Grantees

Guidance on Zone Schedule Contents

In the current FTZ Board regulations, the requirements for a grantee’s zone schedule requirements were revised to remove anything that we did not believe was essential. Grantees should not feel that they need to include anything beyond the short list of items listed in section 400.44(b) of our regulations, namely:

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).

To assist grantees in preparing their zone schedule, below is a sample table of contents: 

It should be noted that the pre-2012 regulations did require substantially more information in the grantee’s zone schedule. As such, there may be information in a grantee’s zone schedule that was required in the past but is no longer required. A grantee should not hesitate to remove information from their zone schedule if it is no longer required. 

Note:  A grantee is required to submit its zone schedule to the Executive Secretary of the FTZ Board at the time the zone schedule is created, and any time it is amended.

Any questions on the zone schedule should be directed to your FTZ Staff regional representative. 
 

Guidance on Providing Local Public Notice 

The FTZ Regulations require that the applicant publish a notice in a local newspaper for applications to the FTZ Board submitted under Sections 400.21, 400.24(b) and 400.25 of the FTZ Board’s regulations. The local notice should:

•Be published in a general circulation newspaper 

•Be published in time to allow at least 15 days before the close of the comment period for the application.

•The text of the notice can be the same as that published by the FTZ staff in the Federal Register or can be simplified as long as a summary of the proposal is included along with instructions on how to find more detailed information.

•A copy of the local notice should be provided to the FTZ staff to include in the case record
 
 

FTZ Production: Scope of Authority and Monitoring Visits

What is Scope of Authority?

When a company receives approval from the FTZ Board (the Board) for authority to conduct “production” activity, the “scope” of that authority from the Board extends only to the finished products and foreign-status materials/components that were described in the company’s request(s) approved by the Board. In the Board’s regulations (15 CFR Part 400), section 400.14(b) sets out those limitations: “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 company’s scope of authority is based on the written descriptions provided in its requests. Scope of authority is not tied directly to the Harmonized Tariff Schedule of the United States (HTSUS) numbers under which the materials/components or finished products are classified. HTSUS numbers are provided in notifications and applications requesting authority from the FTZ Board as a supplement to the written descriptions. Therefore, changes in an HTSUS number alone generally have no impact on an approved scope of authority and a new production notification would not be needed simply as a result of a change to the HTSUS number associated with an already authorized finished product or foreign-status material/component.

Operator Responsibilities

• Maintain copies of notifications/applications and decision documents. If unable to locate copies of those documents, contact the grantee and/or the Board’s staff to obtain copies.
• Understand any specific restriction(s) placed on the activity by the Board.
• Obtain approval in advance for any finished products or foreign-status materials/components not already authorized by the Board. A production notification must be submitted to request such additional authority.

Grantee and Operator Best Practices

• Grantees should communicate with operators regarding the need for advance approval from the Board for production activity and the limits of scope of authority.
• Each operator should have routine internal discussions so that employees are aware that changes in production may require new FTZ authority and also establish routine reviews of actual operations relative to the operator’s approved scope of authority.
• Contact the Board’s staff with questions or to request a scope determination, as warranted.

Monitoring Visits
Periodically, the Board’s staff visits FTZ operations, including to monitor that FTZ activity is consistent with the Board’s authorizations. Each such monitoring visit generally is scheduled for either a half-day or full-day duration. For such visits, the Board’s staff commonly views the actual activities being conducted and ordinarily requests in advance a sample of documents for receipt of materials/components and shipment of finished products for a selected timeframe. The Board’s staff may request additional documents during the course of a monitoring visit. CBP personnel may opt to accompany the Board’s staff during such visits.

GUIDELINES FOR THE LAPSE PROVISION, FTZ ACTIVATION AND REINSTATEMENT 
   These guidelines are based on FTZ Board Order 849 (61 FR 53305-53307, October 11, 1996) 

ACTIVATION DEFINED 

  A zone grantee which will have reported in its annual report to the FTZ Board the receipt of shipments under FTZ procedures (and under CBP activation approval) within five years of the issuance of the grant of authority for the zone or subzone is deemed to have fulfilled the FTZ activation requirement. 

  A zone at which no shipments have been actually received under FTZ procedures, but which is active in offering FTZ services to the public, may alternatively fulfill the FTZ activation requirement by:
 (1) obtaining CBP activation approval under Section 146.6 of the CBP regulations (19 CFR Part 146) from the CBP Port Director for the area;
 (2) submitting a zone schedule to the Executive Secretary of the FTZ Board pursuant to Section 400.44(a) of the FTZ regulations; and,
 (3) notifying the Executive Secretary in writing upon the completion of (1) and (2) that the zone is open for business. 

  The fulfillment of the requirements in either of the two preceding paragraphs constitutes “FTZ activation” for purposes of the “lapse provision” and it preserves active FTZ authority for all zone sites. Subzones are individually subject to the requirements. 

REINSTATEMENT PERIOD 

  During the 18-month period following a lapse of authority (“reinstatement period”), zone grantees may apply for reinstatement of FTZ authority for the zone and for individual subzones upon completion of the FTZ activation requirements during that period. Grantees should notify the Executive Secretary when steps are being taken to qualify for reinstatement. 

  During the reinstatement period, the authority for the affected zone or subzone is considered lapsed, unless and until reinstatement occurs. Termination of authority would occur at the end of the 18-month reinstatement period for a zone or subzone not reinstated during the period (as noted below, under certain conditions, grantees may request that the processing of certain pending applications be continued during this period). Upon termination of authority, zones and subzones affected will be dropped from lists maintained by the FTZ Staff and published in the FTZ Board’s annual report. 

GUIDELINES 

1. A zone which had been in FTZ activation at any time and for any length of time within the applicable time frame (i.e., prior to the lapse date) is not affected by the lapse provision. 

2. The FTZ activation of any part of a zone site or a subzone will suffice to preserve FTZ authority for the zone as a whole, but not for any particular subzone which has not been activated. Thus, each subzone is considered separately. (The lapse of authority for a subzone does not affect the basic authority of a zone grantee which has otherwise met the FTZ activation requirements.) 

3. The starting time for tolling whether a lapse of authority has occurred will be from the time of the original grant of authority for a zone, and it will affect all sites and subzones associated with the zone, however recently approved. With regard to a zone which meets the activation requirements but has inactive subzones, the starting time for tolling such subzones will be from the time of the original grant of authority for the subzone. 

4. Applications submitted to or pending with the FTZ Board or the FTZ Staff from any affected zone shall become inactive if zone authority lapses, but the processing of such applications may be resumed upon written request of a zone grantee made within 90 days of a lapse of authority if the site involved in the application is part of an activation plan. (New applications may be considered for acceptance for filing under the same conditions, except that applications for minor modifications to zone projects proposing changes that are part of an activation plan may be so considered up to 60 days prior to the end of the reinstatement period.) 

5. FTZ activation of a zone or subzone may be determined by the Board to extend to separate, but related, zones or subzones approved for the same grantee if approved in the same Board action or if the projects are significantly interrelated in terms of their administration as an element of state/regional/local economic development programs (in the case of subzones, if the sites are administered as a unit by the subzone company), providing that the CBP Port Director for the area concurs. 
 

GUIDELINES FOR REQUESTS FOR REISSUANCE OF FOREIGN-TRADE ZONE GRANTS OF AUTHORITY

— A zone grantee may request by letter to the FTZ Board for the reissuance of the grant of authority for its zone project to another eligible organization. 

— The letter should include an explanation of the circumstances involved and why the change would be in the public interest; and it should be accompanied by a resolution of the grantee organization. 

— The organization that would become the new grantee also needs to submit a request by letter to the FTZ Board for reissuance of the grant of authority under its sponsorship (may be submitted in same package as grantee request), explaining the public interest basis for the change and accompanied by the following documentation (same as that required in §400.21(d)(1) of FTZ Regulations, 15 CFR Part 400): 

— A current copy of the state enabling legislation regarding FTZs. 

— The sections of the charter (or organization papers) that are pertinent to FTZs. 

— Certified copies of a resolution of the board of the organization authorizing the organization to become a zone grantee and authorizing an official to sign the request. 

— A concurrence letter from the U.S. Customs and Border Protection Port Director serving the area. 

— On a case by case basis, other specific information may be needed. 
 

The FTZ Board’s regulations (at 15 CFR 400.41(b)) require the grantee of a zone to submit to the FTZ Board a “zone schedule” (15 CFR 400.44) – establishing the policies, procedures and fees (as applicable) for the zone – prior to the operation of any site or subzone of that zone. The FTZ Board has no record of the zones listed below having submitted a zone schedule and, therefore, those zones are not permitted to undertake FTZ operations pursuant to 15 CFR 400.41(b). If you have any questions or believe that a zone is mistakenly included on this list, please contact the FTZ Staff.