[Title 15 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2017 Edition]
[From the U.S. Government Publishing Office]
[[Page i]]
Title 15
Commerce and Foreign Trade
________________________
Parts 300 to 799
Revised as of January 1, 2017
Containing a codification of documents of general
applicability and future effect
As of January 1, 2017
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 61
Chapter VII--Bureau of Industry and Security,
Department of Commerce 93
Finding Aids:
Table of CFR Titles and Chapters........................ 1077
Alphabetical List of Agencies Appearing in the CFR...... 1097
List of CFR Sections Affected........................... 1107
[[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.
----------------------------
[[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
regulation. Each title is divided into chapters which usually bear the
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
volume.
LEGAL STATUS
The contents of the Federal Register are required to be judicially
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evidence of the text of the original documents (44 U.S.C. 1510).
HOW TO USE THE CODE OF FEDERAL REGULATIONS
The Code of Federal Regulations is kept up to date by the individual
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To determine whether a Code volume has been amended since its
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EFFECTIVE AND EXPIRATION DATES
Each volume of the Code contains amendments published in the Federal
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OMB CONTROL NUMBERS
The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires
Federal agencies to display an OMB control number with their information
collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
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(a) The incorporation will substantially reduce the volume of
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(b) The matter incorporated is in fact available to the extent
necessary to afford fairness and uniformity in the administrative
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(c) The incorporating document is drafted and submitted for
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alphabetical list of agencies publishing in the CFR are also included in
this volume.
[[Page vii]]
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Oliver A. Potts,
Director,
Office of the Federal Register.
January 1, 2017.
[[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, 2017.
For this volume, Ann Worley was Chief Editor. The Code of Federal
Regulations publication program is under the direction of John Hyrum
Martinez, assisted by Stephen J. Frattini.
[[Page 1]]
TITLE 15--COMMERCE AND FOREIGN TRADE
(This book contains parts 300 to 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 20
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
336-399 [Reserved]
[[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 Enforcement
and Compliance 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; 78 FR 72571, Dec. 3,
2013]
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, light microscope.
(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.
(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.
(Approved by the Office of Management and Budget under control number
0625-0037)
[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
[[Page 12]]
things, whether the results of any research to be performed with the
instrument will be fully and timely made 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
[[Page 13]]
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 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
[[Page 14]]
upon the provision of such information and may draw appropriate
inferences from a person's failure to provide the requested information.
(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,
[[Page 15]]
tape recorders, projectors); and in conveying cultural information to
the public (e.g., a planetarium in the Smithsonian Institution).
(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
[[Page 16]]
and domestic) in the shortest possible time; and (C) such other factors
as the Director finds relevant under the circumstances of a particular
case.
(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
[[Page 17]]
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 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,
[[Page 18]]
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]
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 and Border Protection 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.
[[Page 19]]
(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 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]
[[Page 20]]
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.
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
[[Page 21]]
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 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 at 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:
[[Page 22]]
(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 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
[[Page 23]]
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 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
[[Page 24]]
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 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-
[[Page 25]]
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. 303.12.)
[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%
[[Page 26]]
or more of the quantity distributed to that territory in the immediately
preceding year, except in the case of a 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]
Secs. 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
[[Page 32]]
U.S. Department of Commerce, Enforcement and Compliance, International
Trade 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; 78 FR 72571, Dec. 3, 2013]
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).
[[Page 33]]
(4) No producer shall accept from any watch parts and components
supplier advantages and preferences which 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 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)).
[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 for the shipment, or, if a company did
[[Page 38]]
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. 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) 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
[[Page 39]]
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 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
[[Page 40]]
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 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, Enforcement and Compliance, 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;
[[Page 41]]
(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.
(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; 78 FR 72571, Dec.
3, 2013]
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\
[[Page 42]]
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.)
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
[[Page 43]]
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).
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
[[Page 44]]
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.
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
[[Page 45]]
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 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
[[Page 46]]
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.
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
[[Page 47]]
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.
(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.
[[Page 48]]
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 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.
[[Page 49]]
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 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
[[Page 50]]
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 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
[[Page 51]]
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 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.
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,
[[Page 52]]
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.
(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.
[[Page 53]]
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 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.
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
[[Page 54]]
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 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
[[Page 55]]
the Secretary any information that has 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]
PARTS 336 399 [RESERVED]
[[Page 61]]
CHAPTER IV--FOREIGN-TRADE ZONES BOARD, DEPARTMENT OF COMMERCE
--------------------------------------------------------------------
Part Page
400 Regulations of the Foreign-Trade Zones Board 63
401-499 [Reserved]
[[Page 63]]
PART 400_REGULATIONS OF THE FOREIGN-TRADE ZONES BOARD--
Table of Contents
Subpart A_Scope, Definitions and Authority
Sec.
400.1 Scope.
400.2 Definitions.
400.3 Authority of the Board.
400.4 Authority and responsibilities of the Executive Secretary.
400.5 Authority to restrict or prohibit certain zone operations.
400.6 Board headquarters.
400.7 CBP officials as Board representatives.
Subpart B_Ability To Establish Zone; Limitations and Restrictions on
Authority Granted
400.11 Number and location of zones and subzones.
400.12 Eligible applicants.
400.13 General conditions, prohibitions and restrictions applicable to
authorized zones.
400.14 Production--requirement for prior authorization; restrictions.
400.15 Production equipment.
400.16 Exemption from state and local ad valorem taxation of tangible
personal property.
Subpart C_Applications To Establish and Modify Authority
400.21 Application to establish a zone.
400.22 Notification for production authority.
400.23 Application for production authority.
400.24 Application for expansion or other modification to zone.
400.25 Application for subzone designation.
400.26 Criteria for evaluation of proposals, including expansions,
subzones or other modifications of zones.
400.27 Criteria applicable to evaluation of applications for production
authority.
400.28 Burden of proof.
400.29 Application fees.
Subpart D_Procedures for Application Evaluation and Reviews
400.31 General application provisions and pre-docketing review.
400.32 Procedures for docketing applications and commencement of case
review.
400.33 Examiner's review--application to establish or modify a zone.
400.34 Examiner's review--application for production authority.
400.35 Examiner's review--application for subzone designation.
400.36 Completion of case review.
400.37 Procedure for notification of proposed production activity.
400.38 Procedure for application for minor modification of zone.
Subpart E_Operation of Zones and Administrative Requirements
400.41 General operation of zones; requirements for commencement of
operations.
400.42 Operation as public utility.
400.43 Uniform treatment.
400.44 Zone schedule.
400.45 Complaints related to public utility and uniform treatment.
400.46 Grantee liability.
400.47 Retail trade.
400.48 Zone-restricted merchandise.
400.49 Monitoring and reviews of zone operations and activity.
Subpart F_Records, Reports, Notice, Hearings and Information
400.51 Accounts, records and reports.
400.52 Notices and hearings.
400.53 Official records; public access.
400.54 Information.
Subpart G_Penalties and Appeals to the Board
400.61 Revocation of authority.
400.62 Fines, penalties and instructions to suspend activated status.
400.63 Appeals to the Board of decisions of the Assistant Secretary for
Enforcement and Compliance and the Executive Secretary.
Authority: Foreign-Trade Zones Act of June 18, 1934, as amended
(Pub. L. 73-397, 48 Stat. 998-1003 (19 U.S.C. 81a-81u)).
Source: 77 FR 12139, Feb. 28, 2012, unless otherwise noted.
Editorial Note: Nomenclature changes to part 400 appear at 78 FR
69289, Nov. 19, 2013.
Subpart A_Scope, Definitions and Authority
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 (FTZs or zones) in the United States pursuant to the
Foreign-Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u). It
includes the substantive and procedural rules for the authorization of
zones and for the Board's regulation of zone activity. The purpose of
zones as stated in the
[[Page 64]]
Act is to ``expedite and encourage foreign commerce, and other
purposes.'' The regulations provide the legal framework for
accomplishing this purpose in the context of evolving U.S. economic and
trade policy, and economic factors relating to international
competition.
(b) Part 146 of the customs regulations (19 CFR part 146) governs
zone operations, including the admission of merchandise into zones, zone
activity involving such merchandise, and the transfer of merchandise
from zones.
(c) To the extent zones are ``activated'' under U.S. Customs and
Border Protection (CBP) procedures in 19 CFR part 146, and only for the
purposes specified in the Act (19 U.S.C. 81c), zones are treated for
purposes of the tariff laws and customs entry procedures as being
outside the customs territory of the United States. Under zone
procedures, foreign and domestic merchandise may be admitted into zones
for operations such as storage, exhibition, assembly, manufacture and
processing, without being subject to formal customs entry procedures and
payment of duties, unless and until the foreign merchandise enters
customs territory for domestic consumption. At that time, the importer
ordinarily has a choice of paying duties either at the rate applicable
to the foreign material in its condition as admitted into a zone, or if
used in production activity, to the emerging product. Quota restrictions
do not normally apply to foreign goods in zones. The Board can deny or
limit the use of zone procedures in specific cases on public interest
grounds. Merchandise moved into zones for export (zone-restricted
status) may be considered exported for purposes such as federal excise
tax rebates and customs drawback. Foreign merchandise (tangible personal
property) admitted to a zone and domestic merchandise held in a zone for
exportation are exempt from certain state and local ad valorem taxes (19
U.S.C. 81o(e)). Articles admitted into zones for purposes not specified
in the Act shall be subject to the tariff laws and regular entry
procedures, including the payment of applicable duties, taxes, and fees.
Sec. 400.2 Definitions.
(a) Act means the Foreign-Trade Zones Act of 1934, as amended (19
U.S.C. 81a-81u).
(b) Activation limit is the size of the physical area of a
particular zone or subzone authorized by the Board to be simultaneously
in activated status with CBP pursuant to 19 CFR 146.6. The activation
limit for a particular zone/subzone is a figure explicitly specified by
the Board in authorizing the zone (commonly 2,000 acres) or subzone or,
in the absence of a specified figure, the total of the sizes of the
approved sites of the zone/subzone.
(c) Alternative site framework (ASF) is an optional approach to
designation and management of zone sites allowing greater flexibility
and responsiveness to serve single-operator/user locations. The ASF was
adopted by the Board as a matter of practice in December 2008 (74 FR
1170, January 12, 2009; correction 74 FR 3987, January 22, 2009) and
modified by the Board in November 2010 (75 FR 71069, November 22, 2010).
(d) Board means the Foreign-Trade Zones Board, which consists of the
Secretary of the Department of Commerce (chairman) and the Secretary of
the Treasury, or their designated alternates.
(e) Board Order is a type of document that indicates a final
decision of the Board. Board Orders are generally published in the
Federal Register after issuance.
(f) CBP means U.S. Customs and Border Protection.
(g) Executive Secretary is the Executive Secretary of the Foreign-
Trade Zones Board.
(h) Foreign-trade zone (FTZ or zone) includes one or more
restricted-access sites, including subzones, in or adjacent (as defined
by Sec. 400.11(b)(2)) to a CBP port of entry, operated as a public
utility (within the meaning of Sec. 400.42) under the sponsorship of a
zone grantee authorized by the Board, with zone operations under the
supervision of CBP.
(i) Grant of authority is a document issued by the Board that
authorizes a zone grantee to establish, operate and maintain a zone,
subject to limitations and conditions specified in this part and in 19
CFR part 146. The authority
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to establish a zone includes the responsibility to manage it.
(j) Magnet site means a site intended to serve or attract multiple
operators or users under the ASF.
(k) Modification: A major modification is a proposed change to a
zone that requires action by the FTZ Board; a minor modification is a
proposed change to a zone that may be authorized by the Executive
Secretary.
(l) Person includes any individual, corporation, or entity.
(m) Port of entry means a port of entry in the United States, as
defined by part 101 of the customs regulations (19 CFR part 101), or a
user fee airport authorized under 19 U.S.C. 58b and listed in part 122
of the customs regulations (19 CFR part 122).
(n) Private corporation means any corporation, other than a public
corporation, which is organized for the purpose of establishing,
operating and maintaining a zone and which is chartered for this purpose
under a law of the state in which the zone is located.
(o) Production, as used in this part, means activity involving the
substantial transformation of a foreign article resulting in a new and
different article having a different name, character, and use, or
activity involving a change in the condition of the article which
results in a change in the customs classification of the article or in
its eligibility for entry for consumption.
(p) Public corporation means a state, a political subdivision
(including a municipality) or public agency thereof, or a corporate
municipal instrumentality of one or more states.
(q) Service area means the jurisdiction(s) within which a grantee
proposes to be able to designate sites via minor boundary modifications
under the ASF.
(r) State includes any state of the United States, the District of
Columbia, and Puerto Rico.
(s) Subzone means a site (or group of sites) established for a
specific use.
(t) Usage-driven site means a site tied to a single operator or user
under the ASF.
(u) 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.
(v) Zone grantee is the corporate recipient of a grant of authority
for a zone. Where used in this part, the term ``grantee'' means ``zone
grantee'' unless otherwise indicated.
(w) Zone operator is a person that operates within a zone or subzone
under the terms of an agreement with the zone grantee (or third party on
behalf of the grantee), with the concurrence of CBP.
(x) Zone participant is a current or prospective zone operator, zone
user, or property owner.
(y) Zone plan includes all the zone sites that a single grantee is
authorized to establish.
(z) Zone site (site) means a physical location of a zone or subzone.
A site is composed of one or more generally contiguous parcels of land
organized and functioning as an integrated unit, such as all or part of
an industrial park or airport facility.
(aa) Zone user is a party using a zone under agreement with a zone
operator.
Sec. 400.3 Authority of the Board.
(a) In general. In accordance with the Act and procedures of this
part, the Board has authority to:
(1) Prescribe rules and regulations concerning zones;
(2) Issue grants of authority for zones, and approve subzones and
modifications to the original zone;
(3) Authorize production activity in zones and subzones as described
in this part;
(4) Make determinations on matters requiring Board decisions under
this part;
(5) Decide appeals in regard to certain decisions of the Commerce
Department's Assistant Secretary for Enforcement and Compliance or the
Executive Secretary;
(6) Inspect the premises, operations and accounts of zone grantees,
operators and users (and persons undertaking zone-related functions on
behalf of grantees, where applicable);
(7) Require zone grantees and operators to report on zone
operations;
(8) Report annually to the Congress on zone operations;
[[Page 66]]
(9) Restrict or prohibit zone operations;
(10) Terminate reviews of applications under certain circumstances
pursuant to Sec. 400.36(g);
(11) Authorize under certain circumstances the entry of ``zone-
restricted merchandise'' (19 CFR 146.44) into the customs territory
pursuant to Sec. 400.48;
(12) Impose fines for violations of the Act and this part;
(13) Instruct CBP to suspend activated status pursuant to
Sec. 400.62(h);
(14) Revoke grants of authority for cause;
(15) Determine, as appropriate, whether zone activity is or would be
in the public interest or detrimental to the public interest, health or
safety; and
(16) Issue and discontinue waivers pursuant to Sec. 400.43(f).
(b) Authority of the Chairman of the Board. The Chairman of the
Board (Secretary of the Department of Commerce) has the authority to:
(1) Appoint the Executive Secretary of the Board;
(2) Call meetings of the Board, with reasonable notice given to each
member; and
(3) Submit to the Congress the Board's annual report as prepared by
the Executive Secretary.
(c) Alternates. Each member of the Board shall designate an
alternate with authority to act in an official capacity for that member.
(d) Authority of the Assistant Secretary for Enforcement and
Compliance (Alternate Chairman). The Commerce Department's Assistant
Secretary for Enforcement and Compliance has the authority to:
(1) Terminate reviews of applications under certain circumstances
pursuant to Sec. 400.36(g);
(2) Mitigate and assess fines pursuant to Secs. 400.62(e) and (f)
and instruct CBP to suspend activated status pursuant to Sec. 400.62(h);
and
(3) Restrict the use of zone procedures under certain circumstances
pursuant to Sec. 400.49(c).
(e) Determinations of the Board. Determinations of the Board shall
be by the unanimous vote of the members (or alternate members) of the
Board, which shall be recorded.
Sec. 400.4 Authority and responsibilities of the Executive Secretary.
The Executive Secretary has the following responsibilities and
authority:
(a) Represent the Board in administrative, regulatory, operational,
and public affairs matters;
(b) Serve as director of the Commerce Department's Foreign-Trade
Zones staff;
(c) Execute and implement orders of the Board;
(d) Arrange meetings and direct circulation of action documents for
the Board;
(e) Arrange with other sections of the Department of Commerce and
other governmental agencies for studies and comments on zone issues and
proposals;
(f) Maintain custody of the seal, records, files and correspondence
of the Board, with disposition subject to the regulations of the
Department of Commerce;
(g) Issue notices on zone matters for publication in the Federal
Register;
(h) Direct processing of applications and reviews, including
designation of examiners and scheduling of hearings, under various
sections of this part;
(i) Make determinations on questions pertaining to grantees'
applications for subzones as provided in Sec. 400.12(d);
(j) Make recommendations in cases involving questions as to whether
zone activity should be prohibited or restricted for public interest
reasons, including proceedings and reviews under Sec. 400.5;
(k) Determine questions of scope under Sec. 400.14(d);
(l) Determine whether additional information is needed for
evaluation of applications and other requests for decisions under this
part, as provided for in various sections of this part, including
Secs. 400.21-400.25;
(m) Issue instructions, guidelines, forms and related documents
specifying time, place, manner and formats for applications and
notifications in various sections of this part, including
Secs. 400.21(b) and 400.43(f);
(n) Determine whether proposed modifications are major modifications
[[Page 67]]
or minor modifications under Sec. 400.24(a)(2);
(o) Determine whether applications meet pre-docketing requirements
under Sec. 400.31(b);
(p) Terminate reviews of applications under certain circumstances
pursuant to Sec. 400.36(g);
(q) Authorize minor modifications to zones under Sec. 400.38,
commencement of production activity under Sec. 400.37(d) and subzone
designation under Sec. 400.36(f);
(r) Review notifications for production authority under Sec. 400.37;
(s) Direct monitoring and reviews of zone operations and activity
under Sec. 400.49;
(t) Review rate schedules and determine their sufficiency under
Sec. 400.44(c);
(u) Assess potential issues and make recommendations pertaining to
uniform treatment under Sec. 400.43 and review and decide complaint
cases under Sec. 400.45;
(v) Make certain determinations and authorizations pertaining to
retail trade under Sec. 400.47;
(w) Authorize under certain circumstances the entry of ``zone-
restricted merchandise'' into the customs territory under Sec. 400.48;
(x) Determine the format and deadlines for the annual reports of
zone grantees to the Board and direct preparation of an annual report
from the Board to Congress under Sec. 400.51(c);
(y) Make recommendations and certain determinations regarding
violations and fines, and undertake certain procedures related to the
suspension of activated status, as provided in Sec. 400.62; and
(z) Designate an acting Executive Secretary.
Sec. 400.5 Authority to restrict or prohibit certain zone operations.
The Board may conduct a proceeding, or the Executive Secretary a
review, to consider a restriction or prohibition on zone activity. Such
proceeding or review may be either self-initiated or in response to a
complaint made to the Board by a person directly affected by the
activity in question and showing good cause. After a proceeding or
review, the Board may restrict or prohibit any admission of merchandise
or process of treatment in an activated FTZ site when it determines that
such activity is detrimental to the public interest, health or safety.
Sec. 400.6 Board headquarters.
The headquarters of the Board are located within the U.S. Department
of Commerce (Herbert C. Hoover Building), 1401 Constitution Avenue NW.,
Washington, DC 20230, within the office of the Foreign-Trade Zones
staff.
Sec. 400.7 CBP officials as Board representatives.
CBP officials with oversight responsibilities for a port of entry
represent the Board with regard to the zones adjacent to the port of
entry in question and are responsible for enforcement, including
physical security and access requirements, as provided in 19 CFR part
146.
Subpart B_Ability To Establish Zone; Limitations and Restrictions on
Authority Granted
Sec. 400.11 Number and location of zones and subzones.
(a) Number of zones--port of entry entitlement. (1) Provided that
the other requirements of this part are met:
(i) Each port of entry is entitled to at least one zone;
(ii) If a port of entry is located in more than one state, each of
the states in which the port of entry is located is entitled to a zone;
and
(iii) If a port of entry is defined to include more than one city
separated by a navigable waterway, each of the cities is entitled to a
zone.
(2) Applications pertaining to zones in addition to those approved
under the entitlement provision of paragraph (a)(1) of this section may
be approved by the Board if it determines that the existing zone(s) will
not adequately serve the convenience of commerce.
(b) Location of zones and subzones--port of entry adjacency
requirements. (1) The Board may approve ``zones in or adjacent to ports
of entry'' (19 U.S.C. 81b).
(2) The ``adjacency'' requirement is satisfied if:
[[Page 68]]
(i) A general-purpose zone site is located within 60 statute miles
or 90 minutes' driving time (as determined or concurred upon by CBP)
from the outer limits of a port of entry boundary as defined in 19 CFR
101.3.
(ii) A subzone meets the following requirements relating to CBP
supervision:
(A) Proper CBP oversight can be accomplished with physical and
electronic means;
(B) All electronically produced records are maintained in a format
compatible with the requirements of CBP for the duration of the record
period; and
(C) The operator agrees to present merchandise for examination at a
CBP site selected by CBP when requested, and further agrees to present
all necessary documents directly to the relevant CBP oversight office.
Sec. 400.12 Eligible applicants.
(a) In general. Subject to the other provisions of this section,
public or private corporations may apply for grants of authority to
establish zones. The Board shall give preference to public corporations.
(b) Public corporations and private non-profit corporations. The
eligibility of public corporations and private non-profit corporations
to apply for a grant of authority shall be supported by enabling
legislation of the legislature of the state in which the zone is to be
located, indicating that the corporation, individually or as part of a
class, is authorized to so apply. Any application must not be
inconsistent with the charter or organizational papers of the applying
entity.
(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 (except pursuant to Sec. 400.24(c))--(1)
Eligibility. The following entities are eligible to apply to establish a
subzone:
(i) The grantee of the closest zone in the same state;
(ii) The grantee of another zone in the same state, which is a
public corporation (or a non-public corporation if no such other public
corporation exists), if the Board, or the Executive Secretary, finds
that such sponsorship better serves the public interest; or
(iii) A state agency specifically authorized to submit such an
application by an act of the state legislature.
(2) Notification of closest grantee. If an application is submitted
under paragraph (d)(1)(ii) or (iii) of this section, the Executive
Secretary shall:
(i) Notify, in writing, the grantee specified in paragraph (d)(1)(i)
of this section, which may, within 30 days, object to such sponsorship,
in writing, with supporting information as to why the public interest
would be better served by its acting as sponsor;
(ii) Review such objections prior to docketing the application to
determine whether the proposed sponsorship is in the public interest,
taking into account:
(A) The objecting zone's structure and operation;
(B) The views of state and local public agencies; and
(C) The views of the proposed subzone operator;
(iii) Notify the applicant and objecting zone in writing of the
Executive Secretary's determination;
(iv) If the Executive Secretary determines that the proposed
sponsorship is in the public interest, docket the application (see
Sec. 400.63 regarding appeals of decisions of the Executive Secretary).
Sec. 400.13 General conditions, prohibitions and restrictions
applicable to authorized zones.
(a) In general. Grants of authority issued by the Board for the
establishment of zones and any authority subsequently approved for such
zones, including those already issued, are subject to the Act and this
part and the following general conditions or limitations:
(1) Prior to activation of a zone, the zone grantee or operator
shall obtain all necessary permits from federal, state and local
authorities, and except as otherwise specified in the Act or this part,
shall comply with the requirements of those authorities.
[[Page 69]]
(2) A grant of authority approved under this part includes authority
for the grantee to permit the erection of buildings necessary to carry
out the approved zone (subject to concurrence of CBP for an activated
area of a zone).
(3) Approvals from the grantee (or other party acting on behalf of
the grantee, where applicable) and CBP, pursuant to 19 CFR part 146, are
required prior to the activation of any portion of an approved zone.
(4) Authority for a zone or a subzone shall lapse unless the zone
(in case of subzones, the subzone facility) is activated, pursuant to 19
CFR part 146, and in operation not later than five years from the
authorization of the zone or subzone, subject to the provisions of Board
Order 849 (61 FR 53305, October 11, 1996).
(5) Zone grantees, operators, and users (and persons undertaking
zone-related functions on behalf of grantees, where applicable) shall
permit federal government officials acting in an official capacity to
have access to the zone and records during normal business hours and
under other reasonable circumstances.
(6) Activity involving production is subject to the specific
provisions in Sec. 400.14.
(7) A grant of authority may not be sold, conveyed, transferred, set
over, or assigned (FTZ Act, section 17; 19 U.S.C. 81q).
(8) Private ownership of zone land and facilities is permitted,
provided the zone grantee retains the control necessary to implement the
approved zone. Such permission shall not constitute a vested right to
zone designation, nor interfere with the Board's regulation of the
grantee or the permittee, nor interfere with or complicate the
revocation of the grant by the Board. 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 zone-designated land/facility for more than its fair market
value without zone designation could, depending on the circumstances, be
subject to the prohibitions set forth in section 17 of the Act (19
U.S.C. 81q).
(b) Board authority to restrict or prohibit activity. Pursuant to
section 15(c) of the Act (19 U.S.C. 81o(c)), the Board has authority to
``order the exclusion from [a] zone of any goods or process of treatment
that in its judgment is detrimental to the public interest, health, or
safety.'' In approvals of proposed production authority pursuant to
Sec. 400.14(a), the Board may adopt restrictions to protect the public
interest, health, or safety. When evaluating production activity, either
as proposed in an application or as part of a review of an operation,
the Board shall determine whether the activity is in the public interest
by reviewing it in relation to the evaluation criteria contained in
Sec. 400.27.
(c) Additional conditions, prohibitions and restrictions. Other
conditions/requirements, prohibitions and restrictions under Federal,
State or local law may apply to authorized zones and subzones.
Sec. 400.14 Production--requirement for prior authorization;
restrictions.
(a) In general. Production activity in zones shall not be conducted
without prior authorization from the Board. To obtain authorization, the
notification process provided for in Secs. 400.22 and 400.37 shall be
used. If Board review of a notification under Sec. 400.37 results in a
determination that further review is warranted for all or part of the
notified activity, the application process pursuant to Secs. 400.23,
400.31-400.32, 400.34 and 400.36 shall apply to the activity.
(b) Scope of authority. Production activity that may be conducted in
a particular zone operation is limited to the specific foreign-status
materials and components and specific finished products described in
notifications and applications that have been authorized pursuant to
paragraph (a) of this section, including any applicable prohibitions or
restrictions. A determination may be requested pursuant to paragraph (d)
of this section as to whether particular activity falls within the
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scope of authorized activity. Unauthorized activity could be subject to
penalties pursuant to the customs regulations on foreign-trade zones (19
CFR part 146).
(c) Information about authorized production activity. The Board
shall make available via its Web site information regarding the
materials, components, and finished products associated with individual
production operations authorized under these and previous regulations,
as derived from applications and notifications submitted to the Board.
(d) Scope determinations. Determinations may be made by the
Executive Secretary as to whether changes in activity are within the
scope of the production activity already authorized under this part.
When warranted, the procedures of Secs. 400.32 and 400.34 shall be
followed.
(e) Restrictions on items subject to antidumping and countervailing
duty actions--(1) Board policy. Zone procedures shall not be used to
circumvent antidumping duty (AD) and countervailing duty (CVD) actions
under 19 CFR part 351.
(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 part 351.
Sec. 400.15 Production equipment.
(a) In general. Pursuant to section 81c(e) of the FTZ Act,
merchandise that is admitted into a foreign-trade zone for use within
such zone as production equipment or as parts for such equipment, shall
not be subject to duty until such merchandise is completely assembled,
installed, tested, and used in the production for which it was admitted.
Payment of duty may be deferred until such equipment goes into use as
production equipment as part of zone production activity, at which time
the equipment shall be entered for consumption as completed equipment.
(b) Definition of production equipment. Eligibility for this section
is limited to equipment and parts of equipment destined for use in zone
production activity as defined in Sec. 400.2(o) of this part. Ineligible
for treatment as production equipment under this section are general
materials (that are used in the installation of production equipment or
in the assembly of equipment) and materials used in the construction or
modification of the plant that houses the production equipment.
(c) Equipment not destined for zone activity. Production equipment
or parts that are not destined for use in zone production activity shall
be treated as normal merchandise eligible for standard zone-related
benefits (i.e., benefits not subject to the requirements of
Sec. 400.14(a)), provided the equipment is entered for consumption or
exported prior to its use.
Sec. 400.16 Exemption from state and local ad valorem taxation
of tangible personal property.
Tangible personal property imported from outside the United States
and held in a zone for the purpose of storage, sale, exhibition,
repackaging, assembly, distribution, sorting, grading, cleaning, mixing,
display, manufacturing, or processing, and tangible personal property
produced in the United States and held in a zone for exportation, either
in its original form or as altered by any of the above processes, shall
be exempt from state and local ad valorem taxation.
Subpart C_Applications To Establish and Modify Authority
Sec. 400.21 Application to establish a zone.
(a) In general. An application for a grant of authority to establish
a zone (including pursuant to the ASF procedures adopted by the Board;
see 74 FR 1170, Jan. 12, 2009, 74 FR 3987, Jan. 22, 2009, and 75 FR
71069, Nov. 22, 2010) shall consist of an application letter and
detailed contents to meet the requirements of this part.
(b) Application format. Applications pursuant to this part shall
comply with
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any instructions, guidelines, and forms or related documents, published
in the Federal Register and made available on the Board's Web site, as
established by the Executive Secretary specific to the type of
application in question. An application submitted that uses a superseded
format shall be processed unless the format has not been current for a
period in excess of one year.
(c) Application letter. The application letter shall be dated within
six months prior to the submission of the application and signed by an
officer of the corporation authorized in the resolution for the
application (see Sec. 400.21(d)(1)(iii)). The application letter shall
also describe:
(1) The relationship of the proposal to the state enabling
legislation and the grantee's charter;
(2) The specific authority requested from the Board;
(3) The proposed zone site(s) and facility(ies) and any larger
project of which the zone is a part;
(4) The project background;
(5) The relationship of the project to the community's and state's
international trade-related goals and objectives;
(6) Any production authority requested; and
(7) Any additional pertinent information needed for a complete
summary description of the proposal.
(d) Detailed contents. (1) Legal authority for the application shall
be documented with:
(i) A current copy of the state enabling legislation described in
Secs. 400.12(b) and (c);
(ii) A copy of the relevant sections of the applicant's charter or
organization papers; and
(iii) A certified copy of a resolution of the applicant's governing
body specific to the application authorizing the official signing the
application letter. The resolution must be dated no more than six months
prior to the submission of the application.
(2) Site descriptions (including a table with site designations when
more than one site is involved) shall be documented with:
(i) A detailed description of the zone site, including size,
location, and address (and legal description or its equivalent in
instances where the Executive Secretary determines it is needed to
supplement the maps in the application), as well as dimensions and types
of existing and proposed structures, master planning, and timelines for
construction of roads, utilities and planned buildings;
(ii) Where applicable, a summary description of the larger project
of which the site is a part, including type, size, location and address;
(iii) A statement as to whether the site is within or adjacent to a
CBP port of entry (including distance from the limits of the port of
entry and, if the distance exceeds 60 miles, driving time from the
limits of the port of entry);
(iv) A description of existing or proposed site qualifications,
including appropriate land-use zoning (with environmentally sensitive
areas avoided) and physical security;
(v) A description of current and planned activities associated with
the site;
(vi) A summary description of transportation systems, facilities,
and services, including connections from local and regional
transportation hubs to the zone;
(vii) A statement regarding the environmental aspects of the
proposal;
(viii) The estimated time schedules for construction and activation;
and
(ix) A statement as to the possibilities and plans for future
expansion of the site.
(3) Operation and financing shall be documented with:
(i) A statement as to site ownership (if not owned by the applicant
or proposed operator, evidence as to their legal right to use the site);
(ii) A discussion of plans for operations at the site;
(iii) A commitment to satisfy the requirements for CBP automated
systems; and
(iv) A summary of the plans for financing the project.
(4) Economic justification shall be documented with:
(i) A statement of the community's overall economic and trade-
related goals and strategies in relation to those of the region and
state, including a reference to the plan or plans on
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which the goals are based and how they relate to the zone project;
(ii) An economic profile of the community including discussion of:
(A) Dominant sectors in terms of employment or income;
(B) Area strengths and weaknesses;
(C) Unemployment rates; and
(D) Area foreign trade statistics;
(iii) A statement as to the role and objective of the zone project
and a discussion of the anticipated economic impact, direct and
indirect, of the zone project, including references to public costs and
benefits, employment, and U.S. international trade;
(iv) A separate justification for each proposed site, including a
specific explanation addressing the degree to which the site may
duplicate types of facilities at other proposed or existing sites in the
zone;
(v) A statement as to the need for zone services in the community,
with specific expressions of interest from proposed zone users and
letters of intent from those firms that are considered prime prospects
for each specific proposed site; and
(vi) For any production activity to be conducted at a proposed site,
the separate requirements of Sec. 400.14(a) must also be met.
(5) Maps and site plans shall include the following documents:
(i) State and county maps showing the general location of the
proposed site(s) in terms of the area's transportation network;
(ii) For any proposed site, a legible, detailed site plan of the
zone area showing zone boundaries in red, with street name(s), and
showing existing and proposed structures; and
(iii) For proposals involving a change in existing zones, one or
more maps showing the relationship between existing zone sites and the
proposed changes.
(e) ASF applications. In addition to the general application
requirements of this section, applications under the ASF shall include
the following, where applicable:
(1) Service area.
(2) Appropriate information regarding magnet sites.
(3) Appropriate information regarding usage-driven sites.
(f) Additional information. The Board or the Executive Secretary may
require additional information needed to evaluate proposals adequately.
(g) Amendment of application. The Board or the Executive Secretary
may allow amendment of an application. Amendments which substantively
expand the scope of an application shall be subject to comment period
requirements such as those of Sec. 400.32(c)(2) with a minimum comment
period of 30 days.
(h) Drafts. Applicants are encouraged to submit a draft application
to the Executive Secretary for review. A draft application must be
complete with the possible exception of the application letter and/or
resolution from the grantee.
(i) Format and number of copies. Unless the Executive Secretary
alters the requirements of this paragraph, the applicant shall submit an
original (including original documents to meet the requirements of
paragraphs (c) and (d)(1)(iii) of this section) and one copy of the
application, both on 8\1/2\ x 11" (216 x 279 mm) paper, and an
electronic copy.
(j) Where to submit an application: Executive Secretary, Foreign-
Trade Zones Board, U.S. Department of Commerce, 1401 Constitution Avenue
NW., Washington, DC 20230. Options for submission of electronic copies
are described on the FTZ Board's Web site.
Effective Date Note: At 77 FR 12139, Feb. 28, 2012, Sec. 400.21 was
added. This section contains information collection and recordkeeping
requirements and will not become effective until approval has been given
by the Office of Management and Budget.
Sec. 400.22 Notification for production authority.
Notifications requesting production authority pursuant to
Sec. 400.14(a) shall comply with any instructions, guidelines, and forms
or related documents, published in the Federal Register and made
available on the Board's Web site, as established by the Executive
Secretary. Notifications shall contain the following information:
(a) Identity of the user and its location;
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(b) Materials, components and finished products associated with the
proposed activity, including the tariff schedule categories (6-digit
HTSUS) and tariff rates; and
(c) Information as to whether any material or component is subject
to a trade-related measure or proceeding (e.g., AD/CVD order or
proceeding, suspension of liquidation under AD/CVD procedures).
Effective Date Note: At 77 FR 12139, Feb. 28, 2012, Sec. 400.22 was
added. This section contains information collection and recordkeeping
requirements and will not become effective until approval has been given
by the Office of Management and Budget.
Sec. 400.23 Application for production authority.
In addition to any applicable requirements set forth in Sec. 400.21,
an application requesting production authority pursuant to
Sec. 400.37(c) shall include:
(a) A summary as to the reasons for the application and an
explanation of its anticipated economic effects;
(b) Identity of the user and its corporate affiliation;
(c) A description of the proposed activity, including:
(1) Finished products;
(2) Imported (foreign-status) materials and components;
(3) For each finished product and imported material or component,
the tariff schedule category (6-digit HTSUS), tariff rate, and whether
the material or component is subject to a trade-related measure or
proceeding (e.g., AD/CVD order or proceeding, suspension of liquidation
under AD/CVD procedures);
(4) Domestic inputs, foreign inputs, and plant value added as
percentages of finished product value;
(5) Projected shipments to domestic market and export market
(percentages);
(6) Estimated total or range of annual value of benefits to proposed
user (broken down by category), including as a percent of finished
product value;
(7) Annual production capacity (current and planned) for the
proposed FTZ activity, in units;
(8) Information to assist the Board in making a determination under
Secs. 400.27(a)(3) and 400.27(b);
(9) Information as to whether alternative procedures have been
considered as a means of obtaining the benefits sought;
(10) Information on the industry involved and extent of
international competition; and
(11) Economic impact of the operation on the area; and
(d) Any additional information requested by the Board or the
Executive Secretary in order to conduct the review.
Effective Date Note: At 77 FR 12139, Feb. 28, 2012, Sec. 400.23 was
added. This section contains information collection and recordkeeping
requirements and will not become effective until approval has been given
by the Office of Management and Budget.
Sec. 400.24 Application for expansion or other modification to zone.
(a) In general. (1) A grantee may apply to the Board for authority
to expand or otherwise modify its zone (including pursuant to the ASF
procedures adopted by the Board; see 74 FR 1170, Jan. 12, 2009, 74 FR
3987, Jan. 22, 2009, and 75 FR 71069, Nov. 22, 2010).
(2) The Executive Secretary, in consultation with CBP as
appropriate, shall determine whether the proposed modification involves
a major change in the zone plan and is thus subject to paragraph (b) of
this section, or is minor and subject to paragraph (c) of this section.
In making this determination the Executive Secretary shall consider the
extent to which the proposed modification would:
(i) Substantially modify the plan originally approved by the Board;
or
(ii) Expand the physical dimensions of the approved zone area as
they relate to the scope of operations envisioned in the original plan.
(b) Major modification to zone. An application for a major
modification of an approved zone shall be submitted in accordance with
the requirements of Sec. 400.21, except that the content submitted
pursuant to Sec. 400.21(d)(4) (economic justification) shall relate
specifically to the proposed change.
(c) Minor modification to zone. Other applications or requests under
this subpart shall be submitted in letter form with information and
documentation necessary for analysis, as determined
[[Page 74]]
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. 400.38). Such applications or requests
include those for minor revisions of general-purpose zone or subzone
boundaries based on immediate need, as well as for designation as a
subzone of all or part of an existing zone site(s) (or site(s) that
qualifies for usage-driven status), where warranted by the circumstances
and so long as the subzone activity remains subject to the activation
limit (see Sec. 400.2(b)) for the zone in question.
(d) Applications for other revisions to authority. Applications or
requests for other revisions to authority, such as for Board action to
establish or modify an activation limit for a zone, modification of a
restriction or reissuance of a grant of authority, shall be submitted in
letter form with information and documentation necessary for analysis,
as determined by the Executive Secretary. If the change involves the
removal or significant modification of a restriction included by the
Board in its approval of authority or the reissuance of a grant of
authority, the review procedures of Secs. 400.31-400.34 and 400.36 shall
be followed, where relevant. If not, the procedure set forth in
Sec. 400.38 shall generally apply (although the Executive Secretary may
elect to follow the procedures of Secs. 400.31-400.34 and 400.36 when
warranted).
Sec. 400.25 Application for subzone designation.
In addition to the requirements of Secs. 400.21(d)(1)(i) and (ii)
pertaining to legal authority, Sec. 400.21(d)(2)(vii) pertaining to
environmental aspects of the proposal, and Secs. 400.21(d)(3)(i) and
(iii) pertaining to operation, a grantee's application for subzone
designation shall contain the following information:
(a) The name of the operator/user for which subzone designation is
sought;
(b) The nature of the activity at the proposed subzone;
(c) The address(es) and physical size (acreage or square feet) of
the proposed subzone location(s); and
(d) One or more maps conforming to the requirements of section
Sec. 400.21(d)(5)(ii). For any production activity to be conducted at a
proposed subzone, the separate requirements of Sec. 400.14(a) must be
met.
Effective Date Note: At 77 FR 12139, Feb. 28, 2012, Sec. 400.25 was
added. This section contains information collection and recordkeeping
requirements and will not become effective until approval has been given
by the Office of Management and Budget.
Sec. 400.26 Criteria for evaluation of applications for expansions,
subzones or other modifications of zones.
The Board shall consider the following factors in determining
whether to approve an application pertaining to a zone:
(a) The need for zone services in the port of entry area, taking
into account existing as well as projected international trade-related
activities and employment impact;
(b) The suitability of each proposed site and its facilities based
on the plans presented for the site, including existing and planned
buildings, zone-related activities, and the timeframe for development of
the site;
(c) The specific need and justification for each proposed site,
taking into account existing sites and/or other proposed sites;
(d) The extent of state and local government support, as indicated
by the compatibility of the zone project with the community's master
plan or stated goals for economic development and the views of state and
local public officials involved in economic development. Such officials
shall avoid commitments that anticipate the outcome of Board decisions;
(e) The views of persons likely to be materially affected by
proposed zone activity; and
(f) If the application involves production activity, the criteria in
Sec. 400.27.
Sec. 400.27 Criteria applicable to evaluation of applications
for production authority.
The Board shall apply the criteria set forth in this section in
determining whether to approve an application for authority to conduct
production activity pursuant to Sec. 400.23. The Board's evaluation
shall take into account such factors as market conditions, price
sensitivity, degree and nature of foreign competition, intra-industry
and
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intra-firm trade, effect on exports and imports, ability to conduct the
proposed activity outside the United States with the same U.S. tariff
impact, analyses conducted in connection with prior Board actions, and
net effect on U.S. employment and the U.S. economy:
(a) Threshold factors. 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. 400.27(b), the Board shall deny or restrict
authority for proposed or ongoing activity if it determines that:
(1) The activity is inconsistent with U.S. trade and tariff law, or
policy which has been formally adopted by the Executive branch;
(2) Board approval of the activity under review would seriously
prejudice U.S. tariff and trade negotiations or other initiatives; or
(3) The activity involves items subject to quantitative import
controls or inverted tariffs, and the use of zone procedures would be
the direct and sole cause of imports that, but for such procedures,
would not likely otherwise have occurred, taking into account imports
both as individual items and as components of imported products.
(b) Economic factors. After its review of threshold factors, if
there is a basis for further consideration of the application, the Board
shall consider the following factors in determining the net economic
effect of the proposed activity:
(1) Overall employment impact;
(2) Exports and re-exports;
(3) Retention or creation of value-added activity;
(4) Extent of value-added activity;
(5) Overall effect on import levels of relevant products;
(6) Extent and nature of foreign competition in relevant products;
(7) Impact on related domestic industry, taking into account market
conditions; and
(8) Other relevant information relating to the public interest and
net economic impact considerations, including technology transfers and
investment effects.
(c) The significant public benefit(s) that would result from the
production activity, taking into account the factors in paragraphs (a)
and (b) of this section.
(d) Contributory effect. In assessing the significance of the
economic effect of the proposed zone activity as part of the
consideration of economic factors, and considering whether it would
result in a significant public benefit(s), 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.
Sec. 400.28 Burden of proof.
(a) In general. An applicant must demonstrate to the Board that its
application meets the criteria set forth in these regulations.
Applications for production-related authority shall contain evidence
regarding the positive economic effect(s) and significant public
benefit(s) that would result from the proposed activity and may submit
evidence and comments concerning policy considerations.
(b) Comments on applications. Comments submitted regarding
applications should provide information that is probative and
substantial in addressing the matter at issue relative to the nature of
the proceeding, including any evidence of the projected direct impact of
the proposed authority.
(c) Requests for extensions of comment periods. Requests for
extensions of comment periods shall include a description of the
potential impact of the proposed authority and the specific actions or
steps for which additional time is necessary.
(d) Responses to comments on applications. Submissions in response
to comments received during the public comment period or pursuant to
Sec. 400.33(e)(1) or Sec. 400.34(a)(5)(iv)(A) should contain evidence
that is probative and substantial in addressing the matter at issue.
Sec. 400.29 Application fees.
(a) In general. This section sets forth a uniform system of charges
in the
[[Page 76]]
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 fee schedule
establishes fees for certain types of applications and requests for
authority on the basis of their estimated 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. 400.21;
Sec. 400.11(a)(2))--$3,200
(2) Special-purpose subzones (Sec. 400.25):
(i) Not involving production activity or involving production
activity with fewer than three products--$4,000
(ii) Production activity with three or more products--$6,500
(3) Expansions (Sec. 400.24(b))--$1,600
(c) Applications submitted to the Board shall include a currently
dated 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
the Board in 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. 400.31(b), or are withdrawn by applicants prior to formal
docketing, refunds will be made.
Subpart D_Procedures for Application Evaluation and Reviews
Sec. 400.31 General application provisions and pre-docketing review.
(a) In general. Sections 400.31-400.36 and 400.38 outline the
procedures to be followed in docketing and processing applications
submitted under Secs. 400.21, 400.23, 400.24(b), and 400.25. In
addition, these sections set forth the time schedules which will
ordinarily apply in processing applications. The schedules will guide
applicants with respect to the time frames for each of the procedural
steps involved in the Board's review. Under these schedules,
applications for subzone designation will generally be processed within
5 months (3 months for applications subject to Sec. 400.36(f)) and
applications to establish or expand zones will generally be processed
within 10 months. The general timeframe to process applications for
production authority is 12 months, but additional time is most likely to
be required for applications requesting production authority when a
complex or controversial issue is involved or when the applicant or
other party has obtained a time extension for a particular procedural
step. The timeframes specified apply from the time of docketing. Each
applicant is responsible for submitting an application that meets the
docketing requirements in a timeframe consistent with the applicant's
need for action on its request.
(b) Pre-docketing review. The grantee shall submit a single complete
copy of an application for pre-docketing review. (For requests relating
to production in already approved zone or subzone space, the request may
be submitted by the operator, provided the operator at the same time
furnishes a copy of the request to the grantee.) The Executive Secretary
shall determine whether the application satisfies the requirements of
Secs. 400.12, 400.21, 400.23-400.25, and other applicable provisions of
this part such that the application is sufficient for docketing. If the
pre-docketing copy of the application is deficient, the Executive
Secretary shall notify the applicant within 30 days of receipt of the
pre-docketing copy, specifying the deficiencies. An affected zone
participant may also be contacted regarding relevant application
elements requiring additional information or clarification. If the
applicant does not correct the deficiencies and submit a corrected pre-
docketing application copy within 30 days of notification, the pre-
docketing application (single copy) shall be discarded.
[[Page 77]]
Sec. 400.32 Procedures for docketing applications and commencement
of case review.
(a) Once the pre-docketing copy of the application is determined to
be sufficient, the Executive Secretary shall notify the applicant within
15 days so that the applicant may then submit the original and requisite
number of copies (which shall be dated upon receipt at the headquarters
of the Board) for docketing by the Board. For applications subject to
Sec. 400.29, the original shall be accompanied with a check in
accordance with that section.
(b) After the procedures described in paragraph (a) of this section
are completed, the Executive Secretary shall within 15 days of receipt
of the original and required number of copies of the application:
(1) Formally docket the application, thereby initiating the
proceeding or review;
(2) Assign a case-docket number; and
(3) Notify the applicant of the formal docketing action.
(c) After initiating a proceeding based on an application under
Secs. 400.21 and 400.23-400.25, the Executive Secretary shall:
(1) Designate an examiner to conduct a review and prepare a report
or memorandum with recommendations for the Board;
(2) Publish in the Federal Register a notice of the formal docketing
of the application and initiation of the review. The notice shall
include the name of the applicant, a description of the proposal, and an
invitation for public comment. If the application requests authority for
production activity and indicates that a component to be used in the
activity is subject to a trade-related measure or proceeding (e.g., AD/
CVD order or proceeding, suspension of liquidation under AD/CVD
procedures), the notice shall include that information. For applications
to establish or expand a zone or for production authority, the comment
period shall normally close 60 days after the date the notice appears.
For applications for subzone designation, the comment period shall
normally close 40 days after the date the notice appears. However, if a
hearing is held (see Sec. 400.52), the comment period shall not close
prior to 15 days after the date of the hearing. The closing date for
general comments shall ordinarily be followed by an additional 15-day
period for rebuttal comments. Requests for extensions of a comment
period will be considered, subject to the standards of Sec. 400.28(c).
Submissions must meet the requirements of Sec. 400.28(b). With the
exception of submissions by the applicant, any new evidence or new
factual information and any written arguments submitted after the
deadlines for comments shall not be considered by the examiner or the
Board. Submission by the applicant of new evidence or new factual
information may result in the (re)opening of a comment period. A comment
period may otherwise be opened or reopened for cause;
(3) Transmit or otherwise make available copies of the docketing
notice and the application to CBP;
(4) Arrange for hearings, as appropriate;
(5) Transmit the report and recommendations of the examiner and any
comments by CBP to the Board for appropriate action; and
(6) Notify the applicant in writing (via electronic means, where
appropriate) and publish notice in the Federal Register of the Board's
determination.
(d) CBP review. Any comments by CBP pertaining to the application
shall be submitted to the Executive Secretary by the conclusion of the
public comment period described in paragraph (c)(2) of this section.
Sec. 400.33 Examiner's review--application to establish or modify
a zone.
An examiner assigned to review an application to establish,
reorganize or expand a zone shall conduct a review taking into account
the factors enumerated in Sec. 400.26 and other appropriate sections of
this part, which shall include:
(a) Conducting or participating in hearings scheduled by the
Executive Secretary;
(b) Reviewing case records, including public comments;
(c) Requesting information and evidence from parties of record;
(d) Developing information and evidence necessary for evaluation and
[[Page 78]]
analysis of the application in accordance with the criteria of the Act
and this part; and
(e) Developing recommendations to the Board and submitting a report
to the Executive Secretary, generally within 150 days of the close of
the period for public comment (75 days for reorganizations under the
ASF) (see Sec. 400.32):
(1) If the recommendations are unfavorable to the applicant, they
shall be considered preliminary and the applicant shall be notified in
writing (via electronic means, where appropriate) of the preliminary
recommendations and the factors considered in their development. The
applicant shall be given 30 days from the date of notification, subject
to extensions upon request by the applicant, which shall not be
unreasonably withheld, in which to respond to the recommendations and
submit additional evidence pertinent to the factors considered in the
development of the preliminary recommendations. Public comment may be
invited on preliminary recommendations when warranted.
(2) If the response contains new evidence on which there has been no
opportunity for public comment, the Executive Secretary shall publish a
notice in the Federal Register after completion of the review of the
response. The new material shall be made available for public inspection
and the Federal Register notice shall invite further public comment for
a period of not less than 30 days, with an additional 15-day period for
rebuttal comments.
(3) If the bases for an examiner's recommendation(s) change as a
result of new evidence, the applicable procedures of Secs. 400.33(e)(1)
and (2) shall be followed.
(4) When necessary, a request may be made to CBP to provide further
comments, which shall be submitted within 45 days after the request.
Sec. 400.34 Examiner's review--application for production authority.
(a) The examiner shall conduct a review taking into account the
factors enumerated in this section, Sec. 400.27, and other appropriate
sections of this part, which shall include:
(1) Conducting or participating in hearings scheduled by the
Executive Secretary;
(2) Reviewing case records, including public comments;
(3) Requesting information and evidence from parties of record and
others, as warranted;
(4) Developing information and evidence necessary for analysis of
the threshold factors and the economic factors enumerated in
Sec. 400.27; and
(5) Conducting an analysis to include:
(i) An evaluation of policy considerations pursuant to
Secs. 400.27(a)(1) and (2);
(ii) An evaluation of the economic factors enumerated in
Secs. 400.27(a)(3) and 400.27(b), which shall include an evaluation of
the economic impact on domestic industry, considering both producers of
like products and producers of components/materials used in the
production activity;
(iii) Conducting appropriate industry research and surveys, as
necessary; and
(iv) Developing recommendations to the Board and submitting a report
to the Executive Secretary, generally within 150 days of the close of
the period for public comment (although additional time may be required
in circumstances such as when the applicant or other party has obtained
a time extension for a particular procedural step):
(A) If the recommendations are unfavorable to the applicant, they
shall be considered preliminary and the applicant shall be notified in
writing (via electronic transmission where appropriate) of the
preliminary recommendations and the factors considered in their
development. The applicant shall be given 45 days from the date of
notification in which to respond to the recommendations and submit
additional evidence pertinent to the factors considered in the
development of the preliminary recommendations. Public comment may be
invited on preliminary recommendations when warranted.
(B) If the response contains new evidence on which there has not
been an opportunity for public comment, the Executive Secretary shall
publish notice in the Federal Register after completion of the review of
the response. The new material shall be made
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available for public inspection and the Federal Register notice shall
invite further public comment for a period of not less than 30 days,
with an additional 15-day period for rebuttal comments.
(C) If the bases for an examiner's recommendation(s) change as a
result of new evidence, the applicable procedures of
Secs. 400.34(a)(5)(iv)(A) and (B) shall be followed.
(b) Methodology and evidence. The evaluation of an application for
production authority shall include the following steps:
(1) The first phase (Sec. 400.27(a)) involves consideration of
threshold factors. If an examiner or reviewer makes a negative finding
on any of the factors in Sec. 400.27(a) in the course of a review, the
applicant shall be informed pursuant to Sec. 400.34(a)(5)(iv)(A). When
threshold factors are the basis for a negative recommendation in a
review of ongoing activity, the zone grantee and directly affected party
shall be notified and given an opportunity to submit evidence pursuant
to Sec. 400.34(a)(5)(iv)(A). If the Board determines in the negative
regarding any of the factors in Sec. 400.27(a), it shall deny or
restrict authority for the proposed or ongoing activity.
(2) The second phase (Sec. 400.27(b)) involves consideration of the
enumerated economic factors, taking into account their relative weight
and significance under the circumstances. Previous evaluations in
similar cases shall be considered.
Sec. 400.35 Examiner's review--application for subzone designation.
The examiner shall develop a memorandum with a recommendation on
whether to approve the application, taking into account the criteria
enumerated in Sec. 400.26. To develop that memorandum, the examiner
shall review the case records including public comments, and may request
information and evidence from parties of record, as necessary. The
examiner's memorandum shall generally be submitted to the Board within
30 days of the close of the period for public comment. However,
additional time may be taken as necessary for analysis of any public
comment in opposition to the application or if other complicating
factors arise.
(a) If the examiner's recommendation is unfavorable to the
applicant, it shall be considered preliminary and the applicant shall be
notified in writing (via electronic means, where appropriate) of the
preliminary recommendation and the factors considered in its
development. The applicant shall be given 30 days from the date of
notification, subject to extensions upon request by the applicant, which
shall not be unreasonably withheld, in which to respond to the
recommendation and submit additional evidence pertinent to the factors
considered in the development of the preliminary recommendations. Public
comment may be invited on preliminary recommendations when warranted.
(b) If the response contains new evidence on which there has not
been an opportunity for public comment, the Executive Secretary shall
publish notice in the Federal Register after completion of the review of
the response. The new material shall be made available for public
inspection and the Federal Register notice shall invite further public
comment for a period of not less than 30 days, with an additional 15-day
period for rebuttal comments.
(c) If the bases for an examiner's recommendation(s) change as a
result of new evidence, the applicable procedures of Secs. 400.35(a) and
(b) shall be followed.
(d) The CBP adviser shall be requested, when necessary, to provide
further comments, which shall be submitted within 45 days after the
request.
Sec. 400.36 Completion of case review.
(a) The Executive Secretary shall circulate the examiner's report
(memorandum in the case of subzone applications) with recommendations to
CBP headquarters staff and to the Treasury Board member for review and
action.
(b) In its advisory role to the Board, CBP headquarters staff shall
provide any comments within 15 days.
(c) The vote of the Treasury Board member shall be returned to the
Executive Secretary within 30 days, unless a formal meeting is requested
(see, Sec. 400.3(b)).
[[Page 80]]
(d) The Commerce Department shall complete the decision process
within 15 days of receiving the vote of the Treasury Board member, and
the Executive Secretary shall publish the Board decision.
(e) If the Board is unable to reach a unanimous decision, the
grantee shall be notified and provided an opportunity to meet with the
Board members or their delegates.
(f) Delegation of authority to approve subzone designation. The
Board delegates to the Executive Secretary authority to approve
applications requesting subzone designation, on the condition that such
approved subzones will be subject to the activation limit for the zone
in question.
(g) The Board or the Commerce Department's Assistant Secretary for
Enforcement and Compliance may opt to terminate review of an application
with no further action if the applicant has failed to provide in a
timely manner information needed for evaluation of the application. A
request from an applicant for an extension of time to provide
information needed for evaluation of an application shall not be
unreasonably withheld. The Executive Secretary may terminate review of
an application where the overall circumstances presented in the
application no longer exist as a result of a material change, and shall
notify the applicant in writing of the intent to terminate review and
allow 30 days for a response prior to completion of any termination
action. The Executive Secretary shall confirm the termination in writing
(by electronic means, where appropriate) to the applicant.
Sec. 400.37 Procedure for notification of proposed production activity.
(a) Submission of notification. A notification for production
authority pursuant to Secs. 400.14(a) and 400.22 shall be submitted
simultaneously to the Board's Executive Secretary and to CBP (as well as
to the grantee of the zone, if the grantee is not the party making the
submission).
(b) Initial processing of notification. Upon receipt of a complete
notification conforming to the requirements of the notification format
established by the Executive Secretary pursuant to Sec. 400.22, the
Executive Secretary shall commence processing the notification. Unless
the Executive Secretary determines, based on the content of the
notification, to recommend further review to the Board without inviting
public comment on the notification, the Executive Secretary shall
transmit to the Federal Register a notice inviting public comment on the
notification (with such comment subject to the standards of
Sec. 400.28(b)). The notice shall be transmitted to the Federal Register
within 15 days of the commencement of the processing of the
notification, and the comment period shall normally close 40 days after
the date the notice appears. If the notification indicates that a
material or component to be used in the activity is subject to an AD/CVD
order or proceeding, or suspension of liquidation under AD/CVD
procedures, the notice shall include that information. Evidence, factual
information and written arguments submitted in response to the notice
must be submitted by the deadline for comments. Any comments by CBP
pertaining to the notification shall be submitted to the Executive
Secretary by the end of the comment period. Within 80 days of receipt of
the notification, the Executive Secretary shall submit to the Board a
recommendation on whether further review of all or part of the activity
subject to the notification is warranted. The Executive Secretary's
recommendation shall consider comments submitted during the comment
period, any guidance from specialists within government, and other
relevant factors based on the Board staff's assessment of the
notification, in the context of the factors set forth in Sec. 400.27.
(c) Determinations regarding further review. Within 30 days of
receipt of the Executive Secretary's recommendation, the Board members
shall provide to the Executive Secretary their determinations on whether
further review is warranted concerning all or part of the activity that
is the subject of the notification. If either Board member makes a
determination that further review is warranted, the activity that is
subject
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to further review (which may constitute all or part of the notified
activity) shall not be conducted without authorization pursuant to the
application requirements of Sec. 400.23 and the procedural requirements
of Secs. 400.31-400.34 and 400.36 (or the provisions of paragraph (d) of
this section, where applicable). Within 120 days of receipt of the
notification, the Executive Secretary shall notify the party that
submitted the notification (and the zone grantee, if it did not submit
the notification) that:
(1) Further review is not needed for all or part of the activity
that is the subject of the notification, and that the activity in
question may be conducted; or
(2) Further review is needed for all or part of the activity that is
the subject of the notification, with such activity precluded absent
specific authorization.
(d) Authorization for commencement of an activity on an interim
basis. For an activity notified pursuant to Sec. 400.14(a), the
Executive Secretary may authorize the commencement of some or all of the
activity on an interim basis. Such authorization shall only be made
based on a showing that commencement of the activity is time-sensitive,
with such showing to include comments from CBP that specifically address
the projected timeframe for commencement of the activity. Interim
authorization shall not apply to materials or components subject to an
AD/CVD order or proceeding or suspension of liquidation under AD/CVD
procedures. As warranted, a determination that further review is needed
for all or some of the notified activity pursuant to Sec. 400.37(c) may
also revoke the interim authorization until the Board makes a
determination after conduct of that further review.
Sec. 400.38 Procedure for application for minor modification of zone.
(a) The Executive Secretary shall make a determination in cases
under Sec. 400.24(c) involving minor modifications of zones that do not
require Board action, such as boundary modifications, including certain
relocations, and shall notify the applicant in writing of the decision
within 30 days of the determination that the application or request can
be processed under Sec. 400.24(c). The applicant shall submit a copy of
its application/request to CBP no later than the time of the applicant's
submission of the application/request to the Executive Secretary.
(b) If not previously provided to the applicant for inclusion with
the applicant's submission of the application/request to the Executive
Secretary, any CBP comments on the application/request shall be provided
to the Executive Secretary within 20 days of the applicant's submission
of the application/request to the Executive Secretary.
Subpart E_Operation of Zones and Administrative Requirements
Sec. 400.41 General operation of zones; requirements for commencement
of operations.
(a) In general. Zones shall be operated by or under the general
management of zone grantees, subject to the requirements of the FTZ Act
and this part, as well as those of other federal, state and local
agencies having jurisdiction over the site(s) and operation(s). Zone
grantees shall ensure that the reasonable zone needs of the business
community are served by their zones. CBP officials with oversight
responsibilities for a port of entry represent the Board with regard to
the zones adjacent to the port of entry in question and are responsible
for enforcement, including physical security and access requirements, as
provided in 19 CFR part 146.
(b) Requirements for commencement of operations in a zone. The
following actions are required before operations in a zone may commence:
(1) The grantee shall submit the zone schedule to the Executive
Secretary, as provided in Sec. 400.44.
(2) Approval or concurrence from the grantee and approval from CBP,
pursuant to 19 CFR part 146, are required prior to the activation of any
portion of an approved zone; and
(3) Prior to activation of a zone, the operator shall obtain all
necessary permits from federal, state and local authorities, and except
as otherwise specified in the Act or this part, shall comply with the
requirements of those authorities.
[[Page 82]]
Sec. 400.42 Operation as public utility.
(a) In general. Pursuant to Section 14 of the FTZ Act (19 U.S.C.
81n), each zone shall be operated as a public utility, and all rates and
charges for all services or privileges within the zone shall be fair and
reasonable. A rate or charge (fee) may be imposed on zone participants
to recover costs incurred by or on behalf of the grantee for the
performance of the grantee function. Such a rate or charge must be
directly related to the service provided by the grantee (for which the
fee recovers some or all costs incurred) to the zone participants. Rates
or charges may incorporate a reasonable return on investment. Rates or
charges may not be tied to the level of benefits derived by zone
participants. Other than the uniform rates and charges assessed by, or
on behalf of, the grantee, zone participants shall not be required
(either directly or indirectly) to utilize or pay for a particular
provider's zone-related products or services.
(b) Delayed compliance date. The compliance date for the
requirements of paragraph (a) of this section shall be February 28,
2014.
Sec. 400.43 Uniform treatment.
Pursuant to Section 14 of the FTZ Act (19 U.S.C. 81n), a grantee
shall afford to all who may apply to make use of or participate in the
zone uniform treatment under like conditions. Treatment of zone
participants within a zone (including application of rates and charges)
shall not vary depending on whether a zone participant has procured any
zone-related product or service or engaged a particular supplier to
provide any such product or service.
(a) Agreements to be made in writing. Any agreement or contract
related to one or more grantee function(s) and involving a zone
participant (e.g., agreements with property owners and agreements with
zone operators) must be in writing.
(b) Evaluation of proposals. A grantee (or person undertaking a
zone-related function(s) on behalf of a grantee, where applicable) shall
apply uniform treatment in the evaluation of proposals from zone
participants. Uniform treatment does not require acceptance of all
proposals by zone participants, but the bases for a grantee's decision
on a particular proposal must be consistent with the uniform treatment
requirement.
(c) Justification for differing treatment. Given the requirement for
uniform treatment under like conditions, for any instance of different
treatment of different zone participants, a grantee (or person
undertaking a zone-related function(s) on behalf of a grantee, where
applicable) must be able to provide upon request by the Executive
Secretary a documented justification for any difference in treatment.
(d) Avoidance of non-uniform treatment. To avoid non-uniform
treatment of zone participants, persons (as defined in Sec. 400.2(l))
within key categories set out in paragraph (d)(2) of this section shall
not undertake any of the key functions set out in paragraph (d)(1) of
this section (except in specific circumstances where the Board has
authorized a waiver pursuant to paragraph (f) of this section).
(1) Key functions are:
(i) Taking action on behalf of a grantee, or making recommendations
to a grantee, regarding the disposition of proposals or requests by zone
participants pertaining to FTZ authority or activity (including
activation by CBP);
(ii) Approving, or being a party to, a zone participant's agreement
with the grantee (or person acting on behalf of the grantee) pertaining
to FTZ authority or activity (including activation by CBP); or
(iii) Overseeing zone participants' operations on behalf of a
grantee.
(2) Key categories of persons are:
(i) A person that currently engages in, or which has during the
preceding twelve months engaged in, offering/providing a zone-related
product/service to or representing a zone participant in the grantee's
zone;
(ii) Any person that stands to gain from a person's offer/provision
of a zone-related product/service to or representation of a zone
participant in the zone; or
(iii) Any person related, as defined in paragraph (e) of this
section, to the person identified in paragraphs (d)(2)(i) and (ii) of
this section.
[[Page 83]]
(e) Definition of related persons. For purposes of this section,
persons that are related include:
(1) Members of a family or members of a household. The term members
of a family means spouses, parents, grandparents, children,
grandchildren, siblings (including half-siblings and step-siblings),
aunts, uncles, nieces, nephews, and first cousins, as well as the
parents, children, and siblings of a spouse, and the spouse of a
sibling, child or parent;
(2) Organizations that are wholly or majority-owned by members of
the same family or members of the same household;
(3) An officer or director of an organization and that organization;
(4) Partners;
(5) Employers and their employees;
(6) An organization and any person directly or indirectly owning,
controlling, or holding with power to vote, 20 percent or more of the
outstanding voting stock or shares of that organization;
(7) Any person that controls any other person and that other person
(the term control means the power, direct or indirect, whether or not
exercised, through any means, to determine, direct, or decide important
matters affecting an entity); or
(8) Any two or more persons who directly control, are controlled by,
or are under common control with, any person (see definition of control
in paragraph (e)(7) of this section).
(f) Waivers. The grantee or other person subject to paragraph (d) of
this section may submit an application requesting that the Board issue a
waiver exempting from the prohibition of that paragraph a person's
undertaking a specific key function(s) listed in paragraph (d)(1) of
this section. Using the format developed by the Executive Secretary, an
application for a waiver shall explain in detail how the person falls
within a key category(ies) set out in paragraph (d)(2) of this section,
and the specific key function(s) listed in paragraph (d)(1) of this
section that would be undertaken by the person. After receipt of an
application requesting a waiver, the Executive Secretary may solicit
additional information or clarification, as necessary, including from
the person submitting the application and from the grantee. Based on the
information presented in the application, the Executive Secretary shall
make a recommendation to the Board. A waiver shall be authorized only by
an affirmative vote by the Board. If the Board votes not to authorize a
waiver or to discontinue a waiver, the applicant shall be notified in
writing and allowed 30 days to present evidence in response. In deciding
whether to grant a waiver, the Board shall determine whether there is an
unacceptable risk that the waiver would result in non-uniform treatment
being afforded by the person undertaking a key function(s) listed in
paragraph (d)(1) of this section. In its assessment, the Board shall
consider the specific circumstances presented, including the nature and
extent of the person's involvement in undertaking a key function(s)
listed in paragraph (d)(1) of this section. In general, the more
significant the requester's involvement or interest in the undertaking
of a key function(s) listed in paragraph (d)(1) of this section or
activity(ies) identified in paragraph (d)(2)(i) of this section, the
greater the risk will be that non-uniform treatment will be afforded
and, thus, the less likely it will be that a waiver will be granted. The
Board may attach to individual waivers such conditions or limitations
(including, for example, the length of time a waiver is to be effective)
as it deems necessary.
(g) Requests for determinations. A grantee or other party may
request a determination by the Executive Secretary regarding the
consistency of an actual or potential arrangement with the requirements
of this section.
(h) Identification of person undertaking function(s) on behalf of
grantee. The Board, the Commerce Department's Assistant Secretary for
Enforcement and Compliance, or the Executive Secretary, may require a
zone grantee to identify any person undertaking a zone-related
function(s) on behalf of the grantee.
(i) Delayed compliance date. If, as of April 30, 2012, existing
business arrangements do not comply with the requirements of paragraphs
(a) and (d) of
[[Page 84]]
this section, such existing arrangements shall be terminated or brought
into compliance no later than February 28, 2014.
Effective Date Note: At 77 FR 12139, Feb. 28, 2012, Sec. 400.43 was
added. Paragraph (f) contains information collection and recordkeeping
requirements and will not become effective until approval has been given
by the Office of Management and Budget.
Sec. 400.44 Zone schedule.
(a) In general. The zone grantee shall submit to the Executive
Secretary (in both paper and electronic copies) a zone schedule which
sets forth the elements required in this section. No element of a zone
schedule (including any amendment to the zone schedule) may be
considered to be in effect until such submission has occurred. If
warranted, the Board may subsequently amend the requirements of this
section by Board Order.
(b) Each zone schedule shall include:
(1) A title page, which shall include the name of the zone grantee
and the date of the current schedule;
(2) A table of contents;
(3) Internal rules/regulations and policies for the zone;
(4) All rates or charges assessed by or on behalf of the grantee;
(5) Information regarding any operator which has an agreement with
the grantee to offer services to the public, including the operator's
rates or charges for all zone-specific services offered; and
(6) An appendix with definitions of any FTZ-related terms used in
the zone schedule (as needed).
(c) The Executive Secretary may review the zone schedule (or any
amendment to the zone schedule) to determine whether it contains
sufficient information for zone participants concerning the operation of
the zone and the grantee's rates and charges as provided in paragraphs
(b)(3) and (b)(4) of this section. If the Executive Secretary determines
that the zone schedule (or amendment) does not satisfy these
requirements, the Executive Secretary shall notify the zone grantee. The
Executive Secretary may also conduct a review under 400.45(b).
(d) Amendments to the zone schedule shall be prepared and submitted
in the manner described in paragraph (a) of this section, and listed in
the concluding section of the zone schedule, with dates. No rates/
charges or other provisions required for the zone schedule may be
applied by, or on behalf of, the grantee unless those specific rates/
charges or provisions are included in the most recent zone schedule
submitted to the Board and made available to the public in compliance
with paragraph (e) of this section.
(e) Availability of zone schedule. A complete copy of the zone
schedule shall be freely available for public inspection at the offices
of the zone grantee and any operator offering FTZ services to the user
community. The Board shall make copies of zone schedules available on
its Web site.
(f) Delayed compliance date. The compliance date for the
requirements of this section shall be February 28, 2014.
Sec. 400.45 Complaints related to public utility and uniform
treatment.
(a) In general. A zone participant may submit to the Executive
Secretary a complaint regarding conditions or treatment that the
complaining party believes are inconsistent with the public utility and
uniform treatment requirements of the FTZ Act and these regulations.
Complaints may be made on a confidential basis, if necessary. Grantees
(and persons undertaking zone-related functions on behalf of grantees,
where applicable) shall not enter into or enforce provisions of
agreements or contracts with zone participants that would require zone
participants to disclose to other parties, including the grantee (or
person undertaking a zone-related function(s) on behalf of a grantee,
where applicable), any confidential communication with the Board under
this section.
(b) Objections to rates and charges. A zone participant showing good
cause may object to any rate or charge related to the zone on the basis
that it is not fair and reasonable by submitting to the Executive
Secretary a complaint in writing with supporting information. If
necessary, such a complaint may be made on a confidential basis pursuant
to Sec. 400.45(a). The Executive Secretary shall review the complaint
and issue a report and decision, which
[[Page 85]]
shall be final unless appealed to the Board within 30 days. The Board or
the Executive Secretary may otherwise initiate a review for cause. The
primary factor considered in reviewing fairness and reasonableness is
the cost of the specific services rendered. Where those costs
incorporate charges to the grantee by one or more parties undertaking
functions on behalf of the grantee, the Board may consider the costs
incurred by those parties (using best estimates, as necessary). The
Board will also give consideration to any extra costs incurred relative
to non-zone operations, including return on investment and reasonable
out-of-pocket expenses.
Sec. 400.46 Grantee liability.
(a) Exemption from liability. A grant of authority, per se, shall
not be construed to make the zone grantee liable for violations by zone
participants. The role of the zone grantee under the FTZ Act and the
Board's regulations is to provide general management of the zone to
ensure that the reasonable needs of the business community are served.
It would not be in the public interest to discourage public entities
from zone sponsorship because of concern about liability without fault.
(b) Exception to exemption from liability. A grantee could create
liability for itself that otherwise would not exist if the grantee
undertakes detailed operational oversight of or direction to zone
participants. Examples of detailed operational oversight or direction
include review of an operator's inventory-control or record-keeping
systems, specifying requirements for such a system to be used by an
operator, and review of CBP documentation related to an operator's zone
receipts and shipments.
Sec. 400.47 Retail trade.
(a) In general. Retail trade is prohibited in activated areas of
zones, except that 1) sales or other commercial activity involving
domestic, duty-paid, and duty-free goods may be conducted within an
activated area of a zone under a permit issued by the zone grantee and
approved by the Board, and 2) 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 individuals working therein. The Executive Secretary shall
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.
Determinations on whether an activity constitutes retail trade shall be
based on precedent established through prior rulings by CBP, as
appropriate. Such prior rulings shall remain effective unless a
determination is issued to modify their effect (after a notice-and-
comment process, as appropriate). Determinations made by the Executive
Secretary pursuant to this section shall be made available to the public
via the Board's Web site.
(b) Procedure. Requests for Board approval under this section shall
be submitted in letter form, with supporting documentation, to the
Executive Secretary, who is authorized to act for the Board in these
cases, after consultation with CBP as necessary.
(c) Criteria. In evaluating requests under this section, the
Executive Secretary and CBP shall consider factors that may include:
(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.
Sec. 400.48 Zone-restricted merchandise.
(a) In general. Merchandise in zone-restricted status (19 CFR
146.44) may be entered into the customs territory of the United States
only when the Board determines that the entry would be in the public
interest. Such entries are subject to the customs laws and the payment
of applicable duties and excise taxes (19 U.S.C. 81c(a), 4th proviso).
(b) Criteria. In making the determination described in paragraph (a)
of this section, the Board shall consider:
(1) The intent of the parties;
(2) Why the merchandise cannot be exported;
(3) The public benefit involved in allowing entry of the
merchandise; and
(4) The recommendation of CBP.
[[Page 86]]
(c) Procedure. (1) A request for authority to enter ``zone-
restricted'' merchandise into U.S. customs territory shall be made to
the Executive Secretary in letter form by the zone grantee or by the
operator responsible for the merchandise (with copy to the grantee),
with supporting information and documentation.
(2) The Executive Secretary shall investigate the request and
prepare a report for the Board.
(3) The Executive Secretary may act for the Board under this section
with respect to requests that involve merchandise valued at 500,000
dollars or less and that are accompanied by a letter of concurrence from
CBP.
Sec. 400.49 Monitoring and reviews of zone operations and activity.
(a) In general. Ongoing zone operation(s) and activity may be
reviewed by the Board or the Executive Secretary at any time to
determine whether they are in the public interest and in compliance and
conformity with the Act and regulations, as well as authority approved
by the Board. Reviews involving production activity 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. 400.27. The
Board may prescribe special monitoring requirements in its decisions
when appropriate.
(b) Conduct of reviews. Reviews may be initiated by the Board, the
Commerce Department's Assistant Secretary for Enforcement and
Compliance, or the Executive Secretary; or, they may be undertaken in
response to requests from parties directly affected by the activity in
question showing good cause based on the provision of information that
is probative and substantial in addressing the matter in issue. After
initiation of a review, any affected party shall provide in a timely
manner any information requested as part of the conduct of the review.
If a party fails to timely provide information requested as part of such
a review, a presumption unfavorable to that party may be made.
(c) Prohibition or restriction. Upon review, if a finding is made
that zone activity is no longer in the public interest (taking into
account the factors enumerated in Sec. 400.27 where production activity
is involved), the Board or the Commerce Department's Assistant Secretary
for Enforcement and Compliance may prohibit or restrict the activity in
question. Such prohibitions or restrictions may be put in place after a
preliminary review (e.g., prior to potential steps such as a public
comment period) if circumstances warrant such action until further
review can be completed. The procedures of Sec. 400.34(a)(5)(iv)(A)
shall be followed to notify the grantee of the affected zone and allow
for a response prior to the final imposition of a prohibition or
restriction. The appropriateness of a delayed effective date shall be
considered.
Subpart F_Records, Reports, Notice, Hearings and Information
Sec. 400.51 Records and reports.
(a) Records and forms. Zone records and forms shall be prepared and
maintained in accordance with the requirements of CBP and the Board,
consistent with documents issued by the Board specific to the zone in
question, and the zone grantee shall retain copies of applications/
requests it submits to the Board in electronic or paper format.
(b) Maps and drawings. Zone grantees or operators, and CBP, shall
keep current layout drawings of approved sites as described in
Sec. 400.21(d)(5), showing activated portions, and a file showing
required activation approvals. The zone grantee shall furnish necessary
maps to CBP.
(c) Annual reports. (1) Each zone grantee shall submit a complete
and accurate annual report to the Board within 90 days after the end of
the reporting period. Each zone operator shall submit a complete and
accurate annual report to the zone grantee in a timeframe that will
enable the grantee's timely submission of a complete and accurate annual
report to the Board. A zone grantee may request an extension of the
deadline for its report, as warranted. The Executive Secretary
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may authorize such extensions, with decisions on such authorizations
taking into account both the circumstances presented and the importance
of the Board submitting its annual report to Congress in a timely
manner. Annual reports must be submitted in accordance with any
instructions, guidelines, forms and related documents specifying place,
manner and format(s) prescribed by the Executive Secretary. In the event
that a grantee has not received all necessary annual report information
from an operator in a timely manner, the grantee may submit its annual
report on time and note the absence of the missing information.
(2) The Board shall submit an annual report to Congress.
Sec. 400.52 Notices and hearings.
(a) In general. The Executive Secretary shall publish notice in the
Federal Register inviting public comment on applications and
notifications for Board action (see, Secs. 400.32 and 400.37(b)), and
with regard to other reviews or matters considered under this part when
public comment is necessary. An applicant under Secs. 400.21, 400.24(b)
and 400.25 shall give appropriate notice of its proposal in a local,
general-circulation newspaper at least 15 days prior to the close of the
public comment period for the proposal in question. The Board, the
Secretary of Commerce, the Commerce Department's Assistant Secretary for
Enforcement and Compliance, 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 party who may be materially
affected by the zone activity in question and who shows 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. 400.32) 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 shall be made by
the Commerce Department's Assistant Secretary for Enforcement and
Compliance within 15 days after the receipt of such a request.
(c) Procedure for public hearings. The Board shall publish notice in
the Federal Register of the date, time and location of a public 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. 400.53 Official records; public access.
(a) Content. The Executive Secretary shall maintain at the location
stated in Sec. 400.54(e) an official record of each proceeding within
the Board's jurisdiction. The Executive Secretary shall include in the
official record all timely evidence, factual information, and written
argument, and other material developed by, presented to, or obtained by
the Board in connection with the proceeding. 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 to a proposal is involved.
(b) Opening and closing of official record. The official record
opens on the date the Executive Secretary dockets an application or
receives a request or notification 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 shall
not be removed from the Department of Commerce. A certified copy of the
record shall be made available to any court before which any aspect of a
proceeding is under review, with appropriate safeguards to prevent
disclosure of business proprietary or privileged information.
Sec. 400.54 Information.
(a) Request for information. The Executive Secretary, on behalf of
the Board,
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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 shall consider all information submitted in a
proceeding to be public information, and if the person submitting the
information does not agree to its public disclosure, the Board shall
return the information and not consider it in the proceeding.
Information to meet the basic requirements of Secs. 400.21-400.25 is
inherently public information to allow meaningful public evaluation
pursuant to those sections and Sec. 400.32.
(c) Business proprietary information. Persons submitting business
proprietary information and requesting that it be protected from public
disclosure shall mark the cover page, as well as the top of each page on
which such information appears, ``business proprietary.'' Any business
proprietary document submitted for a proceeding other than pursuant to
Sec. 400.45 shall contain brackets at the beginning and end of each
specific piece of business proprietary information contained in the
submission. Any such business proprietary submission shall also be
accompanied by a public version that contains all of the document's
contents except the information bracketed in the business proprietary
version, with the cover page and the top of each additional page marked
``public version.'' Any information for which business proprietary
treatment is claimed must be ranged (i.e., presented as a number or
upper and lower limits that approximate the specific business
proprietary figure) or summarized in the public version. If a submitting
party maintains that certain information is not susceptible to
summarization or ranging, the public version must provide a full
explanation specific to each such piece of information regarding why
summarization or ranging is not feasible.
(d) Disclosure of information. Disclosure of public information
shall be governed by 15 CFR part 4.
(e) Availability of information. Public information in the official
record shall be available at the Office of the Executive Secretary,
Foreign-Trade Zones Board, U.S. Department of Commerce Building, 1401
Constitution Avenue NW., Washington, DC 20230 and may also be available
electronically over the Internet via http://www.trade.gov/ftz (or a
successor Internet address).
Subpart G_Penalties and Appeals to the Board
Sec. 400.61 Revocation of authority.
(a) In general. As provided in this section, the Board can revoke in
whole or in part authority for a zone or subzone whenever it determines
that the zone grantee has violated, repeatedly and willfully, the
provisions of the Act.
(b) 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 shall:
(1) Notify the grantee of the zone in question in writing stating
the nature of the alleged violations, provide the grantee an opportunity
to request a hearing on the proposed revocation, and notify any known
operators in the zone;
(2) Conduct a hearing, if requested or otherwise if appropriate;
(3) Make a determination on the record of the proceeding not earlier
than four months after providing notice to the zone grantee under
paragraph (b)(1) of this section; and
(4) If the Board's determination is affirmative, publish a notice of
revocation of authority, in whole or in part, in the Federal Register.
(c) As provided in section 18 of the Act (19 U.S.C. 81r(c)), the
grantee of the zone or subzone in question may appeal an order of the
Board revoking authority.
Sec. 400.62 Fines, penalties and instructions to suspend activated
status.
(a) In general. Fines are authorized solely for specific violations
of the FTZ Act or the Board's regulations as detailed in Secs. 400.62(b)
and (c). Each specific violation is subject to a fine of not more than
1,000 dollars (as adjusted for inflation pursuant to Sec. 400.62(j)),
with each day during which a violation
[[Page 89]]
continues constituting a separate offense subject to imposition of such
a fine (FTZ Act, section 19; 19 U.S.C. 81s). This section also
establishes the party subject to the fine which, depending on the type
of violation, would be the zone operator, grantee, or a person
undertaking one or more zone-related functions on behalf of the grantee,
where applicable. In certain circumstances, the Board or the Assistant
Secretary for Enforcement and Compliance could instruct CBP to suspend
the activated status of all or part of a zone or subzone. Violations of
the FTZ Act or the Board's regulations (including the sections
pertaining to uniform treatment and submission of annual reports),
failure to pay fines, or failure to comply with an order prohibiting or
restricting activity may also result in the Executive Secretary's
suspending the processing of any requests to the Board and staff
relating to the zone or subzone in question. In circumstances where non-
compliance pertains to only a subset of the operations in a zone,
suspensions of activated status and suspensions of the processing of
requests shall be targeted to the specific non-compliant operation(s).
(b) Violations involving requirement to submit annual report. A
grantee's failure to submit a complete and accurate annual report
pursuant to section 16 of the FTZ Act (19 U.S.C. 81p(b)) and
Sec. 400.51(c)(1) of these regulations constitutes a violation subject
to a fine, with each day of continued failure to submit the report
constituting a separate offense subject to a fine of not more than 1,000
dollars (as adjusted for inflation pursuant to Sec. 400.62(j)). Further,
each day during which a zone operator fails to submit to the zone's
grantee the information required for the grantee's timely submission of
a complete and accurate annual report to the Board shall constitute a
separate offense subject to a fine of not more than 1,000 dollars (as
adjusted for inflation pursuant to Sec. 400.62(j)). Consistent with
Sec. 400.46, if the grantee submits a timely report to the Board
identifying any operator that has not provided complete and timely
information in response to a timely request(s) by the grantee, the
grantee shall not be subject to a fine-assessment action stemming from
the operator's failure to timely provide its report.
(c) Violations involving uniform treatment. Failure by a grantee or
a person undertaking one or more zone-related functions on behalf of the
grantee to comply with the uniform treatment requirement of section 14
of the FTZ Act (19 U.S.C. 81n) or the provisions of Sec. 400.43 of these
regulations constitutes a violation, with each day of continued
violation constituting a separate offense subject to a fine of not more
than 1,000 dollars (as adjusted for inflation pursuant to
Sec. 400.62(j)).
(d) Procedures for determination of violations and imposition of
fines. When the Board or the Executive Secretary has reason to believe
that a violation pursuant to Secs. 400.62(b) and (c) has occurred and
that the violation warrants the imposition of a fine (such as a
situation where a party has previously been notified of action required
for compliance and has failed to take such action within a reasonable
period of time), the following steps shall be taken:
(1) The Executive Secretary shall notify the party or parties
responsible for the violation and the zone grantee in writing stating
the nature of the alleged violation, and provide the party(ies) a
specified period (no less than 30 days, with consideration given to any
requests for an extension, which shall not be unreasonably withheld) to
respond in writing;
(2) The Executive Secretary shall conduct a hearing, if requested or
otherwise if appropriate. Parties may be represented by counsel at the
hearing, and any evidence and testimony of witnesses in the proceeding
shall be presented. A transcript of the hearing shall be produced and a
copy shall be made available to the parties;
(3) The Executive Secretary shall make a recommendation on the
record of the proceeding not earlier than the later of 15 days after the
deadline for the party(ies)'s response under paragraph (d)(1) of this
section or 15 days after the date of a hearing held under paragraph
(d)(2) of this section. If the recommendation is for an affirmative
determination of a violation, the Executive Secretary shall also
recommend the amount of the fine to be imposed; and
[[Page 90]]
(4) The Board shall make a determination regarding the finding of a
violation and imposition of a fine based on the Executive Secretary's
recommendation under paragraph (d)(3) of this section. For related
actions where the total sum of recommended fines is no more than 10,000
dollars (50,000 dollars in the case of violations pursuant to paragraph
(b) of this section), the Board delegates to the Executive Secretary the
authority to make a determination.
(e) Mitigation--(1) In general. The Commerce Department's Assistant
Secretary for Enforcement and Compliance may approve the mitigation
(reduction or elimination) of an imposed fine based on specific evidence
presented by the affected party. Authority is delegated to the Executive
Secretary to mitigate a fine where the total sum of fines imposed on a
party for related actions does not exceed 10,000 dollars (50,000 dollars
in the case of violations pursuant to paragraph (b) of this section).
Mitigating evidence and argument pertaining to mitigating factors must
be submitted within 30 days of the determination described in paragraph
(d)(4) of this section, subject to requests for extension for cause, the
granting of which shall not be unreasonably withheld.
(2) Mitigating factors. Factors to be taken into account in
evaluating potential mitigation include:
(i) A good record of a violator over the preceding five years with
regard to the type of violation(s) at issue;
(ii) The violation was due to the action of another party despite
violator's adherence to the requirements of the FTZ Act and the Board's
regulations;
(iii) Immediate remedial action by the violator to avoid future
violations;
(iv) A violator's cooperation with the Board (beyond the degree of
cooperation expected from a person under investigation for a violation)
in ascertaining the facts establishing the violation;
(v) A violation's resulting from a clerical error or similar
unintentional negligence; and
(vi) Such other factors as the Board, or the Executive Secretary,
deems appropriate to consider in the specific circumstances presented.
(f) Assessment of fines. After evaluating submitted mitigating
evidence and argument, where applicable, the Commerce Department's
Assistant Secretary for Enforcement and Compliance may assess an imposed
fine (in whole or in part). Authority is delegated to the Executive
Secretary to assess a fine where the total sum of the imposed fines for
related actions does not exceed 10,000 dollars (50,000 dollars in the
case of violations pursuant to paragraph (b) of this section).
(g) Time for payment. Full payment of an assessed fine must be made
within 30 days of the date of the assessment or within such longer
period of time as may be specified. Payment shall be made in the manner
specified by the Commerce Department's Assistant Secretary for
Enforcement and Compliance or the Executive Secretary.
(h) Procedures for instruction to suspend activated status. If a
fine assessed pursuant to Secs. 400.62(d) through (g) has not been paid
within 90 days of the specified deadline for payment, if there is a
repeated and willful failure to comply with a requirement of the FTZ Act
or the Board's regulations, or if there is a repeated and willful
failure to comply with a prohibition or restriction on activity imposed
by an order of the Board or an order of the Commerce Department's
Assistant Secretary for Enforcement and Compliance pursuant to
Sec. 400.49(c), the Board or the Commerce Department's Assistant
Secretary for Enforcement and Compliance may instruct CBP to suspend the
activated status of the zone operation(s) in question (or, if
appropriate, the suspension may be limited to a particular activity of a
zone operator, such as suspension of the privilege to admit
merchandise), and the suspension shall remain in place until the failure
to pay a fine, failure to comply with a requirement of the FTZ Act or
the Board's regulations, or failure to comply with an order's
prohibition or restriction on activity has been remedied. In determining
whether to instruct CBP to suspend the activated status of a zone
operation in the circumstances noted, the following steps shall be
taken:
(1) Notification of party(ies). The Executive Secretary shall notify
the responsible party(ies) in writing stating the
[[Page 91]]
nature of the failure to timely pay a fine, to comply with a requirement
of the FTZ Act or the Board's regulations or to comply with a
prohibition or restriction on activity imposed by an order of the Board
or an order of the Commerce Department's Assistant Secretary for
Enforcement and Compliance. If the grantee is not one of the responsible
parties notified, the Executive Secretary shall also provide a copy of
the notification to the grantee. The responsible party(ies) shall be
provided a specified period (of not less than 15 days) to respond in
writing to the notification;
(2) Hearing. If the notified responsible party(ies) or the zone's
grantee requests a hearing (or if a hearing is determined to be
warranted by the Board, the Commerce Department's Assistant Secretary
for Enforcement and Compliance or the Executive Secretary), it shall be
held before the Executive Secretary (or a member of the Board staff
designated by the Executive Secretary) within 30 days following the
request for a hearing (or the determination by the Board, the Commerce
Department's Assistant Secretary for Enforcement and Compliance or the
Executive Secretary). Parties may be represented by counsel at the
hearing, and any evidence and testimony of witnesses in the proceeding
shall be presented. A transcript of the hearing shall be produced and a
copy shall be made available to the parties;
(3) The Executive Secretary shall make a recommendation on the
record of the proceeding not earlier than 15 days after the later of:
(i) The deadline for the party(ies)'s response under paragraph
(h)(1) of this section; or
(ii) The date of a hearing held under paragraph (h)(2) of this
section; and
(4) The Board or the Commerce Department's Assistant Secretary for
Enforcement and Compliance shall determine whether to instruct CBP to
suspend the activated status of the zone operation(s) in question. If
the determination is affirmative, the Executive Secretary shall convey
the instruction to CBP, with due consideration to allow for the transfer
of any affected merchandise from the applicable zone site(s).
(i) Enforcement of assessment. Upon any failure to pay an assessed
fine, the Board may request the U.S. Department of Justice to recover
the amount assessed in any appropriate district court of the United
States or may commence any other lawful action.
(j) Adjustment for inflation. The maximum dollar value of a fine for
a violation of the FTZ Act or the Board's regulations is subject to
adjustment for inflation pursuant to the Federal Civil Penalties
Inflation Adjustment Act of 1990 (Pub. L. 101-410), as amended by the
Debt Collection Improvement Act of 1996 (Pub. L. 104-134).
Sec. 400.63 Appeals to the Board of decisions of the Assistant
Secretary for Enforcement and Compliance and the Executive Secretary.
(a) In general. Decisions of the Commerce Department's Assistant
Secretary for Enforcement and Compliance and the Executive Secretary
made pursuant to this part 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 shall notify the appealing party of its decision in
writing.
PARTS 401 499 [RESERVED]
[[Page 93]]
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... 95
701 Reporting of offsets agreements in sales of
weapon systems or defense-related items
to foreign countries or foreign firms... 123
702 Industrial base surveys--Data collections... 128
703-704 [Reserved]
705 Effect of imported articles on the national
security................................ 131
706-709 [Reserved]
SUBCHAPTER B--CHEMICAL WEAPONS CONVENTION REGULATIONS
710 General information and overview of the
Chemical Weapons Convention Regulations
(CWCR).................................. 137
711 General information regarding declaration,
reporting, and advance notification
requirements, and the electronic filing
of declarations and reports............. 145
712 Activities involving Schedule 1 chemicals... 148
713 Activities involving Schedule 2 chemicals... 157
714 Activities involving Schedule 3 chemicals... 167
715 Activities involving Unscheduled Discrete
Organic Chemicals (UDOCs)............... 174
716 Initial and routine inspections of declared
facilities.............................. 180
717 CWC clarification procedures (consultations
and challenge inspections).............. 190
718 Confidential business information........... 192
719 Enforcement................................. 195
720 Denial of export privileges................. 204
721 Inspection of records and recordkeeping..... 206
722
Interpretations [Reserved]
[[Page 94]]
723-729 [Reserved]
SUBCHAPTER C--EXPORT ADMINISTRATION REGULATIONS
730 General information......................... 208
732 Steps for using the EAR..................... 209
734 Scope of the Export Administration
regulations............................. 218
736 General prohibitions........................ 233
738 Commerce Control List overview and the
country chart........................... 247
740 License exceptions.......................... 254
742 Control policy--CCL based controls.......... 266
743 Special reporting and notification.......... 326
744 Control policy: End-user and end-use based.. 367
745 Chemical Weapons Convention requirements.... 371
746 Embargoes and other special controls........ 510
747 Special Iraq reconstruction license......... 514
748 Applications (classification, advisory, and
license) and documentation.............. 527
750 Application processing, issuance, and denial 529
752 [Reserved]
754 Short supply controls....................... 569
756 Appeals..................................... 579
758 Export clearance requirements............... 586
760 Restrictive trade practices or boycotts..... 587
762 Recordkeeping............................... 596
764 Enforcement and protective measures......... 663
766 Administrative enforcement proceedings...... 668
768 Foreign availability determination
procedures and criteria................. 680
770 Interpretations............................. 707
772 Definitions of terms........................ 717
774 The Commerce Control List................... 723
775-780 [Reserved]
SUBCHAPTER D--ADDITIONAL PROTOCOL REGULATIONS
781 General information and overview of the
additional protocol regulations (APR)... 756
782 General information regarding reporting
requirements and procedures............. 1033
783 Civil nuclear fuel cycle-related activities
not involving nuclear materials......... 1037
784 Complementary access........................ 1039
785 Enforcement................................. 1059
786 Records and recordkeeping................... 1066
787-799 [Reserved]
[[Page 95]]
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 part.
Subpart B_Overview
700.2 Introduction.
700.3 Priority ratings and rated orders.
700.4-700.7 [Reserved]
Subpart C_Definitions
700.8 Definitions.
Subpart D_Industrial Priorities
700.10 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_Allocation Actions
700.30 Policy.
700.31 General procedures.
700.32 Controlling the general distribution of a material in the
civilian market.
700.33 Types of allocations orders.
700.34 Elements of an allocation order.
700.35 Mandatory acceptance of an allocation order.
700.36 Changes or cancellations of allocation orders.
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 Homeland security, emergency preparedness, and critical
infrastructure protection and restoration assistance programs
within the United States.
700.56 Military assistance programs with Canada.
700.57 Military assistance programs with other nations and
international organizations.
700.58 Critical infrastructure assistance programs to foreign nations
and international organizations.
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 part 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: 50 U.S.C. 4501 et seq.; 42 U.S.C. 5195, et seq.; 50
U.S.C. 3816; 10 U.S.C. 2538; 50 U.S.C. 82; E.O. 12656, 53 FR 226, 3 CFR,
1988 Comp., p. 585; E.O. 12742, 56 FR 1079, 3 CFR, 1991 Comp., p. 309;
E.O. 13603, 77 FR 16651, 3 CFR, 2012 Comp., p. 225.
Source: 49 FR 30414, July 30, 1984, unless otherwise noted.
Redesignated at 54 FR 601, Jan. 9, 1989.
[[Page 96]]
Subpart A_Purpose
Sec. 700.1 Purpose of this part.
This part implements the Defense Priorities and Allocations System
(DPAS) that is administered by the Department of Commerce, Bureau of
Industry and Security. The DPAS implements the priorities and
allocations authority of the Defense Production Act, including use of
that authority to support emergency preparedness activities pursuant to
Title VI of the Robert T. Stafford Disaster Relief and Emergency
Assistance Act (42 U.S.C. 5195 et seq.), and the priorities authority of
the Selective Service Act and related statutes, all with respect to
industrial resources. The DPAS establishes procedures for the placement,
acceptance, and performance of priority rated contracts and orders and
for the allocation of materials, services, and facilities. The guidance
and procedures in this part are generally consistent with the guidance
and procedures provided in other regulations issued under Executive
Order 13603 authority.
[79 FR 47563, Aug. 14, 2014]
Subpart B_Overview
Sec. 700.2 Introduction.
(a) Certain national defense and energy programs (including
military, emergency preparedness, homeland security, and critical
infrastructure protection and restoration activities) are approved for
priorities and allocations support. A complete list of currently
approved programs is provided at schedule I to this part.
(b) The Department of Commerce administers the DPAS and may exercise
priorities and allocations authority to ensure the timely delivery of
industrial items to meet approved program requirements.
(c) The Department of Commerce has delegated authority to place
priority ratings on contracts or orders necessary or appropriate to
promote the national defense to certain government agencies that issue
such contracts or orders. Such delegations include authority to
authorize recipients of rated orders to place ratings on contracts or
orders to contractors, subcontractors, and suppliers. Schedule I to this
part includes a list of agencies to which the Department of Commerce has
delegated authority.
[79 FR 47563, Aug. 14, 2014]
Sec. 700.3 Priority ratings and rated orders.
(a) Rated orders are identified by a priority rating and a program
identification symbol. Rated orders take precedence over all unrated
orders as necessary to meet required delivery dates. Among rated orders,
DX rated orders take precedence over DO rated orders. Program
identification symbols indicate which approved program is attributed to
the rated order.
(b) Persons receiving rated orders must give them preferential
treatment as required by this part.
(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 part.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31921, June 11, 1998; 79 FR 47563, Aug. 14, 2014]
Secs. 700.4-700.7 [Reserved]
Subpart C_Definitions
Sec. 700.8 Definitions.
The definitions in this section apply throughout this part:
Allocation. The control of the distribution of materials, services
or facilities for a purpose deemed necessary or appropriate to promote
the national defense.
Allocation order. An official action to control the distribution of
materials,
[[Page 97]]
services, or facilities for a purpose deemed necessary or appropriate to
promote the national defense.
Allotment. An official action that specifies the maximum quantity of
a material, service, or facility authorized for a specific use to
promote the national defense.
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
and Executive Order 13603, or the Selective Service Act 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.
Critical infrastructure. Any systems and assets, whether physical or
cyber-based, so vital to the United States that the degradation or
destruction of such systems and assets would have a debilitating impact
on national security, including, but not limited to, national economic
security and national public health or safety.
Defense Production Act. The Defense Production Act of 1950, as
amended (50 U.S.C. App. 2061, et seq.).
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.
Directive. An official action which requires a person to take or
refrain from taking certain actions in accordance with its provisions.
Emergency preparedness. All activities and measures designed or
undertaken to prepare for or minimize the effects of a hazard upon the
civilian population, to deal with the immediate emergency conditions
which would be created by the hazard, and to effectuate emergency
repairs to, or the emergency restoration of, vital utilities and
facilities destroyed or damaged by the hazard. Emergency preparedness
includes the following:
(1) Measures to be undertaken in preparation for anticipated hazards
(including the establishment of appropriate organizations, operational
plans, and supporting agreements, the recruitment and training of
personnel, the conduct of research, the procurement and stockpiling of
necessary materials and supplies, the provision of suitable warning
systems, the construction or preparation of shelters, shelter areas, and
control centers, and, when appropriate, the nonmilitary evacuation of
the civilian population);
(2) Measures to be undertaken during a hazard (including the
enforcement of passive defense regulations prescribed by duly
established military or civil authorities, the evacuation of personnel
to shelter areas, the control of traffic and panic, and the control and
use of lighting and civil communications); and
(3) Measures to be undertaken following a hazard (including
activities for firefighting, rescue, emergency medical, health and
sanitation services, monitoring for specific dangers of special weapons,
unexploded bomb reconnaissance, essential debris clearance, emergency
welfare measures, and immediately essential emergency repair or
restoration of damaged vital facilities).
Hazard. An emergency or disaster resulting from:
(1) A natural disaster, or
(2) An accidental or man-caused event.
Homeland security. Includes efforts:
(1) To prevent terrorist attacks within the United States;
(2) To reduce the vulnerability of the United States to terrorism;
(3) To minimize damage from a terrorist attack in the United States;
and
(4) To recover from a terrorist attack in the United States.
Industrial resources. All materials, services, and facilities,
including construction materials, the authority for which has not been
delegated to other agencies under Executive Order 13603. 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
[[Page 98]]
kind, technical information, process, or service.
Maintenance and repair and/or operating supplies (MRO). (1)
Maintenance is the upkeep necessary to continue any plant, facility, or
equipment in working condition.
(2) 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.
(3) 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.
(4) 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.
National defense. Programs for military and energy production or
construction, military or critical infrastructure assistance to any
foreign nation, homeland security, stockpiling, space, and any directly
related activity. Such term includes emergency preparedness activities
conducted pursuant to Title VI of The Robert T. Stafford Disaster Relief
and Emergency Assistance Act (42 U.S.C. 5195 et seq.) and critical
infrastructure protection and restoration.
Official action. An action taken by the Department of Commerce under
the authority of the Defense Production Act, the Selective Service Act
and related statutes, and this part. Such actions include the issuance
of rating authorizations, directives, letters of understanding, demands
for information, inspection authorizations, administrative subpoenas and
allocation orders.
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 international organization or agency thereof, delegated
authority as provided in this part.
Priorities authority. The authority of the Department of Commerce,
pursuant to Section 101 of the Defense Production Act, to require
priority performance of contracts and orders for industrial resource
items for use in approved programs.
Priority rating. An identifying code assigned by a Delegate Agency
or authorized person placed on all rated orders and consisting of the
rating symbol and the program identification symbol.
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.
Program identification symbols. Abbreviations used to indicate which
approved program is supported by a rated order.
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 part.
Selective Service Act. Section 18 of the Selective Service Act of
1948 (50 U.S.C. app. 468).
Set-aside. An official action that requires a person to reserve
materials, services, or facilities capacity 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.).
Working day. Any day that the recipient of an order is open for
business.
[79 FR 47564, Aug. 14, 2014]
[[Page 99]]
Subpart D_Industrial Priorities
Sec. 700.10 Authority.
(a) Delegations to the Department of Commerce. 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 13603 of March 16,
2012 (3 CFR, 2012 Comp., p. 225). 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 (3
CFR, 1991 Comp. 309).
(b) Delegations by the Department of Commerce. The Department of
Commerce has authorized the Delegate Agencies to assign priority ratings
to orders for industrial resources needed for use in approved programs.
(c) Jurisdiction limitations. (1) The priorities and allocations
authority for certain items have been delegated under Executive Order
13603, other executive orders, or Interagency Memoranda of Understanding
between other agencies. Unless otherwise agreed to by the concerned
agencies, the provisions of this part are not applicable to those other
items which include:
(i) Food resources, food resource facilities, livestock resources,
veterinary resources, plant health resources, and the domestic
distribution of farm equipment and commercial fertilizer (delegated to
the Department of Agriculture);
(ii) All forms of energy (delegated to the Department of Energy);
(iii) Health resources (delegated to the Department of Health and
Human Services);
(iv) All forms of civil transportation (delegated to the Department
of Transportation); and
(v) Water resources (delegated to the Department of Defense/U.S.
Army Corps of Engineers).
(2) The priorities and allocations authority set forth in this part
may not be applied to communications services subject to Executive Order
13618 of July 6, 2012--Assignment of National Security and Emergency
Preparedness Communications Functions (3 CFR, 2012 Comp., p. 273).
[79 FR 47565, Aug. 14, 2014]
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 is found in
schedule I to this part. 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; 79 FR
47565, Aug. 14, 2014]
Sec. 700.12 Elements of a rated order.
(a) Elements required for all rated orders. (1) The appropriate
priority rating and program identification symbol (e.g., DO-A1, DX-A4,
DO-N1).
(2) A required delivery date or dates. The words ``immediately'' or
``as soon
[[Page 100]]
as possible'' do not constitute a delivery date. When a ``requirements
contract,'' ``basic ordering agreement,'' ``prime vendor contract,'' or
similar procurement document bearing a priority rating contains no
specific delivery date or dates, but provides 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,'' the purchase orders supporting such contracts or agreements
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.
(3) The written signature on a manually placed order, or the digital
signature or name on an electronically placed order, of an individual
authorized to sign rated orders for the person placing the order. The
signature, manual or digital, certifies that the rated order is
authorized under this part and that the requirements of this part are
being followed.
(4) 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
regulations (15 CFR part 700).''
(b) Additional element required for certain emergency preparedness
rated orders. If a rated order is placed for the purpose of emergency
preparedness requirements and expedited action is necessary or
appropriate to meet these requirements, the following statement must be
included in the order: ``This rated order is placed for the purpose of
emergency preparedness. It must be accepted or rejected within [Insert a
time limit no less than the minimum applicable time limit specified in
Sec. 700.13(d)(2)].''
[79 FR 47565, Aug. 14, 2014]
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
[[Page 101]]
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) Except as provided in
paragraph (d)(2) of this section, a person must accept or reject a rated
order 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 give reasons in writing or electronically for
the rejection.
(2) If a rated order is placed for the purpose of emergency
preparedness requirements and expedited action is necessary or
appropriate to meet these requirements and the order includes the
statement set forth in Sec. 700.12(b), a person must accept or reject
the rated order and transmit the acceptance or rejection in writing or
in an electronic format within the time specified in the rated order.
The minimum times for acceptance or rejection that such orders may
specify are six (6) hours after receipt of the order if the order is
issued by an authorized person in response to a hazard that has
occurred, or twelve (12) hours after receipt if the order is issued by
an authorized person to prepare for an imminent hazard.
(3) 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 (hard copy) or electronic confirmation must be provided within
one working day of the verbal notice.
[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; 79 FR
47565, Aug. 14, 2014]
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. However, if business operations cannot be altered to meet
both the June 3 and July 15 delivery dates, then the DX rated order must
be given priority over the DO 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
[[Page 102]]
should promptly seek special priorities assistance as provided in
subpart H of this part. 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
subpart H of this part. 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)(3).
(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; 79 FR 47566, Aug. 14, 2014]
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 part or as directed by the Department of Commerce.
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.
Therefore, the inclusion of the rating will continue from contractor to
subcontractor to supplier throughout the entire supply chain.
(c) A person must use rated orders with suppliers to obtain items
needed to fill an emergency preparedness rated order. That person must
require acceptance or rejection, and transmission of that acceptance or
rejection by the supplier within the time limit stated in the rated
order that is being filled.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 79 FR 47566, Aug. 14, 2014]
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 (prior to
the start of production); or a change which is agreed upon between the
supplier and the customer.
(e) A person must cancel any rated orders that the person (or a
predecessor in interest) has placed with suppliers or cancel the
priority ratings on those orders if the person no longer needs the items
in those orders to fill a rated order.
(f) A person adding a rating to an unrated order, or changing or
cancelling a priority rating must promptly notify all suppliers to whom
the order was sent of the addition, change or cancellation.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 79 FR 47566, Aug. 14, 2014]
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
[[Page 103]]
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 elements of a rated order, as required by Sec. 700.12, are
included on the order with the statement required in Sec. 700.12(a)(4)
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 regulations (15 CFR part 700) as it pertains to the
rated quantities.''
(2) A supplier must accept or reject the rated portion of the
purchase order 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 $75,000, or one half of the Simplified Acquisition
Threshold (as established in the Federal Acquisition Regulation (FAR))
(see FAR section 2.101), whichever amount is greater, 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; 79 FR 47566, Aug. 14, 2014]
Sec. 700.18 Limitations on placing rated orders.
(a) General limitations. (1) A person may not place a rated order
pursuant to this part unless the person is in receipt of a rated order,
has been explicitly authorized to do so by the Department of Commerce or
a Delegate Agency or is otherwise permitted to do so by this part.
(2) Rated orders may not be used to obtain:
(i) Delivery on a date earlier than needed;
[[Page 104]]
(ii) A greater quantity of the item than needed, except to obtain a
minimum procurable quantity;
(iii) Items in advance of the receipt of a rated order, except as
specifically authorized by the Department of Commerce (see
Sec. 700.41(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 the Department of
Commerce:
(A) Items for plant improvement, expansion or construction, unless
they will be physically incorporated into a construction project covered
by a rated order; or
(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. 700.41).
(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.
(3) Separate rated orders may not be placed solely for obtaining
minimum procurable quantities on each order if the minimum procurable
quantity would be sufficient to cover more than one rated order.
(b) Specific item limitations. Notwithstanding any authorization or
requirement to place a rated order stated elsewhere in this part, no
person may place a rated order to obtain the following items unless such
order is authorized by an official action of the Department of Commerce.
(1) Copper raw materials.
(2) Crushed stone.
(3) Gravel.
(4) Sand.
(5) Scrap.
(6) Slag.
(7) Steam heat, central.
(8) Waste paper.
[79 FR 47566, Aug. 14, 2014]
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 Department of
Energy, Office of Electricity Delivery and Energy Reliability, 1000
Independence Avenue SW., Washington, DC 20585.
(b) If the Department of Energy notifies the Department of Commerce
that the project maximizes domestic energy supplies and that the
materials, equipment, or services are critical and essential, the
Department of Commerce will determine whether the items in question are
scarce, and, if they are scarce, whether there is a need to use the
priorities authority.
(1) Scarcity implies an unusual difficulty in obtaining the
materials, equipment, or services in a time frame consistent with the
timely completion of the energy project. In determining scarcity, the
Department of Commerce may consider factors such as 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;
[[Page 105]]
(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
authority, the Department of Commerce may consider alternative supply
solutions and other measures.
(c) After the Department of Commerce has conducted its analysis, it
will advise the Department of Energy whether the two findings have been
satisfied. If the findings are satisfied, the Department of Commerce
will authorize the Department of Energy to grant the use of a priority
rating to the applicant.
(d) Schedule I to this part includes a list of approved programs to
support the maximization of domestic energy supplies. A Department of
Energy regulation 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.
[79 FR 47567, Aug. 14, 2014]
Subpart F_Allocation Actions
Source: 63 FR 31923, June 11, 1998, unless otherwise noted.
Sec. 700.30 Policy.
(a) Allocation orders will:
(1) Be used only when there is insufficient supply of a material,
service, or facility to satisfy national defense requirements through
the use of the priorities authority or when the use of the priorities
authority would cause a severe and prolonged disruption in the supply of
materials, services, or facilities available to support normal U.S.
economic activities; and
(2) Not be used to ration materials or services at the retail level.
(b) Allocation orders, when used, will be distributed equitably
among the suppliers of the materials, services, or facilities being
allocated and not require any person to relinquish a disproportionate
share of the civilian market.
[79 FR 47567, Aug. 14, 2014]
Sec. 700.31 General procedures.
Before the Department of Commerce uses its allocations authority to
address a supply problem within its resource jurisdiction, it will
develop a plan that includes:
(a) A copy of the written determination made in accordance with
section 202 of Executive Order 13603, that the program or programs that
would be supported by the allocation action are necessary or appropriate
to promote the national defense;
(b) A detailed description of the situation to include any unusual
events or circumstances that have created the requirement for an
allocation action;
(c) A statement of the specific objective(s) of the allocation
action;
(d) A list of the materials, services, or facilities to be
allocated;
(e) A list or description of the sources of the materials, services,
or facilities that will be subject to the allocation action;
(f) A detailed description of the provisions that will be included
in the allocations orders, including the type(s) of allocations orders,
the percentages or quantity of capacity or output to be allocated for
each purpose, the relationship with previously or subsequently received
priority rated and unrated contracts and orders, and the duration of the
allocation action (e.g., anticipated start and end dates);
(g) An evaluation of the impact of the proposed allocation action on
the civilian market; and
(h) Proposed actions, if any, to mitigate disruptions to civilian
market operations.
[79 FR 47567, Aug. 14, 2014]
Sec. 700.32 Controlling the general distribution of a material in
the civilian market.
No allocation action by the Department of Commerce may be used to
control the general distribution of a material in the civilian market
unless the conditions of paragraphs (a), (b), and (c) of this section
are met.
(a) The Secretary has made a written finding that:
(1) Such material is a scarce and critical material essential to the
national defense, and
[[Page 106]]
(2) The requirements of the national defense for such material
cannot otherwise be met without creating a significant dislocation of
the normal distribution of such material in the civilian market to such
a degree as to create appreciable hardship.
(b) The Secretary has submitted the finding for the President's
approval through the Assistant to the President and National Security
Advisor and the Assistant to the President for Homeland Security and
Counterterrorism.
(c) The President has approved the finding.
(d) In this section, the term, ``Secretary'' means the Secretary of
Commerce or his or her designee.
[79 FR 47567, Aug. 14, 2014]
Sec. 700.33 Types of allocations orders.
There are three types of allocations orders available for
communicating allocation actions.
(a) Set-aside. A set-aside is an official action that requires a
person to reserve materials, services, or facilities capacity in
anticipation of the receipt of rated orders.
(b) Directive. A directive is an official action that requires a
person to take or refrain from taking certain actions in accordance with
its provisions. For example, a directive can require a person to: stop
or reduce production of an item; prohibit the use of selected materials,
services, or facilities; or divert the use of materials, services, or
facilities from one purpose to another.
(c) Allotment. An allotment is an official action that specifies the
maximum quantity of a material, service, or facility authorized for a
specific use to promote the national defense.
[79 FR 47567, Aug. 14, 2014]
Sec. 700.34 Elements of an allocation order.
Allocation orders may be issued directly to the affected persons or
by constructive notice to the parties through publication in the Federal
Register. This section describes the elements that each order must
include.
(a) Elements to be included in all allocation orders. (1) A detailed
description of the required allocation action(s), including its
relationship to previously or subsequently received DX rated orders, DO
rated orders and unrated orders.
(2) Specific start and end calendar dates for each required
allocation action.
(b) Elements to be included in orders issued directly to affected
persons. (1) A statement that reads in substance: ``This is an
allocation order certified for national defense use. [Insert the name of
the person receiving the order] is required to comply with this order,
in accordance with the provisions of the Defense Priorities and
Allocations System regulations (15 CFR part 700).''
(2) The written signature on a manually placed order, or the digital
signature or name on an electronically placed order, of an authorized
official or employee of the Department of Commerce.
(c) Elements to be included in an allocation order that gives
constructive notice through publication in the Federal Register. (1) A
statement that reads in substance: ``This is an allocation order
certified for national defense use. [Insert the name(s) of the person(s)
to whom the order applies or a description of the class of persons to
whom the order applies] is (are) required to comply with this order, in
accordance with the provisions of the Defense Priorities and Allocations
System regulations (15 CFR part 700).''
(2) The order must be signed by an authorized official or employee
of the Department of Commerce.
[79 FR 47567, Aug. 14, 2014]
Sec. 700.35 Mandatory acceptance of an allocation order.
(a) Except as otherwise specified in this section, a person shall
accept and comply with every allocation order received.
(b) A person shall not discriminate against an allocation order in
any manner such as by charging higher prices for materials, services, or
facilities covered by the order or by imposing terms and conditions for
contracts and orders involving allocated materials, services, or
facilities that differ from the person's terms and conditions for
contracts and orders for the materials, services, or facilities prior to
receiving the allocation order.
[[Page 107]]
(c) If a person is unable to comply fully with the required
action(s) specified in an allocation order, the person must notify the
Office of Strategic Industries and Economic Security immediately,
explain the extent to which compliance is possible, and give the reasons
why full compliance is not possible. If notification is given verbally,
written or electronic confirmation must be provided within one working
day. Such notification does not release the person from complying with
the order to the fullest extent possible, until the person is notified
by the Department of Commerce that the order has been changed or
cancelled.
[79 FR 47567, Aug. 14, 2014]
Sec. 700.36 Changes or cancellations of allocation orders.
An allocation order may be changed or cancelled by an official
action from the Department of Commerce. Notice of such changes or
cancellations may be provided directly to persons to whom the order
being cancelled or modified applies or constructive notice may be
provided by publication in the Federal Register.
[79 FR 47567, Aug. 14, 2014]
Subpart G [Reserved]
Subpart H_Special Priorities Assistance
Sec. 700.50 General provisions.
(a) Once a priority rating has been authorized pursuant to this
part, further action by the Department of Commerce generally is not
needed. 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
consistent with this part, 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 otherwise ratable
under this part. If the Department of Commerce is unable to resolve the
problem or to authorize the use of a priority rating and believes
additional assistance is warranted, the Department of Commerce may
forward the request to another agency, identified in Sec. 700.10(c), as
appropriate, for action.
(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; 79 FR
47568, Aug. 14, 2014]
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 part, 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
[[Page 108]]
production or construction equipment, 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, the Department of 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, the Department of 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; and
(v) 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.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 79 FR 47568, Aug. 14, 2014]
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 the Department of 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.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 79 FR 47568, Aug. 14, 2014]
Sec. 700.54 Instances where assistance will not be provided.
Special priorities assistance is provided at the discretion of the
Delegate
[[Page 109]]
Agencies and the Department of 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;
(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; 79 FR 47568, Aug. 14, 2014]
Sec. 700.55 Homeland security, emergency preparedness, and critical
infrastructure protection and restoration assistance programs within
the United States.
Any person requesting priority rating authority or requiring
assistance in obtaining rated items supporting homeland security,
emergency preparedness, and critical infrastructure protection and
restoration related activities should submit a request for such
assistance or priority rating authority to the Office of Policy and
Program Analysis, Federal Emergency Management Agency, Department of
Homeland Security, 500 C Street SW., Washington, DC 20472; telephone:
(202) 646-3520; Fax: (202) 646-4060; Email: [email protected], Web site:
http://www.fema.gov/defense- production-act-program-division.
[79 FR 47568, Aug. 14, 2014]
Sec. 700.56 Military assistance programs with Canada.
(a) To promote military assistance to Canada, this section provides
for authorizing priority ratings to persons in Canada 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 in support of approved
programs.
(b) The joint United States-Canadian military arrangements for the
defense of North America and the integrated nature of the United States
and Canadian defense industries require close coordination and the
establishment of a means to provide mutual assistance to the defense
industries located in both countries.
(c) 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 part.
(d) 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, or
electronically at DGA Priorites de defense. ACQB Defence Priorities
@tpsgc- pwgsc. gc. ca.
(e) 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.
(f) 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
[[Page 110]]
Canada will forward appropriate requests to the Department of Commerce.
(g) Any person in the United States requiring assistance in
obtaining items in Canada must submit a request through the Delegate
Agency to the Office of Strategic Industries and Economic Security, U.S.
Department of Commerce on Form BIS-999. The Department of Commerce will
forward appropriate requests to the Canadian Public Works and Government
Services Canada.
[79 FR 47568, Aug. 14, 2014]
Sec. 700.57 Military assistance programs with other nations and
international organizations.
(a) Scope. To promote military assistance to foreign nations and
international organizations (for example, the North Atlantic Treaty
Organization or the United Nations), this section provides for
authorizing priority ratings to persons in foreign nations or
international organizations 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 Australia, Finland, Italy, The Netherlands, Spain, Sweden,
and the United Kingdom in support of approved programs.
(b) Foreign nations and international organizations. (1) Any person
in a foreign nation other than Canada, or any person in an international
organization, requiring assistance in obtaining items in the United
States or priority rating authority for items to be purchased in the
United States, should submit a request for such assistance or priority
rating authority to: the Department of Defense DPAS Lead in the Office
of the Deputy Assistant Secretary of Defense for Manufacturing and
Industrial Base Policy, 3330 Defense Pentagon, Room 3B854, Washington,
DC 20301; Telephone: (703) 697-0051; Fax: (703) 695-4885; Email:
[email protected], Web site: http://www.acq.osd.mil/mibp.
(i) If the end product is being acquired by a U.S. Government
agency, the request should be submitted to the Department of Defense
DPAS Lead through the U.S. contract administration representative.
(ii) If the end product is being acquired by a foreign nation or
international organization, the request must be sponsored prior to its
submission to the Department of Defense DPAS Lead by the government of
the foreign nation or the international organization that will use the
end product.
(2) If the Department of Defense endorses the request, it will be
forwarded to the Department of Commerce for appropriate action.
(c) Requesting assistance in Australia, Finland, Italy, The
Netherlands, Spain, Sweden, and the United Kingdom. (1) The Department
of Defense has entered into bilateral security of supply arrangements
with Australia, Finland, Italy, The Netherlands, Spain, Sweden, and the
United Kingdom that allow the Department of Defense to request the
priority delivery for 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
Australia, Finland, Italy, The Netherlands, Spain, Sweden, or the United
Kingdom to support an approved program should contact the Department of
Defense DPAS Lead in the Office of the Deputy Assistant Secretary of
Defense for Manufacturing and Industrial Base Policy for assistance.
Persons in Australia, Finland, Italy, The Netherlands, Spain, Sweden,
and the United Kingdom should request assistance in accordance with
paragraph (b)(1) of this section.
[79 FR 47568, Aug. 14, 2014, as amended at 80 FR 50762, Aug. 21, 2015]
Sec. 700.58 Critical infrastructure assistance programs to foreign
nations and international organizations.
(a) Scope. To promote critical infrastructure assistance to foreign
nations, this section provides for authorizing priority ratings to
persons in foreign nations or international organizations (for example
the North Atlantic Treaty Organization or the United Nations) to
[[Page 111]]
obtain items in the United States in support of approved programs.
(b) Foreign nations or international organizations. Any person in a
foreign nation or representing an international organization requiring
assistance in obtaining items to be purchased in the United States for
support of critical infrastructure protection and restoration should
submit a request for such assistance or priority rating authority to the
Office of Policy and Program Analysis, Federal Emergency Management
Agency, Department of Homeland Security, 500 C Street SW., Washington,
DC 20472; telephone: (202) 646-3520; Fax: (202) 646-4060; Email: fema-
[email protected], Web site: http://www.fema.gov/defense -production-act-
program -division.
[79 FR 47568, Aug. 14, 2014]
Subpart I_Official Actions
Sec. 700.60 General provisions.
(a) The Department of Commerce may, from time-to-time, take specific
official actions to implement or enforce the provisions of this part.
(b) Some of these official actions (rating authorizations and
letters of understanding) are discussed in this subpart. Official
actions that pertain to compliance (administrative subpoenas, demands
for information, and inspection authorizations) are discussed in
Sec. 700.71(c). Directives are discussed in Sec. 700.62.
[79 FR 47569, Aug. 14, 2014]
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.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 79 FR 47570, Aug. 14, 2014]
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.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 79 FR 47570, Aug. 14, 2014]
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 (the Department of 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.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 79 FR 47570, Aug. 14, 2014]
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 Selective Service Act and related statutes, this
part, or an official action. Such actions include audits,
investigations, or other inquiries.
(b) Willful violation of any of the provisions of Title I or section
705 of the Defense Production Act, this part, or an official action of
the Department
[[Page 112]]
of Commerce, is a criminal act, punishable as provided in the Defense
Production Act and as set forth in Sec. 700.74 of this part.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 63 FR 31924, June 11, 1998; 79 FR 47570, Aug. 14, 2014]
Sec. 700.71 Audits and investigations.
(a) Audits and investigations are official actions involving the
examination 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, and this part 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 part.
(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 part, the Department of 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, or this part. 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, or this part.
(3) Inspection authorizations. An inspection authorization requires
a person to permit a duly authorized representative of the Department 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,
or this part.
(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 the Department 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 the Department 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 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 at least 18
[[Page 113]]
years of age 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 older 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.
[79 FR 47570, Aug. 14, 2014]
Sec. 700.72 Compulsory process.
(a) If a person refuses to permit a duly authorized representative
of the Department of Commerce to have access to any premises or source
of information necessary to the administration or enforcement of the
Defense Production Act or this part, the Department of Commerce 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; 79 FR 47570, Aug. 14, 2014]
Sec. 700.73 Notification of failure to comply.
(a) At the conclusion of an audit, investigation, or other inquiry,
or at any other time, the Department of Commerce may inform the person
in writing where compliance with the requirements of the Defense
Production Act, the Selective Service Act and related statutes, or this
part were not met.
(b) In cases where the Department of Commerce determines that
failure to comply with the provisions of the Defense Production Act, the
Selective Service Act and related statutes, or this part 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 willful violation of the
Defense Production Act, this part, or an official action.
[79 FR 47570, Aug. 14, 2014]
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 or this part 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 maximum penalty
provided by the Selective Service Act 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
part, or an official action.
(c) In order to secure the effective enforcement of the Defense
Production Act, this part, and official actions, the
[[Page 114]]
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 part, 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 part, 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 part, or an
official action. In such instances, the person must immediately notify
the Department of Commerce that, in accordance with this section,
delivery has not been made.
[79 FR 47571, Aug. 14, 2014]
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 part 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 part or an
official action is contrary to the intent of the Defense Production Act,
the Selective Service Act and related statutes, or this part.
(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 part 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
provisions of this part 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. The Office of
Strategic Industries and Economic Security shall respond to requests for
adjustment of or exceptions to compliance with the provisions of this
part or an official action within 25 (twenty-five) days, not including
Saturdays, Sundays or Government holidays, of the date of receipt.
(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; 79 FR 47571, Aug. 14,
2014]
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 Export
Administration, Department of Commerce, who shall review and reconsider
the denial. Such appeals should be submitted to the Office of the
Assistant Secretary for Export Administration, Bureau of Industry and
Security, Department of Commerce, Room 3886, Washington, DC 20230, Ref:
DPAS Appeals.
[[Page 115]]
(b) Appeals of denied requests for exceptions from or adjustments to
compliance with the provisions of this part or an official action must
be received by the Assistant Secretary for Export Administration 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.
(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 provisions of this
part 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; 79 FR
47571, Aug. 14, 2014]
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 part, or an official action, notwithstanding
that such provision or action shall subsequently be declared invalid by
judicial or other competent authority.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 79 FR 47571, Aug. 14, 2014]
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
part (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 part or any official action. However, this
part does not specify any particular method or system to be used.
(c) Records required to be maintained by this part must be made
available for examination on demand by duly authorized representatives
of the Department of Commerce as provided in Sec. 700.71.
(d) In addition, persons must develop, maintain, and submit any
other records and reports to the Department of Commerce that may be
required for the administration of the Defense Production Act, the
Selective Service Act and related statutes, and this part.
(e) Section 705(d) of the Defense Production Act provides that
information obtained under this section which the President deems
confidential, or with
[[Page 116]]
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 the Department of Commerce in connection
with the enforcement or administration of the Act, this part, or an
official action, is deemed to be confidential under section 705(d) 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; 79 FR 47571, Aug. 14,
2014]
Sec. 700.92 Applicability of this part and official actions.
(a) This part 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 part 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 part and its schedules shall not be construed to affect any
administrative actions taken by the Department of 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 the Department of Commerce. Such actions, contracts, or orders shall
continue in full force and effect under this part unless modified or
terminated by proper authority.
(d) The repeal of any provision of this part, 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.
[49 FR 30414, July 30, 1984. Redesignated at 54 FR 601, Jan. 9, 1989, as
amended at 79 FR 47571, Aug. 14, 2014]
Sec. 700.93 Communications.
General communications concerning this part, including how to obtain
copies of this part and explanatory information, requests for guidance
or clarification, may be addressed to the Office of Strategic Industries
and Economic Security, Room 3876, Department of Commerce, Washington, DC
20230, Ref: DPAS; telephone (202) 482-3634, email [email protected].
Request for priorities assistance under Sec. 700.50, adjustments or
exceptions under Sec. 700.80, or appeals under Sec. 700.81, must be
submitted in the manner specified in those sections.
[79 FR 47571, Aug. 14, 2014]
Sec. Schedule I to Part 700--Approved Programs and Delegate
Agencies
The programs listed in this schedule have been approved for
priorities support under this part by the Department of Defense,\1\ the
Department of Energy or the Department of Homeland Security, in
accordance with section 202 of Executive Order 13603. They have equal
preferential status. The Department of Commerce has authorized the
delegate agencies listed in
[[Page 117]]
the third column to use this part in support of those programs assigned
to them, as indicated below.\2\
---------------------------------------------------------------------------
\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 part, the Central Intelligence Agency and the National
Aeronautics and Space Administration as associated agencies.
\2\ The Department of Commerce is also listed as an agency in the
third column for programs where its authorization is necessary to place
rated orders.
------------------------------------------------------------------------
Program identification
symbol Approved program Agency(ies)
------------------------------------------------------------------------
Defense Programs
------------------------------------------------------------------------
A1.................... Aircraft............... Department of Defense.
A2.................... Missiles............... Department of Defense.
A3.................... Ships.................. Department of Defense.
A4.................... Tank--Automotive....... Department of Defense.
A5.................... Weapons................ Department of Defense.
A6.................... Ammunition............. Department of Defense.
A7.................... Electronic and Department of Defense.
communications
equipment.
B1.................... Military building Department of Defense.
supplies.
B8.................... Production equipment Department of Defense.
(for defense
contractor's account).
B9.................... Production equipment Department of Defense.
(Government owned).
C1.................... Food resources (combat Department of Defense.
rations).
C2.................... Department of Defense Department of Defense.
construction.
C3.................... Maintenance, repair, Department of Defense.
and operating supplies
(MRO) for Department
of Defense facilities.
C9.................... Miscellaneous.......... Department of Defense.
------------------------------------------------------------------------
Military Assistance to Canada
------------------------------------------------------------------------
D1.................... Canadian military Department of Commerce.
programs.
D2.................... Canadian production and Department of Commerce.
construction.
D3.................... Canadian atomic energy Department of Commerce.
program.
------------------------------------------------------------------------
Military Assistance to Other Foreign Nations
------------------------------------------------------------------------
G1.................... Certain munitions items Department of Commerce.
purchased by foreign
governments through
domestic commercial
channels for export.
G2.................... Certain direct defense Department of Commerce.
needs of foreign
governments other than
Canada.
G3.................... Foreign nations (other Department of Commerce.
than Canada)
production and
construction.
------------------------------------------------------------------------
Critical Infrastructure Assistance to Foreign Nations
------------------------------------------------------------------------
G4.................... Foreign critical Department of Commerce.
infrastructure
programs.
------------------------------------------------------------------------
Co-Production
------------------------------------------------------------------------
J1.................... F-16 Co-Production Departments of Commerce
Program. and Defense.
------------------------------------------------------------------------
Atomic Energy Programs
------------------------------------------------------------------------
E1.................... Construction........... Department of Energy.
E2.................... Operations--including Department of Energy.
maintenance, repair,
and operating supplies
(MRO).
E3.................... Privately owned Department of Energy.
facilities.
------------------------------------------------------------------------
Domestic Energy Programs
------------------------------------------------------------------------
F1.................... Exploration, Department of Energy.
production, refining,
and transportation.
F2.................... Conservation........... Department of Energy.
F3.................... Construction, repair, Department of Energy.
and maintenance.
------------------------------------------------------------------------
Other Defense, Energy, and Related Programs
------------------------------------------------------------------------
H1.................... Certain combined orders Department of Commerce.
(see section
700.17(c)).
H5.................... Private domestic Department of Commerce.
production.
H6.................... Private domestic Department of Commerce.
construction.
H7.................... Maintenance, repair, Department of Commerce.
and operating supplies
(MRO).
H8.................... Designated Programs.... Department of Commerce.
[[Page 118]]
K1.................... Federal supply items... General Services
Administration.
------------------------------------------------------------------------
Homeland Security Programs
------------------------------------------------------------------------
N1.................... Federal emergency Department of Homeland
preparedness, Security.
mitigation, response,
and recovery.
N2.................... State, local, tribal Department of Homeland
government emergency Security.
preparedness,
mitigation, response,
and recovery.
N3.................... Intelligence and Department of Homeland
warning systems. Security.
N4.................... Border and Department of Homeland
transportation Security.
security.
N5.................... Domestic counter- Department of Homeland
terrorism, including Security.
law enforcement.
N6.................... Chemical, biological, Department of Homeland
radiological, and Security.
nuclear
countermeasures.
N7.................... Critical infrastructure Department of Homeland
protection and Security.
restoration.
N8.................... Miscellaneous.......... Department of Homeland
Security.
------------------------------------------------------------------------
[79 FR 47572, Aug. 14, 2014]
[[Page 119]]
Sec. Appendix I to Part 700--Form BIS-999--Request for Special
Priorities Assistance
[GRAPHIC] [TIFF OMITTED] TR13JY06.000
[[Page 120]]
[GRAPHIC] [TIFF OMITTED] TR13JY06.001
[[Page 121]]
[GRAPHIC] [TIFF OMITTED] TR13JY06.002
[[Page 122]]
[GRAPHIC] [TIFF OMITTED] TR13JY06.003
[71 FR 39529, July 13, 2006]
[[Page 123]]
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. 4568; E.O. 12919, 59 FR 29525, 3 CFR, 1994
Comp., p. 901; E.O. 13286, 68 FR 10619, 3 CFR, 2003 Comp., p. 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:
(1) Defense articles and/or defense services as defined by the Arms
Export Control Act and the International Traffic in Arms Regulations; or
(2) Items controlled under an Export Control Classification Number
(ECCN) that has the numeral ``6'' as its third character in the Commerce
Control List found in supplement no. 1 to part 774 of this chapter other
than semi-submersible and submersible vessels specially designed for
cargo transport and parts, components, accessories and attachments
specially designed therefor controlled under ECCN 8A620.b; test,
inspection and production equipment controlled in ECCN 8B620.b, software
controlled in ECCN 8D620.b and technology controlled in ECCN 8E620.b.
(b) Military Export Sales. Exports that are either Foreign Military
Sales (FMS) or commercial (direct) sales of:
(1) Defense articles and/or defense services as defined by the Arms
Export Control Act and International Traffic in Arms Regulations; or
(2) Items controlled under an Export Control Classification Number
(ECCN) that has the numeral ``6'' as its third character in the Commerce
Control List found in supplement no. 1 to part 774 of this chapter other
than semi-submersible and submersible vessels specially designed for
cargo transport and parts, components, accessories and attachments
specially designed therefor controlled under ECCN 8A620.b; test,
inspection and production equipment controlled in ECCN 8B620.b; software
controlled in ECCN 8D620.b; and technology controlled in ECCN 8E620.b.
(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
[[Page 124]]
(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 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
[[Page 125]]
in Secs. 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 Secs. 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; 81
FR 10474, Mar. 1, 2016]
Sec. 701.3 Applicability and scope.
(a) This part applies to U.S. firms entering contracts that are
subject to an offset agreement exceeding $5,000,000 in value and that
are for the sale to a foreign country or foreign firm of:
(1) Defense articles and/or defense services as defined by the Arms
Export Control Act and International Traffic in Arms Regulations; or
(2) Items controlled under an Export Control Classification Number
(ECCN) that has the numeral ``6'' as its third character in the Commerce
Control List found in supplement no. 1 to part 774 of this chapter other
than semi-submersible and submersible vessels specially designed for
cargo transport and parts, components, accessories and attachments
specially designed therefor controlled under ECCN 8A620.b; test,
inspection and production equipment controlled in ECCN 8B620.b; software
controlled in ECCN 8D620.b and technology controlled in ECCN 8E620.b.
(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.
[59 FR 61796, Dec. 2, 1994, as amended at 81 FR 10474, Mar. 1, 2016]
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.
[[Page 126]]
(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 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
[[Page 127]]
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 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]
[[Page 128]]
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]
PART 702_INDUSTRIAL BASE SURVEYS_DATA COLLECTIONS--Table of Contents
Sec.
702.1 Introduction.
702.2 Scope and purpose of surveys--avoiding duplicative requests for
information.
702.3 Confidential information.
702.4 Requirement to comply with surveys or other requests for
information.
702.5 Consequences of failure to comply.
702.6 Definitions.
Supplement No. 1 to Part 702--General Survey Information
Authority: 50 U.S.C. 4501 et seq.; E.O. 13603, 77 FR 16651, 3 CFR,
2012 Comp., p. 225.
Source: 80 FR 41430, July 15, 2015, unless otherwise noted.
Sec. 702.1 Introduction.
In accordance with 50 U.S.C. app. 2155, the Bureau of Industry and
Security (BIS) may obtain such information from, require such reports
and the keeping of such records by, make an inspection of the books,
records, and other writings, premises or property of, take the sworn
testimony of and administer oaths and affirmations to, any person as may
be necessary or appropriate, in its discretion, to the enforcement or
the administration of its authorities and responsibilities under the
Defense Production Act of 1950 as amended (DPA) and any regulations or
orders issued thereunder. BIS's authorities under the DPA (50 U.S.C.
app. 2061 et seq.) include authority to collect data via surveys to
perform industry studies assessing the capabilities of the United States
industrial base to support the national defense and develop policy
recommendations to improve both the international competitiveness of
specific domestic industries and their ability to meet national defense
program needs.
Sec. 702.2 Scope and purpose of surveys--avoiding duplicative
requests for information.
(a) BIS will not send any survey to any person for completion unless
the scope and purpose of the survey have been established, that scope
and purpose are consistent with BIS's authorities under the DPA, and the
data requested by the survey does not duplicate adequate and
authoritative data already available to BIS from a Federal or other
authoritative source.
(b) BIS personnel of appropriate competence and authority will
ensure that the requirements of paragraph (a) of this section are met.
(c) This section shall not be construed as limiting the criteria
that BIS may consider in determining whether to proceed with a survey.
This paragraph shall not be construed as replacing or in any way
modifying the requirements of the Paperwork Reduction Act (44 U.S.C.
3501 et seq.).
Sec. 702.3 Confidential information.
This section implements section 705(d) of the DPA.
(a) BIS deems all information submitted in response to a survey
issued pursuant to this part to be confidential.
[[Page 129]]
(b) Any person submitting information in response to a survey issued
pursuant to this part may request confidential treatment of that
information.
(c) The President's authority under the DPA to protect confidential
information has been delegated to the Under Secretary for Industry and
Security. The information described in paragraphs (a) and (b) of this
section shall not be published or disclosed unless the Under Secretary
for Industry and Security determines that the withholding thereof is
contrary to the interest of the national defense.
(d) Any person convicted of willfully violating the prohibition in
paragraph (c) of this section may be fined not more than $10,000 or
imprisoned for not more than one year, or both.
Sec. 702.4 Requirement to comply with surveys or other requests
for information.
(a) Requirement to comply. Every person who receives a survey or
other request for information issued pursuant to this part must submit a
complete and adequate response to BIS within the time frame stated on
the initial distribution letter or other request for information. Survey
response information that does not adhere to the survey question
criteria or that contains only aggregate information in place of
specified information will be treated as inadequate and therefore
noncompliant. BIS may exempt persons from this requirement for the
reasons in paragraph (b) of this section, or grant extensions of time to
comply as set forth in paragraph (c) of this section. Submitting a
request to BIS for an exemption or an extension of time for completion
does not suspend the initial deadline required by BIS (or any extended
deadline subsequently granted by BIS). Thus, persons who request an
exemption or extension of time are advised to proceed as if the response
is required by the deadline until advised otherwise by BIS.
(b) Grounds for exemption. (1) An exemption from the requirements of
this section may be granted if the person receiving the survey or other
request for information:
(i) Has no physical presence in the United States of any kind;
(ii) Does not provide, produce, distribute, utilize, procure,
research, develop, consult or advise on, or have any other direct or
indirect association with the materials, products, services or
technology that are within the scope of the survey;
(iii) Has ceased business operations more than 12 months prior to
receipt of the survey;
(iv) Has been in business for less than one year; or
(v) BIS determines that extenuating circumstances exist that make
responding impractical.
(2) BIS may also grant an exemption if, based on the totality of the
circumstances, it concludes that compliance would be impractical and/or
that requiring compliance would be unduly time intensive.
(3) Existence of a pre-existing private non-disclosure agreement or
information sharing agreement between a person and another party (e.g.,
customers, suppliers, etc.), does not exempt a person from the
obligation to comply with and complete a survey. The authority to
conduct the survey and comply with the survey is derived from the DPA,
and that statutory obligation to comply supersedes any private
agreement.
(c) Extensions of time to complete. A person who receives a survey
or other request for information may request an extension of time to
submit the complete response to BIS. BIS may grant such an extension of
time, if, in its judgment, circumstances are such that additional time
reasonably is needed, the extension would not jeopardize timely
completion of BIS's overall analysis, and the person is making
reasonable progress towards completing the survey or response to the
other request for information. Generally, extensions will be for no more
than two weeks. A person who receives a survey or other request for
information may request successive extensions if the person believes
that it continues to have a legitimate need for additional time to
complete the survey. BIS will not grant extensions that would jeopardize
the performance and timely completion of its industrial base
assessments.
[[Page 130]]
(d) Procedure for requesting exemptions or extensions of time.
Requests for exemptions or extensions of time must be made to BIS at the
telephone number, email address or BIS physical address provided in the
initial distribution letter for a survey or in the other request for
information. A request for an exemption must provide factual information
and documentation that are adequate for BIS to determine that one or
more of the criteria stated in paragraph (b) or (c) of this section are
met.
(e) Responses that are incomplete or inadequate. BIS may return
responses that are incomplete or inadequate to the person for prompt
completion. BIS will specify the required period of time permitted for
completion and submission of the revised survey.
Sec. 702.5 Consequences of failure to comply.
(a) Civil. If any person fails to comply with the requirements of
Sec. 702.4, BIS may issue a subpoena requiring that person to submit the
information called for in the survey. In the case of contumacy or
refusal to obey such a subpoena, the U.S. Government may apply for an
order by the United States district court in a district where that
person resides or transacts business that would compel the person to
submit the completed survey.
(b) Criminal. In accordance with 50 U.S.C. app. 2155, any person who
willfully fails to comply with Sec. 702.4, may, upon conviction, be
fined not more than $10,000 or imprisoned not more than one year, or
both.
Sec. 702.6 Definitions.
The definitions in this section apply throughout this part.
Confidential. A description of information that is subject to the
disclosure prohibitions of the DPA (50 U.S.C. app. 2155(d)).
Initial distribution letter. A letter that BIS sends to a person
that has been identified by the U.S. Government as a supplier or
customer of materials, products or services used for activities of the
industry that is the focus of a survey. The letter describes the
survey's primary objectives, how survey results will assist the U.S.
Government, and the confidential treatment of the information submitted.
The letter also includes BIS contact information.
Person. The term ``person'' includes:
(1) An individual, corporation, partnership, association, or any
other organized group of persons, or legal successor or representative
thereof;
(2) Any State or local government or agency thereof;
(3) The Government of the United States, of the District of
Columbia, of any commonwealth, territory or possession of the United
States, or any department, agency or commission thereof.
Note to the definition of ``person.'' Paragraph (1) of this
definition is not limited to commercial or for-profit organizations. For
example, the term ``any other organized group of persons'' may encompass
labor unions, academic institutions, charitable organizations or any
group of persons who are organized in some manner. The term corporation
is not limited to publicly traded corporations or corporations that
exist for the purpose of making a profit.
Survey. A questionnaire or other request for information that
collects detailed information and data to support both the assessment of
a particular industrial sector or technology and the development of a
corresponding study.
Sec. Supplement No. 1 to Part 702--General Survey Information
This supplement provides general information about surveys and the
content of the typical survey. The content of this supplement is purely
an example of a typical survey, and in no way limits the content that
may appear in a specific Bureau of Industry and Security (BIS)-issued
survey. Procedures and content vary from survey to survey, and as such,
there is no set template to follow. Nonetheless, BIS is offering this
information as a basic guide to some elements of a survey.
Survey Structure
Most surveys include the following sections: Cover Page; Table of
Contents; General Instructions; Glossary of Terms; Organizational
Information, and sector-specific sections.
--The cover page typically includes the title of the survey, its
scope, an explanation of the legal requirement to comply, the burden
estimate for compliance with the survey, the Office of Management and
Budget (OMB) control number, and the survey date of expiration.
[[Page 131]]
--The General Instructions section normally includes process steps
necessary for a person's survey submittal. These include but are not
limited to instructions for survey completion, survey support staff
point-of-contact information, the name and address of the presiding BIS
official, and instructions for both survey certification and submittal.
--The Glossary of Terms section explains terms contained in the
survey. Terms contained in the survey may be unique to the subject
matter of the industry assessment, and therefore may change in meaning
from survey to survey. Therefore, it is important to follow the specific
instructions and defined terms contained in the specific survey you
receive, regardless of any previous survey you might have completed.
--The Organization Information section requests information related
to the person in receipt of the survey, including address information,
the source level of response (e.g., facility, business unit, division,
corporate consolidated, etc.), point of contact details, and other
pertinent contact information.
The survey is generally organized in a question and answer format
and is presented on an electronic survey system. Each survey is
specially tailored to collect the specific information requested.
Therefore, specific detailed information is what should be submitted in
response to a survey requesting such information.
--For example, if we ask for a listing of your customers that order
widget A, your response should not be a listing of your entire customer
base. Only the information pertaining to customers' ordering widget A is
responsive to that kind of question.
Also note that your reply to a survey request is compulsory, unless
you meet the criteria for exemption set forth in the body of the
regulation. Therefore, any non-disclosure agreements or similar
agreements you may have with your customers or clients are not
applicable to a survey's request for information. Compliance with the
survey is required by the DPA. Accordingly, compliance with that
statutory requirement is paramount to any private agreement you have
with your customers or other parties.
In addition to the aforementioned sections, each survey contains
sections tailored to the specific scope of the study, including but not
limited to Facility Locations, Products and Services, Inventories,
Suppliers and Customers, Challenges and Organizational Outlook,
Employment, Operations, Financial Statements, Sales, Research and
Development, and Capital Expenditures.
Examples of survey terms.
Certification: A section of the survey in which a person (an
authorizing official) certifies that the information supplied in
response to the survey is complete and correct, to the best of the
person's knowledge.
Facility: A building or the minimum complex of buildings or parts of
buildings in which a person operates to serve a particular function,
producing revenue and incurring costs for the person. A facility may
produce an item of tangible or intangible property or may perform a
service. It may encompass a floor or group of floors within a building,
a single building, or a group of buildings or structures. Often, a
facility is a group of related locations at which employees work,
together constituting a profit-and-loss center for the person, and it
may be identified by a unique Dun and Bradstreet number.
Sole source: An organization that is the only source for the supply
of parts, components, materials, or services. No alternative U.S. or
non-U.S. based supplier exists other than the current supplier.
Survey template: The data collection instrument supplied by BIS to
persons by which survey information is recorded and submitted to BIS.
The survey is generally organized in a question and answer format and is
presented on an electronic survey system.
Supplier: An entity from which your organization obtains inputs. A
supplier may be another firm with which you have a contractual
relationship, or it may be another facility owned by the same parent
organization. The inputs may be materials, products or services.
PARTS 703 704 [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.
705.11 Determination by the President and adjustment of imports.
705.12 Disposition of an investigation and report to the Congress.
Authority: 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:
[[Page 132]]
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 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.
[[Page 133]]
(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.
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
[[Page 134]]
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;
(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
[[Page 135]]
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 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
[[Page 136]]
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 137]]
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 138]]
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 139]]
(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 140]]
(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 141]]
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 142]]
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 143]]
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 Secs. 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 (Secs. 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 June 1, 2016
Afghanistan
Albania
Algeria
Andorra
Angola
Antigua and Barbuda
Argentina
Armenia
Australia
Austria
Azerbaijan
Bahamas
Bahrain
Bangladesh
Barbados
Belarus
Belgium
Belize
Benin
Bhutan
Bolivia
Bosnia-Herzegovina
Botswana
Brazil
Brunei Darussalam*
Bulgaria
Burkina Faso
Burma
Burundi
Cambodia
Cameroon
Canada
Cape Verde
Central African Republic
Chad
Chile
China***
Colombia
Comoros
Congo, (Democratic Republic of the)
Congo (Republic of the)
Cook Islands**
Costa Rica
Cote d'Ivoire (Ivory Coast)
Croatia
Cuba
Cyprus
Czech Republic
Denmark
Djibouti
Dominica
Dominican Republic
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)
Iraq
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
[[Page 144]]
Malta
Marshall Islands
Mauritania
Mauritius
Mexico
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
Somalia
South Africa
Spain
Sri Lanka
Sudan
Suriname
Swaziland
Sweden
Switzerland
Syria
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; 79 FR 16666, Mar. 26, 2014; 81 FR 36462,
June 7, 2016]
Sec. 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.
[[Page 145]]
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.
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.