exports or imports.
(d) Types of declaration and reporting forms to be used--(1) Annual
declaration on past activities. If you are a declared Schedule 2 plant
site, as described in paragraph (a)(1) of this section, you must
complete Form 2-3B, in addition to the forms required by Sec.
713.2(b)(1) of the CWCR, for each declared Schedule 2 chemical exported
or imported above the applicable threshold in the previous calendar
year.
(2) Annual report on exports and imports. (i) If you are a declared
plant site, as described in paragraph (a)(2)(i) of this section, you may
fulfill your annual reporting requirements by:
(A) Submitting, with your annual declaration on past activities, a
Form 2-3B for each Schedule 2 chemical you exported or imported above
the applicable threshold. Attach Form A, as appropriate; Form B is
optional; or
(B) Submitting, separately from your annual declaration on past
activities, a Certification Form, Form 2-1, and Form 2-3B for each
Schedule 2 chemical you exported or imported above the applicable
threshold. Attach Form A, as appropriate; Form B is optional.
(ii) If you are an undeclared plant site, trading company or any
other person subject to the CWCR, you must complete the Certification
Form, Form 2-1, and Form 2-3B for each Schedule 2 chemical you exported
or imported
[[Page 145]]
above the applicable threshold. Attach Form A, as appropriate; Form B is
optional.
(e) Quantities to be declared--(1) Calculations. If you exported
from or imported to your plant site, trading company, or other location
more than the applicable threshold of a Schedule 2 chemical in the
previous calendar year, you must declare or report all exports and
imports of that chemical by country of destination or country of origin,
respectively, and indicate the total amount exported to or imported from
each country.
(2) Rounding. For purposes of declaring or reporting exports and
imports of a Schedule 2 chemical, you must total all exports and imports
per calendar year per recipient or source and then round as follows: For
the chemical BZ, the total quantity for each country of destination or
country of origin (source) should be reported to the nearest hundredth
of a kilogram (10 grams); for PFIB and Amiton and corresponding
alkylated or protonated salts, the quantity for each destination or
source should be reported to the nearest 1 kilogram; and for all other
Schedule 2 chemicals, the total quantity for each destination or source
should be reported to the nearest 10 kilograms.
Sec. 713.4 Advance declaration requirements for additionally planned
production, processing, or consumption of Schedule 2 chemicals.
(a) Declaration requirements for additionally planned activities.
(1) You must declare additionally planned production, processing, or
consumption of Schedule 2 chemicals after the annual declaration on
anticipated activities for the next calendar year has been delivered to
BIS if:
(i) You plan that a previously undeclared plant on your plant site
under Sec. 713.2(a)(1)(ii) of the CWCR will produce, process, or
consume a Schedule 2 chemical above the applicable declaration
threshold;
(ii) You plan to produce, process, or consume at a plant declared
under Sec. 713.2(a)(1)(ii) of the CWCR an additional Schedule 2
chemical above the applicable declaration threshold;
(iii) You plan an additional activity (production, processing, or
consumption) at your declared plant above the applicable declaration
threshold for a chemical declared under Sec. 713.2(a)(1)(ii) of the
CWCR;
(iv) You plan to increase the production, processing, or consumption
of a Schedule 2 chemical by a plant declared under Sec. 713.2(a)(1)(ii)
of the CWCR from the amount exceeding the applicable declaration
threshold to an amount exceeding the applicable inspection threshold
(see Sec. 716.1(b)(2) of the CWCR);
(v) You plan to change the starting or ending date of anticipated
production, processing, or consumption declared under Sec.
713.2(a)(1)(ii) of the CWCR by more than three months; or
(vi) You plan to increase your production, processing, or
consumption of a Schedule 2 chemical by a declared plant site by 20
percent or more above that declared under Sec. 713.2(a)(1)(ii) of the
CWCR.
(2) If you must submit a declaration on additionally planned
activities because you plan to engage in any of the activities listed in
paragraphs (a)(1)(i) through (vi) of this section, you also should
declare changes to your declaration relating to the following
activities. You do not have to submit an additionally planned
declaration if you are only changing the following non-quantitative
activities:
(i) Changes to the plant's production capacity;
(ii) Changes or additions to the product group codes for the plant
site or the plant(s);
(iii) Changes to the plant's activity status (i.e., dedicated,
multipurpose, or other status);
(iv) Changes to the plant's multipurpose activities;
(v) Changes to the plant site's status relating to domestic transfer
of the chemical;
(vi) Changes to the plant site's purposes for which the chemical
will be produced, processed or consumed; or
(vii) Changes to the plant site's status relating to exports of the
chemical or the addition of new countries for export.
(b) Declaration forms to be used. If you are required to declare
additionally
[[Page 146]]
planned activities pursuant to paragraph (a) of this section, you must
complete the Certification Form and Forms 2-1, 2-2, 2-3, and 2-3C as
appropriate. Such forms are due to BIS at least 15 days prior to
beginning the additional activity.
Sec. 713.5 Amended declaration or report.
In order for BIS to maintain accurate information on previously
submitted plant site declarations, including information necessary to
facilitate inspection notifications and activities or to communicate
declaration or reporting requirements, amended declarations or reports
will be required under the circumstances described in this section. This
section applies only to annual declarations on past activities submitted
for the three previous calendar years, annual reports on exports and
imports for the previous calendar year or annual declarations on
anticipated activities covering the current calendar year, unless
specified otherwise in a final inspection report.
(a) Changes to information that directly affect inspection of a
declared plant site's Annual Declaration of Past Activities (ADPA) or
Combined Annual Declaration and Report. You must submit an amended
declaration or report to BIS within 15 days of any change in the
following information:
(1) Types of Schedule 2 chemicals produced, processed, or consumed;
(2) Quantities of Schedule 2 chemicals produced, processed, or
consumed;
(3) Activities involving Schedule 2 chemicals (production,
processing, consumption);
(4) End-use of Schedule 2 chemicals (e.g., additional end-use(s));
(5) Product group codes for Schedule 2 chemicals produced,
processed, or consumed;
(6) Production capacity for manufacturing a specific Schedule 2
chemical at particular plant site;
(7) Exports or imports (e.g., changes in the types of Schedule 2
chemicals exported or imported or in the quantity, recipients, or
sources of such chemicals);
(8) Domestic transfers (e.g., changes in the types of Schedule 2
chemicals, types of destinations, or product group codes); and
(9) Addition of new plant(s) for the production, processing, or
consumption of Schedule 2 chemicals.
(b) Changes to export or import information submitted in Annual
Reports on Exports and Imports from undeclared plant sites, trading
companies and U.S. persons. You must submit an amended report or amended
combined declaration and report to BIS within 15 days of any change in
the following export or import information:
(1) Types of Schedule 2 chemicals exported or imported (additional
Schedule 2 chemicals);
(2) Quantities of Schedule 2 chemicals exported or imported;
(3) Destination(s) of Schedule 2 chemicals exported; and
(4) Source(s) of Schedule 2 chemicals imported.
(c) Changes to company and plant site information that must be
maintained by BIS for the ADPA, Annual Declaration on Anticipated
Activities (ADAA), and the Annual Report on Exports and Imports--(1)
Internal company changes. You must submit an amended declaration or
report to BIS within 30 days of any change in the following information:
(i) Name of declaration/report point of contact (D-POC), including
telephone number, facsimile number, and e-mail address;
(ii) Name(s) of inspection point(s) of contact (I-POC), including
telephone number(s), facsimile number(s) and e-mail address(es);
(iii) Company name (see paragraph (c)(2) of this section for other
company changes);
(iv) Company mailing address;
(v) Plant site name;
(vi) Plant site owner, including telephone number, and facsimile
number;
(vii) Plant site operator, including telephone number, and facsimile
number;
(viii) Plant name;
(ix) Plant owner, including telephone number, and facsimile number;
and
(x) Plant operator, including telephone number and facsimile number.
(2) Change in ownership of company, plant site, or plant. If you
sold or purchased a declared plant site, plant, or trading company you
must submit an amended declaration or report to BIS, either before the
effective date of the
[[Page 147]]
change or within 30 days after the effective date of the change. The
amended declaration or report must include the following information:
(i) Information that must be submitted to BIS by the company selling
a declared plant site:
(A) Name of seller (i.e., name of the company selling a declared
plant site);
(B) Name of the declared plant site and U.S. Code Number for that
plant site;
(C) Name of purchaser (i.e., name of the new company/owner
purchasing a declared plant site) and identity of contact person for the
purchaser, if known;
(D) Date of ownership transfer or change;
(E) Additional (e.g., unique) details on the sale of the declared
plant site relevant to ownership or operational control over any portion
of the declared plant site (e.g., whether the entire plant site or only
a portion of the declared plant site has been sold to a new owner); and
(F) Details regarding whether the new owner will submit the next
declaration or report for the entire calendar year during which the
ownership change occurred, or whether the previous owner and new owner
will submit separate declarations or reports for the periods of the
calendar year during which each owned the plant site or trading company.
(1) If the new owner is responsible for submitting the declaration
or report for the entire current year, it must have in its possession
the records for the period of the year during which the previous owner
owned the plant site.
(2) If the previous owner and new owner will submit separate
declarations or reports for the periods of the calendar year during
which each owned the plant site, and, if at the time of transfer of
ownership, the previous owner's activities are not above the declaration
or reporting thresholds set forth in Sec. 713.2(a)(1)(i)(A)(1) through
(3) and Sec. 713.3(b)(1)(i) through (iii) of the CWCR, respectively,
the previous owner and the new owner must still submit declarations to
BIS with the below threshold quantities indicated.
(3) If the part-year declarations submitted by the previous owner
and the new owner are not, when combined, above the declaration
thresholds set forth in Sec. 713.2(a)(1)(i)(A)(1) through (3) of the
CWCR, BIS will return the declarations without action as set forth in
Sec. 713.6 of the CWCR.
(4) If part-year reports submitted by the previous owner and the new
owner are not, when combined, above the thresholds in Sec. Sec.
713.3(b)(1)(i) through (iii) of the CWCR, BIS will return the reports
without action as set forth in Sec. 713.6 of the CWCR.
(ii) Information that must be submitted to BIS by the company
purchasing a declared plant site:
(A) Name of purchaser (i.e., name of individual or company
purchasing a declared plant site);
(B) Mailing address of purchaser;
(C) Name of declaration point of contact (D-POC) for the purchaser,
including telephone number, facsimile number, and e-mail address;
(D) Name of inspection point(s) of contact (I-POC) for the
purchaser, including telephone number(s), facsimile number(s) and e-mail
address(es);
(E) Name of the declared plant site and U.S. Code Number for that
plant site;
(F) Location of the declared plant site;
(G) Owner of the declared plant site, including telephone number,
and facsimile number;
(H) Operator of the declared plant site, including telephone number,
and facsimile number;
(I) Name of plant(s) where Schedule 2 activities exceed the
applicable declaration threshold;
(J) Owner and operator of plant(s) where Schedule 2 activities
exceed the applicable declaration threshold, including telephone
numbers, and facsimile numbers;
(K) Location of the plant where Schedule 2 activities exceed the
applicable declaration threshold; and
(L) Details on the next declaration or report submission on whether
the new owner will submit the declaration or report for the entire
calendar year during which the ownership change occurred, or whether the
previous owner and new owner will submit separate declarations or
reports for the periods of the calendar year during which each
[[Page 148]]
owned the plant site or trading company.
Note 1 to Sec. 713.5(c): You must submit an amendment to your most
recently submitted declaration or report for declaring changes to
internal company information (e.g., company name change) or changes in
ownership of a facility or trading company that have occurred since the
submission of this declaration or report. BIS will process the amendment
to ensure current information is on file regarding the facility or
trading company (e.g., for inspection notifications and correspondence)
and will also forward the amended declaration to the OPCW to ensure that
they also have current information on file regarding your facility or
trading company.
Note 2 to Sec. 713.5(c): You may notify BIS of change in ownership
via a letter to the address given in Sec. 711.6 of the CWCR. If you are
submitting an amended declaration or report, use Form B to address
details regarding the sale of the declared plant site or trading
company.
Note 3 to Sec. 713.5(c): For ownership changes, the declared
facility or trading company will maintain its original U.S. Code Number,
unless the plant site or trading company is sold to multiple owners, at
which time BIS will assign new U.S. Code Numbers.
(d) Inspection-related amendments. If, following the completion of
an inspection (see parts 716 and 717 of the CWCR), you are required to
submit an amended declaration based on the final inspection report, BIS
will notify you in writing of the information that will be required
pursuant to Sec. Sec. 716.10 and 717.5 of the CWCR. You must submit an
amended declaration to BIS no later than 45 days following your receipt
of BIS's post-inspection letter.
(e) Non-substantive changes. If, subsequent to the submission of
your declaration or report to BIS, you discover one or more non-
substantive typographical errors in your declaration or report, you are
not required to submit an amended declaration or report to BIS. Instead,
you may correct these errors in a subsequent declaration or report.
(f) Documentation required for amended declarations or reports. If
you are required to submit an amended declaration or report to BIS
pursuant to paragraph (a), (b), (c), or (d) of this section, you must
submit either:
(1) A letter containing all of the corrected information required,
in accordance with the provisions of this section, to amend your
declaration or report; or
(2) Both of the following:
(i) A new Certification Form; and
(ii) The specific forms required for the declaration or report type
being amended (e.g., annual declaration on past activities) containing
the corrected information required, in accordance with the requirements
of this section, to amend your declaration or report.
Sec. 713.6 Declarations and reports returned without action by BIS.
If you submit a declaration or report and BIS determines that the
information contained therein is not required by the CWCR, BIS will
return the original declaration or report to you, without action,
accompanied by a letter explaining BIS's decision. In order to protect
your confidential business information, BIS will not maintain a copy of
any declaration or report that is returned without action (RWA).
However, BIS will maintain a copy of the RWA letter.
Sec. 713.7 Deadlines for submission of Schedule 2 declarations, reports, and
amendments.
Declarations, reports, and amendments required under this part must
be postmarked by the appropriate date identified in Supplement No. 2 to
this part 713. Required declarations, reports, and amendments include:
(a) Annual declaration on past activities (production, processing,
or consumption of Schedule 2 chemicals during the previous calendar
year);
(b) Annual report on exports and imports of Schedule 2 chemicals by
plant sites, trading companies, and other persons subject to the CWCR
(during the previous calendar year);
(c) Combined declaration and report (production, processing, or
consumption of Schedule 2 chemicals, as well as exports or imports of
the same or different Schedule 2 chemicals, by a declared plant site
during the previous calendar year);
(d) Annual declaration on anticipated activities (production,
processing or consumption) involving Schedule 2
[[Page 149]]
chemicals during the next calendar year;
(e) Declaration on Additionally Planned Activities (production,
processing or consumption) involving Schedule 2 chemicals; and
(f) Amended declaration and report, including combined declaration
and report.
Sec. Supplement No. 1 to Part 713--Schedule 2 Chemicals
------------------------------------------------------------------------
(CAS registry
number)
------------------------------------------------------------------------
A. Toxic chemicals:
(1) Amiton: O,O-Diethyl S-[2-(diethylamino)ethyl] (78-53-5)
phosphorothiolate and corresponding alkylated or
protonated salts..................................
(2) PFIB: 1,1,3,3,3-Pentafluoro-2-(trifluoromethyl)- (382-21-8)
1-propene.........................................
(3) BZ: 3-Quinuclidinyl benzilate.................. (6581-06-2)
B. Precursors:
(4) Chemicals, except for those listed in Schedule (676-97-1)
1, containing a phosphorus atom to which is bonded
one methyl, ethyl or propyl (normal or iso) group
but not further carbon atoms, e.g.
Methylphosphonyl dichloride.......................
Dimethyl methylphosphonate..................... (756-79-6)
Exemption: Fonofos: O-Ethyl S-phenyl (944-22-9)
ethylphosphono-thiolothionate.................
(5) N,N-Dialkyl (Me, Et, n-Pr or i-Pr)
phosphoramidic dihalides
(6) Dialkyl (Me, Et, n-Pr or i-Pr) N,N-dialkyl (Me,
Et, n-Pr or i-Pr)-phosphoramidates
(7) Arsenic trichloride............................ (7784-34-1)
(8) 2,2-Diphenyl-2-hydroxyacetic acid.............. (76-93-7)
(9) Quinuclidine-3-ol.............................. (1619-34-7)
(10) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethyl-
2-chlorides and corresponding protonated salts
(11) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethane-
2-ols and corresponding protonated salts
Exemptions: N,N-Dimethylaminoethanol and (108-01-0)
corresponding protonated salts................
N,N-Diethylaminoethanol and corresponding (100-37-8)
protonated salts..............................
(12) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethane-
2-thiols and corresponding protonated salts
(13) Thiodiglycol: Bis(2-hydroxyethyl)sulfide...... (111-48-8)
(14) Pinacolyl alcohol: 3,3-Dimethylbutane-2-ol.... (464-07-3)
------------------------------------------------------------------------
Notes to Supplement No. 1
Note 1: Note that the following Schedule 2 chemicals are controlled for
export purposes by the Directorate of Defense Trade Controls of the
Department of State under the International Traffic in Arms
Regulations (22 CFR parts 120 through 130): Amiton: O,O-Diethyl S-[2-
(diethylamino)ethyl] phosphorothiolate and corresponding alkylated or
protonated salts (78-53-5); BZ: 3-Quinuclidinyl benzilate 6581-06-2);
and Methylphosphonyl dichloride (676-97-1).
Note 2: All Schedule 2 chemicals not listed in Note 1 to this Supplement
are controlled for export purposes under the Export Administration
Regulations (see part 774 of the EAR, the Commerce Control List).
Sec. Supplement No. 2 to Part 713--Deadlines for Submission of Schedule
2 Declarations, Reports, and Amendments
------------------------------------------------------------------------
Declarations and reports Applicable forms Due dates
------------------------------------------------------------------------
Annual Declaration on Past Certification, 2- February 28 of the
Activities (previous calendar 1, 2-2, 2-3, 2- year following
year)--Declared plant site 3A, 2-3B (if also any calendar year
(production, processing, or exported or in which the
consumption). imported), A (as production,
appropriate), B processing, or
(optional). consumption of a
Schedule 2
chemical exceeded
the applicable
declaration
thresholds in
Sec.
713.2(a)(1)(i) of
the CWCR.
Annual Report on Exports and Certification, 2- February 28 of the
Imports (previous calendar 1, 2-3B, A (as year following
year)--Plant site, trading appropriate), B any calendar year
company, other persons. (optional). in which exports
or imports of a
Schedule 2
chemical by a
plant site,
trading company,
or other person
subject to the
CWCR (as
described in Sec.
713.3(a)(2) of
the CWCR)
exceeded the
applicable
thresholds in
Sec.
713.3(b)(1) of
the CWCR.
Combined Declaration & Report-- Certification, 2- February 28 of the
Declared plant site 1, 2-2, 2-3, 2- year following
(production, processing, or 3A, 2-3B, A (as any calendar year
consumption; exports and appropriate), B in which the
imports). (optional). production,
processing, or
consumption of a
Schedule 2
chemical and the
export or import
of the same or a
different
Schedule 2
chemical by a
declared plant
site exceeded the
applicable
thresholds in
Sec. Sec.
713.2(a)(1)(i)
and 713.3(b)(1),
respectively, of
the CWCR.
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Annual Declaration on Certification, 2- September 3 of the
Anticipated Activities (next 1, 2-2, 2-3, 2- year prior to any
calendar year). 3A, 2-3C, A (as calendar year in
appropriate), B which Schedule 2
(optional). activities are
anticipated to
occur.
Declaration on Additionally Certification, 2- 15 calendar days
Planned Activities (production, 1, 2-2, 2-3, 2- before the
processing and consumption). 3A, 2-3C, A (as additionally
appropriate), B planned activity
(optional). begins.
Amended Declaration............. Certification, 2-
1, 2-2, 2-3 2-3A,
2-3B (if also
exported or
imported), A (as
appropriate), B
(optional).
--Declaration information... .................. --15 calendar days
after change in
information.
--Company information....... .................. --30 calendar days
after change in
information.
--Post-inspection letter.... .................. --45 calendar days
after receipt of
letter.
Amended Report.................. Certification, 2- --15 calendar days
1, 2-3B, A (as after change in
appropriate), B information.
(optional).
Amended Combined Declaration & Certification, 2- --15 calendar days
Report. 1, 2-2, 2-3, 2- after change in
3A, 2-3B, A (as information.
appropriate), B
(optional).
------------------------------------------------------------------------
PART 714_ACTIVITIES INVOLVING SCHEDULE 3 CHEMICALS--Table of Contents
Sec.
714.1 Annual declaration requirements for plant sites that produce a
Schedule 3 chemical in excess of 30 metric tons.
714.2 Annual reporting requirements for exports and imports in excess of
30 metric tons of Schedule 3 chemicals.
714.3 Advance declaration requirements for additionally planned
production of Schedule 3 chemicals.
714.4 Amended declaration or report.
714.5 Declarations and reports returned without action by BIS.
714.6 Deadlines for submission of Schedule 3 declarations, reports, and
amendments.
Supplement No. 1 to Part 714--Schedule 3 Chemicals
Supplement No. 2 to Part 714--Deadlines for Submission of Schedule 3
Declarations, Reports, and Amendments
Authority: 22 U.S.C. 6701 et seq.; E.O. 13128, 64 FR 36703, 3 CFR
1999 Comp., p. 199.
Source: 71 FR 24929, Apr. 27, 2006, unless otherwise noted.
Sec. 714.1 Annual declaration requirements for plant sites that produce a
Schedule 3 chemical in excess of 30 metric tons.
(a) Declaration of production of Schedule 3 chemicals for purposes
not prohibited by the CWC--(1) Production quantities that trigger the
declaration requirement. You must complete the appropriate forms
specified in paragraph (b) of this section if you have produced or
anticipate producing a Schedule 3 chemical (see Supplement No. 1 to this
part) as follows:
(i) Annual declaration on past activities. You produced at one or
more plants on your plant site in excess of 30 metric tons of any single
Schedule 3 chemical during the previous calendar year.
(ii) Annual declaration on anticipated activities. You anticipate
that you will produce at one or more plants on your plant site in excess
of 30 metric tons of any single Schedule 3 chemical in the next calendar
year.
(2) Schedule 3 chemical production. (i) For the purpose of
determining Schedule 3 production, you must include all steps in the
production of a chemical in any units within the same plant through
chemical reaction, including any associated processes (e.g.,
purification, separation, extraction, distillation, or refining) in
which the chemical is not converted into another chemical. The exact
nature of any associated process (e.g., purification, etc.) is not
required to be declared.
(ii) For the purpose of determining if a Schedule 3 chemical is
subject to declaration, you must declare an intermediate Schedule 3
chemical, but not a transient intermediate Schedule 3 chemical.
(3) Mixtures containing a Schedule 3 chemical. (i) When you must
count the quantity of a Schedule 3 chemical in a mixture for declaration
purposes. The quantity of each Schedule 3 chemical contained in a
mixture must be counted for declaration purposes only if the
concentration of each Schedule 3 chemical in the mixture is 80% or more
by
[[Page 151]]
volume or by weight, whichever yields the lesser percent.
(ii) How to count the amount of a Schedule 3 chemical in a mixture.
If your mixture contains 80% or more concentration of a Schedule 3
chemical, you must count only the amount (weight) of the Schedule 3
chemical in the mixture, not the total weight of the mixture.
(b) Types of declaration forms to be used--(1) Annual declaration on
past activities. You must complete the Certification Form and Forms 3-1,
3-2, 3-3, and Form A if one or more plants on your plant site produced
in excess of 30 metric tons of any single Schedule 3 chemical during the
previous calendar year. Form B is optional.
(2) Annual declaration on anticipated activities. You must complete
the Certification Form, and Forms 3-1 and 3-3 if you anticipate that you
will produce at one or more plants on your plant site in excess of 30
metric tons of any single Schedule 3 chemical in the next calendar year.
(c) Quantities to be declared--(1) Production of a Schedule 3
chemical in excess of 30 metric tons. If your plant site is subject to
the declaration requirements of paragraph (a) of this section, you must
declare the range within which the production at your plant site falls
(30 to 200 metric tons, 200 to 1,000 metric tons, etc.) as specified on
Form 3-3. When specifying the range of production for your plant site,
you must aggregate the production quantities of all plants on the plant
site that produced the Schedule 3 chemical in amounts greater than 30
metric tons. Do not aggregate amounts of production from plants on the
plant site that did not individually produce a Schedule 3 chemical in
amounts greater than 30 metric tons. You must complete a separate Form
3-3 for each Schedule 3 chemical for which production at your plant site
exceeds 30 metric tons.
(2) Rounding. To determine the production range into which your
plant site falls, add all the production of the declared Schedule 3
chemical during the calendar year from all plants on your plant site
that produced the Schedule 3 chemical in amounts exceeding 30 metric
tons, and round to the nearest ten metric tons.
(d) ``Declared'' Schedule 3 plant site. A plant site that submitted
a declaration pursuant to paragraph (a)(1) of this section is a
``declared'' Schedule 3 plant site.
(e) Routine inspections of declared Schedule 3 plant sites. A
``declared'' Schedule 3 plant site is subject to routine inspection by
the Organization for the Prohibition of Chemical Weapons (see part 716
of the CWCR) if:
(1) The declared plants on your plant site produced in excess of 200
metric tons aggregate of any Schedule 3 chemical during the previous
calendar year; or
(2) You anticipate that the declared plants on your plant site will
produce in excess of 200 metric tons aggregate of any Schedule 3
chemical during the next calendar year.