[HISTORY: Adopted by the Board of County Commissioners of Doña Ana County 8-26-2014 by Res. No. 2014-86.. Amendments noted where applicable.]
Editor's Note: This resolution also repealed former Ch. 213, Foreign-Trade Zone, adopted 10-23-2007 by Res. No. 2007-126, as amended.
Pursuant to a grant issued by the Foreign-Trade Zones Board, Washington D.C., as Board Order No. 665 on November 26, 1993, the Board of County Commissioners of Doña Ana County, under provisions of the Foreign-Trade Zones Act (19 U.S.C. §§ 81a through 81u), Foreign-Trade Zone No. 197, has issued the following Zone Schedule on rules, regulations, rates and charges. The Board of County Commissioners of Doña Ana County received approval of an Alternative Site Framework Application, by the Foreign-Trade Zones Board on June 30, 2014, as FTZ Board Order No. 1942.
Foreign-Trade Zone No. 197, which is operated as a public utility under Foreign-Trade Zones Board Regulations, has offices located at 845 North Motel Boulevard, Las Cruces, New Mexico 88007. The zone has adequate access to electric power, water, waste disposal, communications, and access to all modes of transportation. The buildings are equipped to provide private lease storage, manipulation, manufacturing, and office space.
The zone has been expanded pursuant to Board Order No. 1536.
The Zone consists of the following sites:
Copies of this Zone Schedule are on file with the Foreign-Trade Zones Board, Washington, D.C., and U.S. Customs Port Director in Santa Teresa, New Mexico, and are available at the general offices of Foreign-Trade Zone No. 197 upon request at a price of $5 per copy. There is no charge for an electronic version of the Zone Schedule.
More detailed guidance on U.S. Customs issues may be found in U.S. Customs FTZ Manual. A copy is maintained for review by the Foreign-Trade Zone grantee.
Communications should be addressed to:
As used in this chapter, the following terms shall have the meanings indicated:
- The Foreign-Trade Zones Act of June 18, 1934 (48 stat. 998 - 1003; 19 U.S.C. §§ 81a through 81u), as amended by Public Law 397, 73rd Congress, approved June 18, 1950 (15 CFR 400.2(a)].
- ADMISSION SUSPENSE ACCOUNT
- Merchandise received without complete U.S. Customs documentation or which is unacceptable to the inventory control and recordkeeping system will be recorded in a suspense account or record until documentation is complete or the system is capable of accepting the information [19 CFR 146.22(c)]. See "temporary deposit."
- A change in the boundaries of a Foreign-Trade Zones Board approved and designated zone or subzone; designation of a separate site of an already-activated zone or subzone with the same zone operator at the same port; or the relocation within a Foreign-Trade Zones Board approved and designated area of an already-activated site with the same Zone Operator. The operator must make a written application to the local Port Director of U.S. Customs for approval of an alteration of an activated area, as it must be checked by Customs through its security survey to ensure the security suitability and fitness of the area for receipt of merchandise in zone status.
- ALTERNATIVE SITE FRAMEWORK (ASF)
- A three-part application that transforms a general-purpose zone by creating a service area (Doña Ana County) where a usage-driven site can be established in 30 days or a traditional magnet industrial park site can be established in six to 10 months if certain criteria are met.
- ANTIDUMPING/COUNTERVAILING DUTY
- FTZ Board regulations require that any merchandise admitted to a zone that is subject to an AD/CVD order must be placed in privileged foreign status [15 CFR 400.14(e)(1)].
- APPLICANT OF RECORD
- The person, firm or corporation in whose name the application to admit merchandise into the zone (CBPF 214) is made, recognized by U.S. Customs as having the legal right to make the application. Evidence of this right of the applicant is the same as would be required to establish the right to apply for release of the merchandise from U.S. Customs with the right to make entry [19 CFR 146.32(b)(2)].
- The Foreign-Trade Zones Board created by the Act to carry out the provisions thereof. The Foreign-Trade Zones Board shall consist of the Secretary of the Department of Commerce, who shall be the chair, and the Secretary of the Treasury [15 CFR 400.2(d)].
- In trade, a product, or a mass (of a product), which is not packaged, bundled, bottled, or otherwise packed, so that it is designated as bulk or bulk merchandise.
- CONDITIONALLY ADMISSIBLE MERCHANDISE
- Merchandise that may be admitted to the zone or be imported into the U.S. under certain conditions. Merchandise subject to antidumping and countervailing duty, subject to Foreign-Trade Zones Board grant restrictions, or merchandise transferred from a bonded warehouse are examples of conditionally admissible merchandise for admission to the zone. Merchandise which is subject to permits or licenses (i.e., FDA-controlled merchandise, certain firearms, motor vehicles, etc.) or merchandise which may be reconditioned to bring it into compliance with the laws administered by various federal agencies are examples of conditionally admissible merchandise for import. See Sections 6.3, 6.7(g), and 11.5, U.S. Customs FTZ Manual.
- A shipping device; a non-self-propelled, rigid, nondisposable, returnable, cargo-carrying device, with or without wheels, enclosed or otherwise, and includes any container, trailer, chassis platform, specially constructed skid, pallets, mount, or combination thereof, and which is designed to be transported integrally as one unit directly and mechanically between vessels and piers so as to eliminate intermediate rehandling and/or storage of cargo.
- CUSTOMS AND BORDER PROTECTION FORM 214
- Application and permit to admit merchandise into a Foreign-Trade Zone and/or designation of zone status.
- CUSTOMS AND BORDER PROTECTION FORM 214A
- Application for Foreign-Trade Zone Admission and/or Status Designation. This form is the pink or salmon-colored statistical copy of the CBPF 214 utilized for Bureau of Census reporting purposes. Electronic filing may be made to Census with filing the e-214. If the admission is not filed electronically, the CBPF 214A is required to be submitted to U.S. Customs.
- CUSTOMS AND BORDER PROTECTION FORM 216
- Application and permit for the manipulation, manufacture, exhibition, temporary removal or destruction of merchandise within a Foreign-Trade Zone.
- CUSTOMS TERRITORY
- The territory of the United States in which the general tariff law of the United States applies but which is not included in any Foreign-Trade Zone.
- DOMESTIC MERCHANDISE
- Domestic-sourced or foreign-sourced previously duty-paid merchandise. See "status of merchandise" herein.
- FOREIGN MERCHANDISE
- Imported merchandise that has not been properly released from U.S. Customs custody in the Customs territory of the United States. See "status of merchandise" herein.
- FUNGIBLE MERCHANDISE
- Merchandise that for commercial purposes is identical and interchangeable in all situations.
- The grantee of Foreign-Trade Zone No. 197 is the Board of County Commissioners of Doña Ana County, an organization to which the privilege of establishing, operating, and maintaining a foreign-trade zone has been granted by the Foreign-Trade Zone Board.
- HARMONIZED TARIFF SCHEDULE OF THE U.S. (HTSUS) NUMBER
- The ten-digit number used to identify all imported and exported merchandise. The complete text is available from the U.S. International Trade Commission on its website.
- INTERIM PRODUCTION APPROVAL
- Existing zone site and subzone may secure interim production approval with Customs concurrence and approval by the Foreign-Trade Zones Board. This does not require the entire four months that a normal Production Notification Application requires. However, the Customs letter must indicate that the operator is activated or could be activated soon.
- IN-TRANSIT MERCHANDISE
- Includes all foreign merchandise transported into and out of the United States, whether in and out of the same port or across the country to another port, with or without transshipment, warehousing, breaking bulk, or change in mode of transportation, which originated in one foreign country and is destined at the time of the original shipment to another foreign country. Its distinctive feature is that it is being transported, from one foreign country through the United States to another foreign country, under a through bill of lading or other documentation for a completed journey.
- The document of agreement entered into between the owner or lessor of the property and the lessee for use of space within the Foreign-Trade Zone.
- MAGNET SITE
- Sites intended to attract multiple potential FTZ operators/users.
- Breaking up, repacking, assembling, distributing, sorting, grading, cleaning, mixing with foreign or domestic merchandise, or other processing which does not constitute manufacturing.
- This is the old term used by the Foreign-Trade Zones Board for activity involving the substantial transformation of a foreign article resulting in a new and different article having a different name, character, use, and HTS classification. It is now referred to as "production." Authority for such activity in a zone must be secured from the Foreign-Trade Zones Board and authorized on a CBPF 216 by the U.S. Customs.
- Includes goods, wares and chattels of every description except prohibited merchandise. (Building materials, production equipment, and supplies for use in operation of a zone may not be considered "merchandise.")
- NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) DUTY DEFERRAL PROGRAM
- The NAFTA Duty Deferral Program is currently in effect for trade between the United States and Canada/Mexico. Under this program, all foreign-sourced, non-NAFTA-qualified merchandise used in manufacturing and production in a foreign-trade zone, whether or not the finished product is NAFTA-qualified, when exported to Canada/Mexico must be the subject of a special NAFTA "08" code Customs entry and be subject to U.S. Customs duties, applicable antidumping/countervailing duties, and merchandise processing fees.
- The Online FTZ Information System that includes information on each zone. It can be accessed through the FTZ Board website. All annual reports are now filed electronically through OFIS.
- OPEN OR YARD STORAGE
- The keeping of merchandise on open space within the fenced-in area of the Foreign-Trade Zone where merchandise not requiring weather protection may be stored.
- OPERATING AGREEMENT
- The agreement between the zone operator and the zone user, or the zone grantee and the zone operator, describing rights, responsibilities, and financial considerations.
- PORT DIRECTOR, U.S. CUSTOMS
- The Port Director of U.S. Customs located in Santa Teresa, New Mexico, or his/her representative.
- Traditional manufacturing activity and "kitting" activity where the new HTSUS classification applies to the finished product. The Foreign-Trade Zones Board uses this term to cover both manufacturing and processing activity.
- PROHIBITED MERCHANDISE
- Merchandise, the importation of which is prohibited by law on grounds of public policy or morals, or any merchandise that is excluded from a zone by order of the Foreign-Trade Zones Board. Books urging treason or insurrection against the U.S., obscene pictures, and lottery tickets are examples of prohibited merchandise. Also, certain types of operations involving the following merchandise are prohibited: tobacco, cigars, cigarettes and cigarette papers and tubes (26 U.S.C. §§ 5701 through 5706); firearms (26 U.S.C. §§ 4181 through 4182/5811); distilled spirits, alcohol, wine and beer (26 U.S.C. §§ 5001 through 5008/5010); sugar (26 U.S.C. §§ 4501 through 4503); Watch movements (19 U.S.C. §§ 1367 through 1368); bicycle parts were prohibited for a limited time period [19 U.S.C. § 81b(c)] until December 31, 1992; and retail sales in a zone [19 U.S.C. § 81(o)(d) and CR 19 CFR 146.14].
- The numerical count of the units composing a shipment of merchandise.
- A set limit of a given item that may be imported during a set period of time (normally one year). Tariff rate quota only limits the quantity that may be imported at the lower rate; imports above the quota quantity would be at a higher rate of duty.
- RE-EXPORTS or RESHIPMENTS
- Merchandise from one foreign country initially destined to the United States that, after being unladen, stored, and/or manipulated or manufactured in this country, is transported under a new bill of lading or other new documentation to another foreign country. Generally, it includes all merchandise of foreign origin which has not been so manipulated or manufactured as to be deemed a product of the United States, and which has not been released from Customs custody into Customs territory.
- All operations within the foreign-trade zone are subject to the Foreign-Trade Zones Board regulations, 15 CFR Part 400; and U.S. Customs regulations, 19 CFR Part 146. Imports and exports may also be governed by the regulations or guidelines of other federal agencies. All products to be admitted to a foreign-trade zone must be reviewed for potential compliance issues.
- RESTRICTED MERCHANDISE/OPERATIONS
- Merchandise which may not be authorized for delivery from Customs custody without a special permit, or a waiver thereof, by an agency of the U.S. government. Also, the Foreign-Trade Zones Board and U.S. Customs have restricted certain operations in the past involving the following products: steel, apparel/textiles, television tubes, auto parts, milk, sugar, orange juice, printers ink, alcohol/gasohol, oil refining, tires, chain saws, silicon metals, and golf carts. The restrictions may vary on a case-by-case basis.
- SEQUENTIAL NUMBER
- The control number or the zone admission number on the CBPF 214 in Block No. 6. The zone operator sets the number structure. It is not the zone lot number or the UIN.
- SERVICE AREA
- The area including Doña Ana County, where usage-driven or magnet sites can be established under ASF rules.
- The keeping of merchandise in or upon the premises within the foreign-trade zone. Covered storage means keeping within a covered and enclosed structure affording weather protection. The term "storage," without other designation, ordinarily implies covered storage.
- A special purpose zone established as part of a zone project for a limited purpose that cannot be accommodated within an existing zone. Foreign merchandise may be admitted to the area without the payment of U.S. Customs duties and taxes or the imposition of U.S. quotas; domestic merchandise is allowed in the area. No U.S. Customs duties, taxes, or quotas apply if the merchandise is exported; U.S. Customs duties, taxes and quotas are applicable if the merchandise is imported into U.S. Customs territory either on the basis of the imported materials or the finished product depending on the zone status designation. For new subzones if a company wishes to have production authority it must request approval of a Production Notification Application which can require four months unless U.S. Customs will support an interim approval. A usage-driven site may also be called a subzone if requested during the application process.
- SUNSET PROVISION
- Magnet sites have a rolling five-year sunset provision during which at least a portion of the magnet site must be activated, while a usage-driven site must demonstrate actual zone activity within three years or lose zone status.
- TEMPORARY DEPOSIT
- Merchandise admitted to a foreign-trade zone under 19 CFR 146.35, when information or documentation is insufficient in order to complete the CBPF 214. The documentation and time period restraints under this provision are avoided if the admission suspense account procedures in 19 CFR 146.22(c) are followed. See "admission suspense account."
- TRANSSHIPMENT MERCHANDISE
- Foreign merchandise which enters and leaves the United States through the same port, being transferred from one vessel to another directly or by way of a foreign-trade zone or Customs bonded warehouse. The term is particularly applied to such merchandise transferred through a foreign-trade zone.
- UNIT OF QUANTITY
- The customary grouping of a commodity as a unit to indicate the medium or method of measure.
- UNITED STATES
- The 50 states, the District of Columbia, and Puerto Rico that constitute the Customs territory of the U.S. The term "United States" includes all territories and possessions of the United States, except the Virgin Islands, American Samoa, Wake Island, Midway Islands, Kingman Reef, and the Island of Guam, which are not considered part of U.S. Customs territory.
- USAGE-DRIVEN SITE
- Sites designated to meet a specific operator's user's present need for FTZ designation; usage-driven sites cannot be used by another entity.
- A covered and enclosed structure, affording weather protection, used primarily for short- or long-term storage of merchandise, and often containing business offices. In a foreign-trade zone, it also is used for manipulation, manufacture, and exhibition of merchandise.
- The gross weight of the merchandise, including all containers, except as noted to the contrary.
- ZONE ADMISSION NUMBER
- The control number or sequential number on the CBPF 214 in Block No. 6. The zone operator sets the number structure.
- ZONE OPERATOR
- The foreign-trade zone may be managed by the grantee, a firm that oversees one or multiple zone users, or each firm may be its own foreign-trade zone operator. For the purposes of this schedule, the term "zone operator" shall apply to both general-purpose zones and subzones. The zone or subzone may be an organization, corporation, partnership, or person that operates under the terms of an agreement with the zone grantee. There may also be multiple zone operators operating under the terms of agreement with the zone grantee.
- ZONE USER
- A person or firm using a zone for storage, handling or processing of merchandise. The zone operator may authorize a zone user to maintain its individual inventory control and recordkeeping systems and procedures manual; however, the zone operator will remain responsible to Customs and liable under its bond for supervision, defects in, or failures of the systems unless the zone user posts its own FTZ operator's bond and becomes a zone operator.
- ZONE YEAR
- Each zone operator may choose its own zone year. December 31 is the year-end for Foreign-Trade Zones Board annual report purposes.
Foreign-trade zones (zones) are restricted-access sites in or near ports of entry, which are licensed by the Foreign-Trade Zones Board and operated under the supervision of U.S. Customs. (See 19 CFR Part 146.) Authority for establishing these facilities is granted to qualified corporations. Applications submitted to the Foreign-Trade Zones Board for grants of authority must show the need for zone services and a workable plan that includes suitable facilities and financing.
Zones are operated under public utility principles. Zone grantees usually contract with private firms to operate facilities and provide services to zone users. Zones have as their public policy objective the creation and maintenance of employment through the encouragement of operations in the United States that, for Customs reasons, might otherwise have been carried on abroad. The objective is furthered particularly when zones assist exporters and re-exporters, and usually when goods arrive from abroad in an unfinished condition for processing here rather than overseas.
Foreign and domestic merchandise may be moved into zones for operations not otherwise prohibited by law involving storage, exhibition, assembly, production or other processing. The usual formal Customs entry procedure and payment of duties is not required on the foreign merchandise unless and until it enters Customs territory for domestic consumption, in which case the importer ordinarily has a choice of paying duties either on the original foreign material or the finished product. Quota restrictions do not normally apply to foreign goods stored in zones, but the Foreign-Trade Zones Board can limit or deny zone use in specific cases on public interest grounds. Domestic goods moved into a zone for export may be considered exported upon entering the zone for purposes of excise tax rebates and drawback. "Subzones" are a special-purpose type of ancillary zone authorized by the Foreign-Trade Zones Board, through grantees of public zones, for operations by individual firms that cannot be accommodated within an existing zone when it can be demonstrated that the activity will result in a significant public benefit and is in the public interest. Foreign merchandise and domestic merchandise for export in a zone are exempt from state and local ad valorem taxes [15 CFR 400.1(c)].
More detailed information is contained in the Foreign-Trade Zones Act, 19 U.S.C. § 81a-u; Foreign-Trade Zones Board regulations, 15 CFR Part 400; and U.S. Customs regulations, 19 CFR Part 146.
Application and interpretation of Foreign-Trade Zone No. 197 Zone Schedule. The rules, regulations and rates of this Zone Schedule shall apply at Foreign-Trade Zone No. 197, its subzones, magnet sites, usage-driven sites, and annexes unless otherwise provided for. The zone grantee/operator shall be the sole judge to interpret and determine the applicability of any of the rates, regulations or services provided for in this Zone Schedule. However, any matter involving interpretation or action by U.S. Customs or other agency of the U.S. government will be determined by the Port Director of Customs, with the concurrence of the Foreign-Trade Zones Board. Where applicable, the Foreign-Trade Zones Board and U.S. Customs regulations shall prevail should any conflict arise with this schedule.
Regulations: Foreign-Trade Zones Board. Foreign-Trade Zone No. 197 is regulated by the Foreign-Trade Zones Board, Washington, D.C., special regulations as defined in the U.S. Code of Federal Regulations, Title 15, Chapter IV, Part 400, Regulations of the Foreign-Trade Zones Board.
Regulations: U.S. Customs and Border Protection. Foreign-Trade Zone No. 197 is subject to special U.S. Customs regulations as defined in U.S. Code of Federal Regulations, Title 19, Chapter I, Part 146, Foreign-Trade Zones.
Public utility standards. Pursuant to Foreign-Trade Zones Board regulations, the zone must be operated as a public utility. All rates and charges for all services or privileges within the zone shall be fair and reasonable, and the zone grantee and zone operator(s) shall afford to all who may apply for the use of the zone and its facilities and appurtenances uniform treatment under like conditions, subject to such treaties or commercial conventions as are now in force or may hereafter be made from time to time by the United States with foreign governments, regardless of whether a zone participant has processed any zone-related product or engaged a particular service provider (15 CFR 400.42). The General-Purpose Zone contains buildings available for sale or lease, and open land suitable for construction, to ensure that the reasonable zone needs of the business community are being met. The buildings are equipped to provide storage, manipulation, manufacturing, and other office space for individual companies to act as their own operator within their own facility. Additionally, there are buildings available, or land available for construction, that would accommodate a third-party provider public warehouse building or buildings, making zone services available to those companies who did not wish to lease or purchase their own building, or physically handle their own merchandise while within the foreign-trade zone site. In this manner, the grantee provides the community the opportunity for a wide range of firms to be accommodated under public utility principles.
Uniform treatment standard. Any company that prepares an application to be filed with the Foreign-Trade Zones Board shall be sponsored by this grantee organization unless that company is in a business that will harm other domestic companies, includes information in its application that is detrimental to the local community, or is not deemed to be in the general public interest.
Property ownership. As stated in a March 4, 2009, memorandum from Mr. Andrew McGilvray, Executive Secretary of the Foreign-Trade Zones Board, zone status is a "privilege," not a "right," which is provided to grantees only in the Foreign-Trade Zone Act. Property owners are not specifically included, and the Foreign-Trade Zones Board does not have the legal right to grant them the privilege of zone status.
Background investigation. In order to permit U.S. Customs to complete the activation request, a background investigation on the qualifications, character and experience of key employees and principal officers who will be involved in the operation of the zone must be completed. A list of each individual, including full names, addresses, social security numbers, and dates and places of birth or a completed CBPF 3078 must be submitted to U.S. Customs in Santa Teresa, New Mexico, in order for them to perform this investigation [19 CFR 146.6(c)]
Employees and persons entering and leaving activated portion of zone. Persons desiring admittance to the zone shall make application to the zone operator and shall be bound by the Foreign-Trade Zones Board and U.S. Customs regulations and the rules of the zone operator. All persons having business in the zone will enter and leave at the prescribed pedestrian entrances and be subject to examination as deemed necessary for the protection of the Customs revenue.
Identification of employees within activated portion of zone. Every employee on duty within the zone and in connection with the operation of the zone shall be required while within the zone to wear appropriate identification badges to be provided by the zone operator of the zone or individual users of the zone. Adequate security will be maintained for unissued badges. All persons having business within the zone, but not possessing appropriate zone-issued badges, passes, or other approval to enter the zone, shall apply for the appropriate approval and entry identification at the zone operator's office. A visitor's log will be maintained by the zone operator and will contain the date, name, firm, person to be visited, and pass number for each visitor permitted to enter the zone.
Physical facilities. All merchandise stored in the zone will be stored in a safe and sanitary manner. Aisles will be established in storage areas and may be changed from time to time. All entrances shall be left unblocked. Trash and waste shall be promptly removed from the zone. All local, state, and federal health laws shall be observed to ensure protection of public safety [19 CFR 146.4(f)].
Activation. Pursuant to regulations of the U.S. Customs, all or any portion of the zone approved by the Foreign-Trade Zones Board may be approved by the zone grantee and the Port Director of Customs for foreign-trade zone operations and for the admission, handling, and shipment for import or export of merchandise in zone status. All procedures of U.S. Customs shall be followed (19 CFR 146.6).
Boundary modification. The zone grantee may submit to the Foreign-Trade Zones Board an application to modify the boundary of an existing zone or subzone or to add a new site under the ASF. The procedure is administrative at the Foreign-Trade Zones Board without a Federal Register notice [15 CFR 400.24(c)]. No fee is owed the Foreign-Trade Zones Board. The site may also be requested to be approved as a subzone.
Construction of buildings and facilities within a zone. The zone grantee may, with the approval of the Foreign-Trade Zones Board, permit other persons, firms, or corporations to erect buildings and other structures within the zone as will meet their particular requirements. The Foreign-Trade Zones Board statute and regulations contain certain requirements. All security-related construction should be in accordance with U.S. Customs requirements and the building activated by U.S. Customs prior to use. As part of the activation process with U.S. Customs in Santa Teresa, a cargo-security survey or site visit will be conducted by U.S. Customs for each company that requests activation approval for its facility. For additional construction in a designated zone site, the Foreign-Trade Zones Board must be notified of all such construction in a general-purpose foreign-trade zone that was not approved in the original application. Advanced notification is not necessary. Notification will occur with the annual report to the Board filed by the Board of County Commissioners of Doña Ana County. If production authority within a general-purpose zone is requested, notification will occur with a Production Notification Application approved by the Foreign-Trade Zones Board.
Deactivation. A zone operator may file a request with the Customs Port Director to deactivate all or a portion of an existing activated zone or subzone and shall cease to admit merchandise into the zone site in zone status. Final action and disposition of the merchandise must be made with the concurrence of the Customs Port Director.
Disposition of merchandise in a zone. In general, merchandise lawfully admitted to a zone may, in accordance with these and other regulations made under the provisions of the Act, be sent into Customs territory of the United States, destroyed or exported (19 CFR 146.71).
Exclusion from zone of goods or process of treatment/grant restrictions. When it shall be reported to the Foreign-Trade Zones Board that any goods or process of treatment is detrimental to the public interest, health, or safety, the Foreign-Trade Zones Board shall cause such investigation to be made, as it may deem necessary. No operation or process of treatment will be permitted in the zone that in the judgment of the Foreign-Trade Zones Board or the zone operator is detrimental to the public interest, health, or safety [15 CFR 400.13(a)(8)(b)]. Normally, the Foreign-Trade Zones Board issues a grant restriction by means of a Board order governing such activity. Grant restrictions are restrictions or conditions placed in a grant or other approval by the Foreign-Trade Zones Board that may limit the zone status allowed, the kind of operation or the merchandise in a zone, the entry of merchandise into the commerce, the life of the grant, or the amount of acreage allowed to be activated. See also the definition of "restricted merchandise/operations."
Forms, procedures and operations in a zone. The merchandise and operations permitted in a zone, the disposition of merchandise in a zone, the zone status of the merchandise and special provisions applicable to each status, compliance with requirements of other federal agencies, the subsequent importation of merchandise, the exportation of merchandise from a zone, and other operations in a zone authorized by the Act are all controlled by U.S. Customs forms or forms of other federal agencies.
Grant sale/conveyance, transfer, assignment, etc. The Foreign-Trade Zone grant of authority may not be sold, conveyed, transferred, set over, or assigned [FTZ Act, Section 17; 19 U.S.C. § 81q; (15 CFR 400.13(a)(7)]. Application may be made to the Foreign-Trade Zones Board to reissue a grant under certain conditions.
Hours of business and service. The zone operator shall prescribe hours of business and service, for U.S. Customs purposes.
Independent contractor status. The zone grantee, zone operator, and any future zone user are not and shall not be considered as joint venturers, partners, or agents of each other, and none shall have the power to bind or obligate the other except as set forth in any written agreement. Zone grantee, zone operator, and any future zone user agree not to represent to anyone that they are agents of one another or have any authority to act on behalf of one another except as set forth in any written agreement.
Lapse/sunset provision. The grant of authority for every general-purpose zone or subzone may lapse if it is not activated and in operation within five years of the initial Foreign-Trade Zones Board order issued after November 7, 1991. Detailed provisions apply. If a portion of any zone site is not activated within five years of the establishment of the zone site, the grantee has the right to transfer zone status to another parcel of land adjacent to the Customs port of entry. Contact the zone grantee for a complete explanation [15 CFR 400.13(a)(4)]. All zone operators in general-purpose zone sites are subject to sunset provisions. A usage-driven site operator secure activation approval and must demonstrate zone activity within three years or lose zone status. If an operator is located in a magnet site, the operator or another operator in the magnet site must activate a portion of the magnet site within five years. Failure to meet the sunset provisions will result in automatic deletion of zone status. The Board of County Commissioners of Doña Ana County as grantee will not be held liable for any difficulties this may create for an operator.
Manipulation, manufacture, exhibition of merchandise. In general, merchandise lawfully brought into a zone may, in accordance with these and other regulations made under the provisions of the Act, be stored, sold, exhibited, broken up, repacked, assembled, distributed, sorted, graded, cleaned, mixed with foreign and domestic merchandise, or otherwise manipulated or be manufactured.
Permission for any manipulation, manufacture, destruction, or exhibition in a zone shall be obtained from the Port Director of Customs subject to such application and procedure prescribed by the Secretary of the Treasury for the protection of the revenue by means of a CBPF 216.
For production (manufacturing/processing), a second request must be made in advance to the Foreign-Trade Zones Board for production operations. The Foreign-Trade Zones Board defines production as any change in HTS classification. The Foreign-Trade Zones Board must approve all production operations. This includes certain "kitting" operations where there may be a change in HTSUS classification. Any new production operation beyond the scope approved in the Grant of Authority must be authorized by the Foreign-Trade Zones Board. See generally 15 CFR 400.14(a). In a general-purpose zone, expedited action under interim production notification authority can be secured. In existing general-purpose zone sites and subzones, interim production notification authority may be secured in less than 120 days if U.S. Customs and Border Protection will provide a concurrence letter to the Foreign-Trade Zones Board.
In the event of the denial of any application by the Port Director for any reason, the applicant, the zone grantee or the zone operator of the zone may appeal the adverse ruling. If any revenue protection considerations are involved in such an application, the Foreign-Trade Zones Board shall be guided by the determinations of the Secretary of the Treasury.
Merchandise permitted in a zone. Foreign and domestic merchandise of every description, except such as is prohibited by law, may, without being subject to Customs laws of the United States, except as otherwise provided in the Foreign Trade Zones Act and the regulations made thereunder, be admitted into a zone.
Merchandise that is specifically and absolutely prohibited by law shall not be admitted into a zone. Any merchandise so prohibited by law that is found within a zone shall be disposed of in the manner provided for in the laws and regulations applicable to such merchandise. A distinction is made between merchandise which is specifically and absolutely prohibited by law on the grounds of policy or morals, such as immoral or subversive literature, obscene articles, or lottery matter, and merchandise which is subject to conditional prohibition only, for example, articles which are subject to permits or licenses for the protection of economic or national security or which may be reconditioned to bring them into compliance with the laws administered by various federal agencies. Port Directors of Customs are required to exclude the first class of articles and may not permit them to be admitted to a zone if they are aware of their prohibited status, except that the Port Director may permit the temporary deposit of any such merchandise in the zone pending final determination of its status. The transfer of articles of the second class to a zone is subject to any requirements of the federal agency concerned. See 19 CFR 146.31(a) and (b).
The application for the admission of merchandise into a zone shall be approved or disapproved by the Port Director of Customs as the representative of the Foreign-Trade Zones Board on a CBPF 214.
Retail trade within zone. No retail trade shall be conducted within a zone except under permits issued by the Foreign-Trade Zones Board. Duty paid and domestic merchandise may be sold in a foreign-trade zone under certain circumstances.
Scope of authority. Foreign-Trade Zone No. 197 is authorized by Foreign-Trade Zone Board Order Nos. 665 and 1536 to undertake the activities set out therein. The Foreign-Trade Zones Board must authorize all production activity that results in a change in the imported material's Harmonized Tariff Schedule of the United States classification. This includes "kitting" operations where finished products are packaged together for sale. Any change in imported materials and finished products for such activity must also be authorized to only undertake those activities approved by the Foreign-Trade Zones Board. The zone operator/user shall promptly notify the zone grantee of any activity requiring Foreign-Trade Zones Board notice and authorization.
Sponsor of new zone or subzone. The zone grantee may, in its sole discretion, decide to sponsor a new zone or subzone project and its application to the Foreign-Trade Zones Board. In order to make its determination, the interested party must submit, in letter form to the grantee, sufficient data in summary form as required in an application to the Foreign-Trade Zones Board [15 CFR 400.14(a), 400.22, 400.25, 400.37]. If the zone grantee decides to sponsor the proposed project, the application must be prepared at the cost of the applicant.
Status of merchandise in a zone. For the purposes of the Act and the regulations relating to this section, all merchandise within a zone, except merchandise in transit through a zone as provided in U.S. Customs regulations, and except merchandise temporarily transferred to a zone for manipulation under Customs supervision pursuant to Section 562, Tariff Act of 1930, as amended, shall be given a zone status on a CBPF 214 document. Any changes to the zone status must be made on a CBPF 214 and approved by the U.S. Customs. For definitions, see § 213-2.
Subsequent importation of zone merchandise. Articles produced in a zone and exported from there shall, on subsequent importation into the Customs territory of the United States, be subject to the import laws applicable to like articles produced in a foreign country, except that articles produced or manufactured in a zone exclusively with the use of domestic merchandise, the identity of which has been maintained in accordance with the Second Proviso of Section 3 of the Act, as amended, may, on such importation, be entered as American goods returned [19 CFR 146.67(e)]. Contact the zone grantee for more detailed information on this topic.
Termination: accrued obligations/survival. All zone operators/users will specifically acknowledge and agree that, upon termination or expiration of tenancy in the foreign-trade zone for any reason whatsoever, the zone operator/user shall not be released or relieved from fulfilling any and all of its obligations or duties which arose or accrued during the term of its zone usage. Zone operators/users will specifically represent and warrant to the zone grantee that upon termination or expiration of its zone usage for any reason whatsoever, the zone operator/user shall completely perform and fulfill any and all of its obligations or duties which arose or accrued during the term of its zone use, including the immediate preparation and filing of all necessary reports with the grantee and the U.S. Customs. Specifically, the zone operator's/user's indemnity obligations, bond obligations, and record and record retention obligations shall survive the termination or expiration of any Agreement and/or zone activity for any such reason. The zone grantee may require the tender of all such records for safekeeping.
Termination: bankruptcy. The Foreign-Trade Zone activity or any rights hereunder shall not be subject to involuntary assignment, transfer or sale or to assignment, transfer or sale by operation of law in any manner whatsoever, and any such attempted involuntary assignment, transfer or sale shall be void and of no effect. Without limiting the generality of the foregoing, the zone operator/user agrees that in the event any proceedings under the Bankruptcy Act or any amendment thereto be commenced by or against the zone operator/user, and, if against the zone operator/user, said proceedings shall not be dismissed before either an adjudication in bankruptcy or the confirmation of a composition, arrangement or plan of reorganization, or in the event the zone operator/user be adjudged insolvent or make an assignment for the benefit of its creditors, or if a writ of attachment or execution be levied against any real or personal property owned or leased by the zone operator/user within the zone and be not released or satisfied within 15 days thereafter, or if a receiver be appointed in any proceedings or action to which the zone operator/user is a party with authority to take possession or control of the business conducted thereon by the zone operator/user and such receiver be not discharged within a period of 15 days after his appointment, any such event or any involuntary assignment may constitute a termination by the zone grantee of the use of the zone without notice or any other action and also shall terminate all rights hereunder at the discretion of the grantee organization.
Termination: conviction/abandonment. Foreign-trade zone usage may be terminated if the zone operator/user shall be convicted under any law of a felony as defined by such law; if the Foreign-Trade Zones Board or U.S. Customs should suspend or terminate the zone operator/user or the activated status of the zone; or if the zone operator/user shall voluntarily abandon, desert, or vacate the premises or discontinue its operations. The zone operator/user shall immediately provide all records and reports for the zone grantee, the Foreign-Trade Zones Board, and the U.S. Customs.
Use of zone by carriers. The loading or unloading areas of a zone are intended primarily for the use of vehicles unloading merchandise into the zone or loading merchandise from the zone, and their use for other purposes may be terminated by the Secretary of the Treasury if found to endanger the revenue, or by the Foreign-Trade Zones Board, zone grantee if found to interfere with the primary uses of the zone.
Agreements. All firms using the services of a foreign-trade zone operator must enter into an operating agreement with the operator. All foreign-trade zone or subzone operators must enter into an agreement with the zone grantee. If there is a conflict between the operating agreement and this Schedule, the agreement will prevail. Copies of the agreements are available from the zone grantee/operator(s).
Communication, audits, inspections and requests for information. The zone operator/user shall inform the zone grantee of any substantive written or oral communication with the U.S. Customs, the Foreign-Trade Zones Board, and any other federal agency that involves the merchandise held in the zone with respect to zone activity. The zone grantee must make all written submissions to the Foreign-Trade Zones Board with respect to foreign-trade zone activity. The zone operator/user shall promptly notify the zone grantee of any oral or written request for information, inspection, spot check, or audit of any kind from U.S. Customs or the Foreign-Trade Zones Board or other reports requested by any government agency and of any audit or investigation commenced by any government agency which directly concerns zone operations, and shall accompany such notification with copies of all letters, requests, reports and investigative documentation to the zone grantee.
Confidential relationship. All foreign-trade zone documentation contains confidential business information that may not be copied or disclosed without the express written permission of the particular party in interest. All information shall be kept confidential except that which is required to be made public by the Foreign-Trade Zones Board or U.S. Customs. The zone operator is specifically required by 19 CFR 146.4(d)(3) to maintain all transaction records confidential. This document contains trade secrets and commercial and financial information relating to the confidential business of private parties. The Trade Secrets Act (18 U.S.C. § 1905) provides penalties for disclosure of such information.
Foreign-trade zone usage. Where applicable, the zone operator agrees to place the following language in all lease/purchase agreements involving its referenced zone property:
Government agencies. The zone operator/user must comply with all lawful regulations of U.S. or New Mexico government agencies. Besides the U.S. Customs, many U.S. agencies have specific laws that apply to the import and export of merchandise. The zone operator/user and its customs broker, if applicable, are responsible for assuring compliance. See also "regulations" definition in § 213-2.
Governmental licenses. Zone operators/users are responsible to obtain, maintain, and keep current any and all licenses, permits, certificates or other authorizations required by any federal, state, or local government that are or may be necessary in the conduct of business in or from the zone.
All zone operators/users shall secure and maintain throughout the term of their insurance with requirements and limits as required by the zone grantee. Zone operators/users must furnish certificates of insurance evidencing the required coverage 10 business days prior to the commencement of operations. As appropriate, insurance shall include statutory workers' compensation, automobile liability, and general liability.
If applicable, zone tenancy may be terminated if, at any time a zone operator/user fails to maintain the required insurance for any period of time or fails to comply with any of the insurance requirements. Detailed insurance requirements may be secured from the zone grantee/operator. Insurance is carried by the zone operator on its own property only and does not include insurance on the contents stored therein. The zone user is obligated to bring nothing within the zone which will cause the cancellation or forfeiture of the insurance or affect the premium rate thereof on the building or buildings of which the leased premises forms a part. Insurance on commodities or other property stored on the leased premises must be carried by and at the expense of the lessee or owner of the commodities or other properties. Merchandise stored, manipulated, or transferred within the zone is not insured by the zone operator, and the Zone Schedule rates do not include insurance on merchandise.
Public interest, health and safety. No operation or process of treatment will be permitted in the zone that, in the judgment of the Foreign-Trade Zones Board, zone grantee, or zone operator, is detrimental to the public interest, health and/or safety. The zone operator reserves the right to refuse merchandise that would, in the opinion of the zone management, pose unusual or unacceptable problems or hazards to the zone. See also the definition of "restricted merchandise/operations" in § 213-2.
All persons and merchandise of every description entering or leaving Foreign-Trade Zone No. 197 for any purpose whatsoever shall be bound by the lawful regulations of the Foreign-Trade Zones Board and by the Board order issued thereunder, and U.S. Customs and actions of the Port Director of Customs.
Although zones are outside the Customs territory, most federal laws apply in zones. The extent to which they apply or do not apply depends on their precise wording, their relationship to the Foreign-Trade Zones Act, and the interpretation thereof by the particular federal agency affected. State and local laws apply in zones except to the extent they are preempted or modified by federal laws. The Foreign-Trade Zones Board and the Port Director of Customs cooperate with federal, state, and local government authorities in the administration of their laws, regulations, and ordinances. The zone grantee, zone operator, and zone users shall allow such authorities access to the zone to carry out their duties. They are, however, subject to admission and departure requirements as noted herein.
Regulations: zone. The rules governing procedure within Foreign-Trade Zone No. 197 are issued in conformity with and supplementary to the Foreign-Trade Zones Board and U.S. Customs regulations and such other United States laws and regulations relating to the port of entry as are applicable to foreign-trade zone operations.
Abandonment, arrearage, or insolvency. If merchandise has been abandoned in the zone, or the person in whose account the merchandise is held in the zone apparently has absconded, is insolvent, or is in serious arrears in payments owed to the operator, the operator must take legal action under the laws of the state in which the zone is located to dispose of the merchandise. If the operator is authorized to sell the merchandise in public auction to recover a debt, the buyer will have title in the goods to dispose of them at his or her option. If the merchandise is to be entered for consumption the owner or purchaser will be held liable for any duties, taxes and deficiencies due. Auction sales will be conducted by the zone operator or representative thereof, and not by Customs or a Customs contractor.
Bureau of Census reporting. Certain statistical information is necessary to be provided to the Bureau of the Census on all FTZ admission receipts. If provided to Customs, the CBPF 214A must be salmon or pink in color and be identified as "Statistical Copy" [19 CFR 146.32(a)]. The current CBPF 214 to be utilized is available from the operator. U.S. Customs is responsible for transmitting the CBPF 214As to Census. The operator may provide this data to the Bureau of the Census with an e-214 filing or it may be provided to U.S. Customs by completion of the CBPF 214A. The Bureau of the Census must receive the reports no later than the tenth calendar day following the month the merchandise was admitted to the zone.
Customs bond. A Customs and Border Protection Form 301, Activity Code 4, is utilized for the foreign-trade zone operator's bond. Provisions are set forth at 19 CFR 113.73. Any companies that will act as a foreign-trade zone operator must secure a foreign-trade zone operator's bond in the name of their company.
Customs inspection of merchandise while in zone. The zone operator/user or his agent shall at all times be immediately available to make the merchandise subject to inspection required by U.S. Customs and shall have the sole responsibility of opening crates and packages, handling the merchandise and securing the crates and packages following the inspection. In the event that the zone operator/user or his agent is not immediately available for inspection, then the zone personnel shall be authorized to open such packages for U.S. Customs and shall not be liable for any loss or damage for any reason whatsoever to the goods of the consignee. The zone operator/user shall be charged for such services at rates established.
Customs permit. Merchandise will not be delivered to or through Customs territory unless the delivery order is accompanied by a CBPF 3461/7501 (entry for consumption); a CBPF 7512 (entry for transportation, immediate exportation, or transportation and exportation); or appropriate alternate procedures.
Grantee knowledge. The zone grantee is not obligated to, and does not intend to, monitor the day-to-day activity of the foreign-trade zone. The zone grantee shall have no knowledge, actual or constructive, of the quantity, character, status designation, identification, or time of admission, transfer, or release of goods into or from the foreign-trade zone.
Handling of merchandise. The zone operator/user will be responsible for the receipt and verification of all merchandise admitted to the zone on the proper Customs forms and for handling of all merchandise having activity being performed under the proper Customs forms. The zone operator/user will perform all these functions according to all Customs regulations that apply to these activities. The zone operator/user will not allow removal of any merchandise located within the zone without prior approval from Customs under the applicable laws, rules and regulations of the U.S. Customs.
Harbor maintenance fee. The Water Resources Act of 1986 provides for a harbor maintenance fee to be imposed for commercial use of ports in the United States. All merchandise arriving at deepwater ports is subject to a fee of 0.125%. The applicant for admission is liable for payment of the fee. The filing of the CBPF 349 quarterly is the responsibility of the zone operator/user or its Customs broker. The CBPF 350 is used for amendments or refunds.
Hazardous/objectionable commodities. The zone will not be required to accept for storage any commodity that will affect the rate of insurance on other merchandise in storage. Products will not be stored except in locations or areas that are not restricted in the acceptance of any commodity for storage under the insurance rate established on contents stored therein. The grantee reserves the right to not allow certain merchandise to be stored, processed, or manufactured in the zone.
Indemnification. The zone operator/user will protect, indemnify and hold harmless the zone grantee and its respective boards, officers and employees from and against any and all actions, suits, proceedings, claims, demands (including attorneys' fees and costs), whether insured or not, arising out of, or incident to, the zone operator's/user's obligations and operations hereunder. The zone grantee/zone operator may require a bond at any time the zone grantee/zone operator deems it necessary to adequately protect the parties indemnified hereby.
Insurance. The grantee may require special insurance coverage in its agreement with the operator.
Marking. All merchandise handled in the zone, before entry to Customs territory, must be marked in accordance with U.S. Customs regulations as to the country of origin and in accordance with all other government regulations. No merchandise will be permitted by Customs to be transferred from the zone for any purpose that is not properly labeled or carries any false or misleading label or mark. A CBPF 216 must be filed and approved by U.S. Customs prior to any repacking and labeling that may occur in the zone.
Merchandise processing (user) fee. The current Customs merchandise processing (user) fee of 0.3464% ad valorem is applicable only to the value of foreign non-duty-paid merchandise entered into the U.S. from a foreign-trade zone. In 1995, the North American Free Trade Agreement for Canadian NAFTA qualifying merchandise provides that the fee is zero, not 0.3464% as for all other imports. For Mexican NAFTA qualifying merchandise, the fee was eliminated June 30, 1999. It is collected on a Customs entry CBPF 7501. Merchandise that is exported, scrapped, etc., from the zone is not subject to the merchandise processing fee. The fee has a minimum of $25 and is capped at $485 per entry.
Permission to manipulate, manufacture, exhibit, repack or destroy. Before merchandise may be manipulated, repacked, manufactured, exhibited, or destroyed within the zone, application on CBPF 216 must be presented to the zone operator for concurrence. The zone operator will then forward the application to U.S. Customs. On approval by the U.S. Customs, the contemplated activity will then be permitted. The zone operator maintains a schedule of charges.
Record deficiencies. In the event that any audit, inspection, or examination by the U.S. Customs, the Foreign-Trade Zones Board, zone grantee, or zone operator discloses that books, records or operational procedures of zone operator/user are not in conformance with the requirements of federal, state and/or local law and the operator's agreement, the U.S. Customs, the Foreign-Trade Zones Board, zone grantee or zone operator may order the immediate correction of the documents or procedures. In the event that it is anticipated that such correction will take in excess of five working days, a plan of performance will be submitted by the responsible party(s) to the zone grantee or zone operator for the correction of such discrepancy, which shall be approved, if necessary, by the Foreign-Trade Zones Board and the U.S. Customs, and shall proceed with all due diligence to correct the deficiency as described in the approved plan.
Record retention. All financial and accounting records of the zone operator/user concerning zone operations shall be retained for five years after the act or occurrence recorded or after the merchandise covered by such records has been forwarded from the zone, whichever is longer, and all such records shall be available for inspection and audit by any appropriate government agency and by zone grantee during normal business hours.
Reports to governmental agencies. The zone operator may be required to submit periodic reports to the grantee and the U.S. Customs, or may be required to perform other acts as the zone operator of the zone in compliance with governmental regulations. Zone users are required to and shall cooperate with the zone operator in the creation and maintenance of procedures, systems, regulations, or programs, and provide information and statistics that the zone operator considers necessary to ensure compliance with governmental requirements. The zone grantee must file an annual report to the Foreign-Trade Zones Board by the last business day in March on all activity that occurred in the zone during the previous calendar year (January 1 through December 31). Each zone or subzone operator and zone user must cooperate in providing the necessary data [15 CFR 400.51(c)]. This data must be provided to the grantee by no later than February 15 each year. An annual reconciliation and annual internal review is required of each foreign-trade zone or subzone operator (19 CFR 146.25, 146.26). A certification letter acknowledging the annual reconciliation and annual systems review have been completed and must be forwarded to the Customs Port Director within 90 days of the end of the operator zone year.
Right of entry. Representatives of the zone grantee, at the zone grantee's request, zone operator, zone user, the Foreign-Trade Zones Board, U.S. Customs and other authorized U.S. government officers shall have the right of access to enter the zone for the authorized and lawful purpose of examining same, conferring with the zone operator/user, its agents, invitees, and employees on such premises, inspecting and checking operations, supplies, equipment and merchandise, and determining whether the business is being conducted in accordance with the procedures established for the operation and management of the zone.
Temporary removal. Merchandise held in the zone may be temporarily removed from the zone for the limited purposes of repair, restoration, or any incidental operation which would not constitute a "manufacture or production" under drawback law, 19 U.S.C. § 1313, and then returned to the zone. Application on a CBPF 216 must be presented to the zone operator and then to U.S. Customs for concurrence. See Customs Headquarters Ruling 214189 (August 31, 1982), Ruling 218458 (January 27, 1986), Customs Directive 3260-20 (August 4, 1986) and Section 9.2 of U.S. Customs FTZ Manual for a more detailed description of this limited provision.
Trucking and lighterage. Transfer of foreign merchandise from the first port of arrival through Customs territory to the zone and from the zone to the port of export must be made by Customs-bonded trucks, rail cars, airplanes, lighters or other carriers and subject to U.S. Customs regulations. Alternate procedures for transfer of merchandise under the Foreign-Trade Operators Bond [See 19 CFR 146.40(b)] not on bonded carriers, may be available with Customs approval.
Grantee charges. Each general-purpose zone operator that makes its facilities available to multiple zone user firms is responsible for preparing and submitting to the grantee an appendix which sets out the rules, rates and charges at the zone site. Each zone operator assumes responsibility for maintaining a complete and current Zone Schedule Each zone operator will provide an appendix of its charges to the grantee and any changes and/or revisions to the appendix upon implementation. Additionally, firms utilizing the general-purpose zone may act as their own zone operator. No other charges will be levied other than those in Appendix A. Under these circumstances, the zone sites will operate under the rules and regulations and grantee rates and charges as set out herein.
Editor's Note: Appendix A is included as an attachment to this chapter.
Uniform pricing. All customers having similar volume and circumstances will be afforded the same contractual terms.