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Title 15 – Commerce and Foreign Trade–Volume 2

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Title 15 – Commerce and Foreign Trade–Volume 2



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


Subtitle B – Regulations Relating to Commerce and Foreign Trade (Continued)

CHAPTER III – INTERNATIONAL TRADE ADMINISTRATION, DEPARTMENT OF COMMERCE

SUBCHAPTER A – MISCELLANEOUS REGULATIONS

PART 300 [RESERVED]

PART 301 – INSTRUMENTS AND APPARATUS FOR EDUCATIONAL AND SCIENTIFIC INSTITUTIONS


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.

§ 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 § 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.


(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 § 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 § 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]


§ 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 § 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.


(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., 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]


§ 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 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 § 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 § 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]


§ 301.4 Processing of applications by the Department of the Treasury (Customs and Border Protection).

(a) Review and determination. The Commissioner shall date each application when received by Customs and Border Protection. If the application appears to be complete, the Commissioner shall determine:


(1) Whether the institution is a nonprofit private or public institution established for research and educational purposes and therefore authorized to import instruments into the U.S. under subheading 9810.00.60, HTSUS. In making this determination, the Commissioner may require applicants to document their eligibility under this paragraph;


(2) Whether the instrument or apparatus falls within the classes of instruments eligible for duty-free entry consideration under subheading 9810.00.60, HTSUS. For eligible classes, see U.S. Note 6(a), Subchapter X, Chapter 98, HTSUS; and


(3) Whether the instrument or apparatus is for the exclusive use of the applicant institution and is not intended to be used for commercial purposes. For the purposes of this section, commercial uses would include, but not necessarily be limited to: Distribution, lease or sale of the instrument by the applicant institution; any use by, or for the primary benefit of, a commercial entity; or use of the instrument for demonstration purposes in return for a fee, price discount or other valuable consideration. Evaluation, modification or testing of the foreign instrument, beyond normal, routine acceptance testing and calibration, to enhance or expand its capabilities primarily to benefit the manufacturer in return for a discount or other valuable consideration, may be considered a commercial benefit. In making the above determination, the Commissioner may consider, among other things, whether the results of any research to be performed with the instrument will be fully and timely made 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 § 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]


§ 301.5 Processing of applications by the Department of Commerce.

(a) Public notice and opportunity to present views. (1) Within 5 days of receipt of an application from the Commissioner, the Director shall make a copy available for public inspection during ordinary business hours of the Department of Commerce. Unless the Director determines that an application has deficiencies which preclude consideration on its merits (e.g., insufficient description of intended purposes to rule on the scientific equivalency of the foreign instrument and potential domestic equivalents), he shall publish in the Federal Register a notice of the receipt of the application to afford all interested persons a reasonable opportunity to present their views with respect to the question “whether an instrument or apparatus of equivalent scientific value for the purpose for which the article is intended to be used is being manufactured in the United States.” The notice will include the application number, the name and address of the applicant, a description of the instrument(s) for which duty-free entry is requested, the name of the foreign manufacturer and a brief summary of the applicant’s intended purposes extracted from the applicant’s answer to question 7 of the application. In addition, the notice shall specify the date the application was accepted by the Commissioner for transmittal to the Department of Commerce.


(2) If the Director determines that an application is incomplete or is otherwise deficient, he may request the applicant to supplement the application, as appropriate, prior to publishing the notice of application in the Federal Register. Supplemental information/material requested under this provision shall be supplied to the Director in two copies within 20 days of the date of the request and shall be subject to the certification on the form. Failure to provide the requested information on time shall result in a denial of the application without prejudice to resubmission pursuant to paragraph (e) of this section.


(3) Requirement for presentation of views (comments) by interested persons. Any interested person or government agency may make written comments to the Director with respect to the question whether an instrument of equivalent scientific value, for the purposes for which the foreign instrument is intended to be used, is being manufactured in the United States. Except for comments specified in paragraph (a)(4) of this section, comments should be in the form of supplementary answers to the applicable questions on the application form. Comments must be postmarked no later than 20 days from the date on which the notice of application is published in the Federal Register. In order to be considered, comments and related attachments must be submitted to the Director in duplicate; shall state the name, affiliation and address of the person 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 § 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 § 301.2(s) of the regulations for the intended purposes of the instrument described in response to question 7 of the application; or that the intended purposes for which the instrument is to be used do not qualify the instrument for duty-free consideration under the Act.


(iii) Where the comments regarding paragraphs (a)(4)(i) and (a)(4)(ii) of this section relate to a particular accessory or optional device offered by a domestic manufacturer, cite the type, model or other catalog designation of the accessory device and include the specification therefor in the comments.


(iv) Where the justification for duty-free entry is based on excessive delivery time, show whether:


(A) The domestic instrument is as a general rule either produced for stock, produced on order, or custom-made and;


(B) An instrument or apparatus of equivalent scientific value to the article, for the purposes described in response to question 7, could have been produced and delivered to the applicant within a reasonable time following the receipt of the order.


(v) Indicate whether the applicant afforded the domestic manufacturer an opportunity to furnish an instrument or apparatus of equivalent scientific value to the article for the purposes described in response to question 7 and, if such be the case, whether the applicant issued an invitation to bid that included the technical requirements of the applicant.


(5) Untimely comments. Comments must be made on a timely basis to ensure their consideration by the Director and the technical consultants, and to preserve the commenting person’s right to appeal the Director’s decision. The Director, at his discretion, may take into account factual information contained in untimely comments.


(6) Provision of general comments. A domestic manufacturer who does not wish to oppose duty-free entry of a particular application, but who desires to inform the Director of the availability and capabilities of its instrument(s), may at any time supply documentation to the Director without reference to a particular application. Such documentation shall be taken into account by the Director when applications involving comparable foreign instruments are received. The provision of general comments does not preserve the provider’s right to appeal the Director’s decision.


(b) Additions to the record. The Director may solicit from the applicant, from foreign or domestic manufacturers, their agents, or any other person or Government agency considered by the Director to have related competence, any additional information the Director considers necessary to make a decision. The Director may attach conditions and time limitations upon the provision of such information and may draw appropriate inferences from a person’s failure to provide the requested information.


(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 (§ 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 § 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 § 301.2(r) of this part. In no event, however, shall the Director consider performance capabilities superior to the manufacturer’s guaranteed specifications or their equivalent. In making the comparison the Director may consider a reasonable combination of domestic instruments that brings together two or more functions into an integrated unit if the combination of domestic instruments is capable of accomplishing the purposes for which the foreign instrument is intended to be used. If the Director finds that a domestic instrument possesses all of the pertinent specifications of the foreign instrument, he shall find that there is being manufactured in the United States an instrument of equivalent scientific value for such purposes as the foreign instrument is intended to be used. If the Director finds that the foreign instrument possesses one or more pertinent specifications not possessed by the comparable domestic instrument, the Director shall find that there is not being manufactured in the United States an instrument of equivalent scientific value to the foreign instrument for such purposes as the foreign instrument is intended to be used.


(ii) Programs that may be undertaken at some unspecified future date shall not be considered in the Director’s comparison. In making the comparison, the Director shall consider only the instrument and accompanying accessories described in the application and determined eligible by the Customs and Border Protection. The Director shall not consider the planned purchase of additional accessories or the planned adaptation of the article at some unspecified future time.


(iii) In order for the Director to make a determination with respect to the “scientific equivalency” of the foreign and domestic instruments, the applicant’s intended purposes must include either scientific research or science-related educational programs. Instruments used exclusively for nonscientific purposes have no scientific value, thereby precluding the requisite finding by the Director with respect to “whether an instrument or apparatus of equivalent scientific value to such article, for the purposes for which the article is intended to be used, is being manufactured in the United States.” In such cases the Director shall deny the application for the reason that the instrument has no scientific value for the purposes for which it is intended to be used. Examples of nonscientific purposes would be the use of an instrument in routine diagnosis or patient care and therapy (as opposed to clinical research); in teaching a nonscientific trade (e.g., printing, shoemaking, metalworking or other types of vocational training); in teaching nonscientific courses (e.g., music, home economics, journalism, drama); in presenting a variety of subjects or merely for presenting coursework, whether or not science related (e.g., video tape editors, tape recorders, projectors); and in conveying cultural information to the public (e.g., a planetarium in the Smithsonian Institution).


(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 § 301.5(d)(2)). In determining whether the difference in delivery times cited by the applicant justifies duty-free entry on the basis of excessive delivery time, the Director shall take into account (A) the normal commercial practice applicable to the production of the general category of instrument involved; (B) the efforts made by the applicant to secure delivery of the instruments (both foreign and domestic) in the shortest possible time; and (C) such other factors as the Director finds relevant under the circumstances of a particular case.


(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 § 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 § 301.5(g).)


(7) Information provided in a resubmission that, in the judgment of the Director, contradicts or conflicts with information provided in a prior submission, or is not a reasonable extension of the information contained in the prior submission, shall not be considered in making the decision on an application that has been resubmitted. Accordingly, an applicant may elect to reinforce an orginal submission by elaborating in the resubmission on the description of the purposes contained in a prior submission and may supply additional examples, documentation and/or other clarifying detail, but the applicant shall not introduce new purposes or other material changes in the nature of the original application. The resubmission should address the specific deficiencies cited in the DWOP. The Director may draw appropriate inferences 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 § 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]


§ 301.6 Appeals.

(a) An appeal from a final decision made by the Director under § 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]


§ 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 § 301.6 of these regulations, of if such appeal has been taken, when final judgment is made and entered by the Court.


(b) The Director shall notify the CBP Port when disposition of an application becomes final. If the Director has not been advised of the port of entry of the instrument, or if entry has not been made when the decision on the application becomes final, the Director shall notify the Commissioner of final disposition of the application.


(c) An instrument, the duty-free entry of which has been finally denied, may not be the subject of a new application from the same institution.


[47 FR 32517, July 28, 1982, as amended at 66 FR 28834, May 25, 2001; 74 FR 30463, June 26, 2009]


§ 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 § 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 § 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.


(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]


§ 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]


§ 301.10 Importation of repair components and maintenance tools under HTSUS subheadings 9810.00.65 and 9810.00.67 for instruments previously the subject of an entry liquidated under subheading 9810.00.60, HTSUS.

(a) An institution owning an instrument that was the subject of an entry liquidated duty-free under subheading 9810.00.60, HTSUS, that wishes to enter repair components or maintenance tools for that instrument may do so without regard to the application procedures required for entry under subheading 9810.00.60, HTSUS. The institution must certify to Customs and Border Protection officials at the port of entry that such components are repair components for that instrument under subheading 9810.00.65, HTSUS, or that the tools are maintenance tools necessary for the repair, checking, gauging or maintenance of that instrument under subheading 9810.00.67, HTSUS.


(b) Instruments entered under subheading 9810.00.60, HTSUS, and subsequently returned to the foreign manufacturer for repair, replacement or modification are not covered by subheading 9810.00.65 or 9810.00.67, HTSUS, although they may, upon return to the United States, be eligible for a reduced duty payment under subheading 9802.00.40 or 9802.00.50, HTSUS (covering articles exported for repairs or alterations) or may be made the subject of a new application under subheading 9810.00.60, HTSUS.


[66 FR 28834, May 25, 2001, as amended at 74 FR 30463, June 26, 2009]


PART 302 [RESERVED]

PART 303 – WATCHES, WATCH MOVEMENTS AND JEWELRY PROGRAM


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

§ 303.1 Purpose.

(a) This part implements the responsibilities of the Secretaries of Commerce and the Interior (“the Secretaries”) under Pub. L. 97-446, enacted on 12 January 1983, which substantially amended Pub. L. 89-805, enacted 10 November 1966, amended by Pub. L. 94-88, enacted 8 August 1975, and amended by Pub. L. 94-241, enacted 24 March 1976, amended by Public Law 103-465, enacted 8 December 1994 and amended by Public Law 108-429 enacted 3 December 2004. The law provides for exemption from duty of territorial watches and watch movements without regard to the value of the foreign materials they contain, if they conform with the provisions of U.S. Legal Note 5 to Chapter 91 of the Harmonized Tariff Schedule of the United States (“91/5”). 91/5 denies this benefit to articles containing any material which is the product of any country with respect to which Column 2 rates of duty apply; authorizes the Secretaries to establish the total quantity of such articles, provided that the quantity so established does not exceed 10,000,000 units or one-ninth of apparent domestic consumption, whichever is greater, and provided also that the quantity is not decreased by more than ten percent nor increased by more than twenty percent (or to more than 7,000,000 units, whichever is greater) of the quantity established in the previous year.


(b) The law directs the International Trade Commission to determine apparent domestic consumption for the preceding calendar year in the first year U.S. insular imports of watches and watch movements exceed 9,000,000 units. 91/5 authorizes the Secretaries to establish territorial shares of the overall duty-exemption within specified limits; and provides for the annual allocation of the duty-exemption among insular watch producers equitably and on the basis of allocation criteria, including minimum assembly requirements, that will reasonably maximize the net amount of direct economic benefits to the insular possessions.


(c) The amended law also provides for the issuance to producers of certificates entitling the holder (or any transferee) to obtain duty refunds on any article imported into the customs territory of the United States duty paid except for any article containing a material which is the product of a country to which column 2 rates of duty apply. The amounts of these certificates may not exceed specified percentages of the producers’ verified creditable wages in the insular possessions (90% of wages paid for the production of the first 300,000 units and declining percentages, established by the Secretaries, of wages paid for incremental production up to 750,000 units by each producer) nor an aggregate annual amount for all certificates exceeding $5,000,000 adjusted for growth by the ratio of the previous year’s gross national product to the gross national product in 1982. Refund requests are governed by regulations issued by the Department of Homeland Security. The Secretaries are authorized to issue regulations necessary to carry out their duties under additional U.S. note 5 to 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]


§ 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:


(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 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 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-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 § 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]


§ 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]


§ 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 § 303.3, above).


(b) Standards for determination – (1) Limitations. A territorial share may not be reduced by more than 500,000 units in any calendar year. No territorial share shall be less than 500,000 units.


(2) Criteria for setting precise quantities. The Secretaries shall determine the precise quantities after considering, inter alia, the territorial capacity to produce and ship watch units. The Secretaries shall further bear in mind the aggregate benefits to the territories, such as creditable wages paid, creditable wages per unit exported, and corporate income tax payments.


(3) Limitations on reduction of share. The Secretaries shall not reduce a territory’s share if its producers use 85% or more of the quantity distributed to that territory in the immediately preceding year, except in the case of a 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]


§ 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 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]


§ 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 § 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:


(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 § 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]


§ 303.7 Issuance of licenses and shipment permits.

(a) Issuance of Licenses (ITA-333). (1) Concurrently with annual allocations under § 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 § 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 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]


§ 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 § 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]


§ 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 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]


§§ 303.10-303.11 [Reserved]

§ 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 § 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 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 § 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 § 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]


§ 303.13 Appeals.

(a) Any official decision or action relating to the allocation of duty-exemptions or to the issuance or use of production incentive certificates may be appealed to the Secretaries by any interested party. Such appeals must be received within 30 days of the date on which the decision was made or the action taken in accordance with the procedures set forth in paragraph (b) of this section. Interested parties may petition for the issuance of a rule, or amendment or repeal of a rule issued by the Secretaries. Interested parties may also petition for relief from the application of any rule on the basis of hardship or extraordinary circumstances resulting in the inability of the petitioner to comply with the rule.


(b) Petitions shall bear the name and address of the petitioner and the name and address of the principal attorney or authorized representative (if any) for the party concerned. They shall be addressed to the Secretaries and filed in one original and two copies with the U.S. Department of Commerce, 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]


§ 303.14 Allocation factors, duty refund calculations and miscellaneous provisions.

(a) The allocation formula. (1) Except as provided in (a)(2) of this section, the territorial shares (excluding any amount set aside for possible new entrants) shall be allocated among the several producers in each territory in accordance with the following formula:


(i) Fifty percent of the territorial share shall be allocated on the basis of the net dollar amount of economic contributions to the territory consisting of the dollar amount of creditable wages, up to an amount equal to 65% of the contribution and benefit base for Social Security as defined in the Social Security Act for the year in which the wages were earned, paid by each producer to territorial residents, plus the dollar amount of income taxes (excluding penalty and interest payments and deducting any income tax refunds and subsidies paid by the territorial government), and


(ii) Fifty percent of the territorial share shall be allocated on the basis of the number of units of watches and watch movements assembled in the territory and entered by each producer duty-free into the customs territory of the United States.


(2) If there is only one producer in a territory, the entire territorial share, excluding any amount set aside for possible new entrants, may be allocated without recourse to any distributive formula.


(b) Minimum assembly requirements and prohibition of preferential supply relationship. (1) No insular watch movement or watch may be entered free of duty into the customs territory of the United States unless the producer used 30 or more discrete parts and components to assemble a mechanical watch movement and 33 or more discrete parts and components to assemble a mechanical watch.


(2) Quartz analog watch movements must be assembled from parts knocked down to the maximum degree possible for the technical capabilities of the insular industry as a whole. The greatest degree of disassembly specified, for each manufacturer’s brand and model, by any producer in any territory purchasing such brands and models shall constitute the disassembly required as a minimum for the industry as a whole.


(3) Watch movements and watches assembled from components with a value of more than $300 for watch movements and $3000 for watches shall not be eligible for duty-exemption upon entry into the U.S. Customs territory. Value means the value of the merchandise plus all charges and costs incurred up to the last point of shipment (i.e., prior to entry of the parts and components into the territory).


(4) No producer shall accept from any watch parts and components supplier advantages and preferences which 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 § 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 § 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.

§ 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 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]


§ 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).


(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 § 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 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 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]


§ 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 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]


§ 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.


§ 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 § 303.20(b). The Departments require the receipt of the data by July 31 for each producer who wishes to receive an interim duty refund certificate. The interim duty refund certificate will be issued on or before August 31 of the same year in which the wages were earned unless the Departments have unresolved questions. The process of determining the total annual amount of the duty refund will be based on verified creditable wages, duty-free shipments into the customs territory of the United States, creditable health insurance, life insurance and pension benefits and the duty differential, if watch tariffs have been reduced during the calendar year. The 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 § 303.16(b)(3)) and the instruction on the form). After authentication by the Department of Commerce, Form ITA-361P may be used to obtain duty refunds on article that entered the customs territory of the United States duty paid. Duties on an article which is the product of a country with respect to column 2 rates of duty apply may not be refunded Articles for which duty refunds are claimed must have entered the customs territory of the United States during the two-year period prior to the issue date of the certificate or during the one-year period the certificate remains valid. Copies of the appropriate Customs entries must be provided with the refund request in order to establish a basis for issuing the claimed amounts. Certification regarding drawback claims and liquidated refunds relating to the presented entries is required from the claimant on the form.


(2) Regulations issued by the Bureau of Customs and Border Protection, U.S. Department of Homeland Security, govern the refund of duties under 19 CFR 7.4. If the Departments receive information from the Bureau of Customs and Border Protection that a producer has made unauthorized use of any official form, they may cancel the affected certificate.


(3) The territorial producer may transfer a portion of all of its certificate entitlement to another party by entering in block C of Form ITA-361P the name and address of the party.


(4) After a Form ITA-361P transferring a certificate entitlement to a party other than the certificate holder has been authenticated by the Department of Commerce, the form may be exchanged for any consideration satisfactory to the two parties. In all cases, authenticated forms shall be transmitted to the certificate holder or its authorized custodian for disposition (see paragraph (b) of this section).


(5) All disputes concerning the use of an authenticated Form ITA-361P shall be referred to the Departments for resolution. Any party named on an authenticated Form ITA-361P shall be considered an “interested party” within the meaning of § 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]


§ 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]


§ 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;


(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


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.

§ 310.1 Background and purpose.

The regulations in this part are issued under the authority of Pub. L. 91-269 (84 Stat. 271, 22 U.S.C. 2801 et seq.) which establishes an orderly procedure for Federal Government recognition of, and participation in, international expositions to be held in the United States. The Act provides, inter alia, that Federal recognition of an exposition is to be granted upon a finding by the President that such recognition will be in the national interest. In making this finding, the President is directed to consider, among other factors, a report from the Secretary of Commerce as to the purposes and reasons for an exposition and the extent of financial and other support to be provided by the State and local officials and business and community leaders where the exposition is to be held, and a report by the Secretary of State to determine whether the exposition is qualified for registration under Bureau of International Expositions (BIE) rules. The BIE is an international organization established by the Paris Convention of 1928 (T.I.A.S. 6548 as amended by T.I.A.S. 6549) to regulate the conduct and scheduling of international expositions in which foreign nations are officially invited to participate. The BIE divides international expositions into different categories and types and requires each member nation to observe specified minimum time intervals in scheduling each of these categories and types of expositions.
1
Under BIE rules, member nations may not ordinarily participate in an international exposition unless such exposition has been approved by the BIE. The United States became a member of the BIE on April 30, 1968, upon ratification of the Paris Convention by the U.S. Senate (114 Cong. Rec. 11012).




1 The BIE defines a General Exposition of the First Category as an exposition dealing with progress achieved in a particular field applying to several branches of human activity at which the invited countries are obligated to construct national pavilions. A General Exposition of the Secondary Category is a similar exposition at which invited countries are not authorized to construct national pavilions, but occupy space provided by the exposition sponsors. Special Category Expositions are those dealing only with one particular technique, raw material, or basic need.


The BIE frequency rules require that an interval of 15 years must elapse between General Expositions of the First Category held in one country. General Expositions of the Second Category require an interval of 10 years. An interval of 5 years must ordinarily elapse between Special Category Expositions of the same kind in one country or three months between Special Category Expositions of different kinds. These frequency intervals are computed from the date of the opening of the exposition.


More detailed BIE classification criteria and regulations are contained in the Paris Convention of 1928, as amended in 1948 and 1966. Applicants not having a copy of the text of this convention may obtain one by writing the Director. (The Convention may soon be amended by a Protocol which has been approved by the BIE and ratified by the United States. This amendment would increase authorized frequencies or intervals for BIE approved expositions.)


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.


§ 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]


§ 310.3 Applications for Federal recognition.

(a) Applications for Federal recognition of an exposition shall be filed with, and all official communications in connection therewith addressed to, the International Expositions Staff, International Trade Administration, Department of Commerce, Washington, DC 20230.


(b) Every application, exhibit, or enclosure, except where specifically waived by the Director, shall be in quadruplicate, duly authenticated and referenced.


(c) Every application shall be in letter form and shall contain the date, address, and official designation of the applicant and shall be signed by an authorized officer or individual.


(d) Every application, except where specifically waived by the Director, shall be accompanied by the following exhibits:



1. Exhibit No. 1. A study setting forth in detail the purpose for the exposition, including any historical, geographic, or other significant event of the host city, State, or region related to the exposition.


2. Exhibit No. 2. An exposition plan setting forth in detail (i) the theme of the exposition and the “storyline” around which the entire exposition is to be developed; (ii) whatever preliminary architectural and design plans are available on the physical layout of the site plus existing and projected structures; (iii) the type of participation proposed in the exposition (e.g., foreign and domestic exhibits); (iv) cultural, sports, and special events planned; (v) the proposed BIE category of the event and evidence of its conformity to the regulations of the BIE (a copy of these regulations can be obtained from the Director upon request); (vi) the proposed steps that will be taken to protect foreign exhibitors under the BIE model rules and regulations and (vii) in writing commit its organization to the completion of the exposition.


3. Exhibit No. 3. Documentary evidence of State, regional and local support (e.g., letters to the applicant from business and civic leadership of the region, pledging assistance and/or financing; State and/or municipal resolutions, acts, or appropriations; referendums on bond issues, and others).


4. Exhibit No. 4. An organization chart of the exposition management structure (actual or proposed) of the applicant, including description of the functions, duties and responsibilities of each official position along with bibliographic material, including any professional experience in the fields of architecture, industrial design, engineering, labor relations, concession management, interpretative theme planning, exhibit development, etc., on principal officers, if available. (The principal officials should also be prepared to submit subsequent individual statements under oath of their respective financial holdings and other interests.)


5. Exhibit No. 5. A statement setting forth in detail (i) the availability of visitor services in existence or projected to accommodate tourists at the exposition (e.g., number of hotel and motel units, number and type of restaurants, health facilities, etc.); (ii) evidence of adequate transportation facilities and accessibility of the host city to large groups of national and international visitors (e.g., number and schedule of airlines, bus lines, railroads, and truck lines serving the host city); and (iii) plans to promote the exposition as a major national and international tourist destination.


6. Exhibit No. 6. A statement setting forth in detail the applicant’s plans for acquiring title to, or the right to occupy and use real property, other than that owned by the applicant or by the United States, essential for implementing the project or projects covered by the application. If the applicant, at the time of filing the application, has acquired title to the real property, he should submit a certified copy of the deed(s). If the applicant, at the time of filing the application, has by easement, lease, franchise, or otherwise acquired the right to occupy and use real property owned by others, he should submit a certified copy of the appropriate legal instrument(s) evidencing this right.


7. Exhibit No. 7. A statement of the latest prevailing hourly wage rates for construction workers in the host city (e.g., carpenters, cement masons, sheet metal workers, etc.).


8. Exhibit No. 8. Information on attitudes of labor leaders as to “no strike” agreements during the development and operation of the exposition. Actual “no strike” pledges are desirable.


9. Exhibit No. 9. A detailed study conducted and certified by a nationally recognized firm(s) in the field of economics, accounting, management, etc., setting forth (i) proposed capital investment cost; cash flow projections; and sources of financing available to meet these costs, including but not limited to funds from State and municipal financing, general obligation and/or general revenue bond issues, and other public or private sources of front-end capital; (ii) assurances that the “guaranteed financing” is or will be available in accordance with Section 2(a)(1)(b) of Pub. L. 91-269; (iii) the projected expenses for managing the exposition; (iv) projected operational revenues broken down to include admissions, space rental, concessions, service fees and miscellaneous income; and (v) cost-benefit projections. These should be accompanied by a statement of the firm that the needed cash flow, sources of funding, and revenue projections are realistic and attainable.


10. Exhibit No. 10. A description of the exposition implementation time schedule and the management control system to be utilized to implement the time schedule (e.g., PERT, CPM, etc.).


11. Exhibit No. 11. A statement setting forth in detail the public relations, publicity and other promotional plans of the applicant. For example, the statement could include: (i) an outline of the public relations/publicity program broken down by percentage allocations among the various media; (ii) a public relations/publicity program budget with the various calendar target dates for completion of phases prior to the opening, the opening and post-opening of the exposition; and (iii) protocol plans for U.S. and foreign dignitaries, as well as for special ceremonies and events and how these plans are to be financed.


12. Exhibit No. 12. A study setting forth in detail the benefits to be derived from the exposition and residual use plans. For example, the study might include: (i) extent of immediate economic benefits for the city/region/nation in proportion to total investment in the exposition; (ii) extent of long range economic benefits for the city/region/nation in proportion to total investment in the exposition; and (iii) extent of intangible (social, psychological, “good will”) benefits accruing to the city/region/nation including the solution or amelioration of any national/local problems.


13. Exhibit No. 13. A statement committing the applicant to develop and complete an environmental impact statement which complies with section 102(2)(c) of the National Environmental Policy Act of 1969 (83 Stat. 852; 42 U.S.C. 4331). Sample copies of environmental impact statements may be obtained from the Director. Prior to the Director’s submitting a report to the Secretary containing his findings on the application for Federal recognition pursuant to § 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]


§ 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 § 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 § 310.3.


(2) The financial plans of the applications. Primary consideration will be given to those applications which do not require Federal financing for exposition development. This does not extend to funding for a Federal pavilion, if one is desired.


(3) The relative merit of the applications in terms of their qualifications as tourism destination sites, both with respect to existing facilities and those facilities planned for the proposed exposition. If necessary, to assist in making this determination, the Director will appoint a panel of travel industry experts representing tour developers, the transportation, entertainment and hotel/motel industries for the purpose of studying the competing applications and reporting to the Director its views as to which proposed site best meets the above criteria. If such a panel is deemed necessary, the provisions of the Federal Advisory Committee Act (86 Stat. 770, 5 U.S.C. App. I) will be applicable.


(c) In analyzing the applications, the Director may hold public hearings with the objective of clarifying issues that might be raised by the application. If desired, the Director may utilize the services of an examiner.


(d) If the Director, in his discretion, decides to hold a public hearing, notice of such hearing shall be published in the Federal Register, and a copy of the notice shall be furnished to local newspapers. The notice shall state the subject to be considered and when and where the hearing will be held, specifically designating the date, hour, and place.


(e) The following general procedure shall govern the conduct of public hearings: (1) Stenographic minutes of the proceedings shall be made; (2) the names and addresses of all parties present or represented at the hearing shall be recorded; and (3) the Director or Examiner shall read aloud for the record and for the benefit of the public such parts of the Act and of these regulations as bear on the application. He shall also read aloud for the record and for the benefit of the public such other important papers, or extracts therefrom, as may be necessary for a full understanding of the issues which require clarification. The Director or Examiner shall impress upon the parties in attendance at the public hearing, and shall specifically state at the commencement of the hearing, that the hearing is not adversary in nature and that the sole objective thereof is to clarify issues that might have been raised by the application.


(f) Statements of interested parties may be presented orally at the hearing, or submitted in writing for the record.


(g) Within six months after receipt of a fully completed application and/or the adjournment of the public hearing, the Director shall submit his report containing his findings on the application to the Secretary.


§ 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.


§ 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.


§ 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.”


§ 310.8 Proposed plan for Federal participation.

(a) Upon receipt of the statement, and the exhibits referred to in § 310.7, the Director shall prepare a proposed plan in cooperation with other interested departments and agencies of the Federal Government for Federal participation in the exposition.


(b) In preparing the proposed plan for Federal participation in the exposition, the Director shall conduct a feasibility study of Federal participation including cost estimates by utilizing the services within the Federal Government, professional consultants and private sources as required and in accordance with applicable laws and regulations.


(c) The Director, in the proposed plan for Federal participation in the exposition, shall determine whether or not a Federal pavilion should be constructed and, if so, whether or not the Government would have need for a permanent structure in the area of the exposition or whether a temporary structure would be more appropriate.


(d) The Director shall seek the advice of the Administrator of the General Services Administration to the extent necessary in carrying out the proposed plan for Federal participation in the exposition.


(e) Upon completion of the proposed plan for Federal participation in the exposition, the Director shall submit the plan to the Secretary.


§ 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 § 310.8.


PART 315 [RESERVED]

PART 325 – EXPORT TRADE CERTIFICATES OF REVIEW


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.

§ 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.


§ 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.


§ 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 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 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.


§ 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.


§ 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 § 325.3(f) of the time period for making a determination). If the Secretary or the Attorney General considers it necessary, and the applicant agrees, the Secretary may take up to an additional thirty days to determine whether to issue a certificate.


(b) Determination. The Secretary shall issue a certificate to the applicant if he determines, and the Attorney General concurs, that the proposed export trade, export trade activities and methods of operation will –


(1) Result in neither a substantial lessening of competition or restraint of trade within the United States nor a substantial restraint of the export trade of any competitor of the applicant;


(2) Not unreasonably enhance, stabilize, or depress prices within the United States of the class of the goods, wares, merchandise or services exported by the applicant;


(3) Not constitute unfair methods of competition against competitors who are engaged in the export of goods, wares, merchandise or services of the class exported by the applicant; and


(4) Not include any act that may reasonably be expected to result in the sale for consumption or resale within the United States of the goods, wares, merchandise, or services exported by the applicant.


(c) Concurrence of the Attorney General. (1) Not later than seven days after an application is deemed submitted, the Secretary shall deliver to the Attorney General a copy of the application, any information submitted in connection with the application, and any other relevant information in his possession. The Secretary and the Attorney General shall make available to each other copies of other relevant information that was obtained in connection with the application, unless otherwise prohibited by law.


(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.


§ 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.


§ 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 § 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.


§ 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 § 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.


§ 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.


§ 325.10 Modifying or revoking a certificate.

(a) Action subject to modification or revocation. The Secretary shall revoke a certificate, in whole or in part, or modify it, as the Secretary or the Attorney General considers necessary, if:


(1) The export conduct of a person or entity protected by the certificate no longer complies with the requirements set forth in § 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 § 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 § 325.4(b), the Secretary shall revoke or modify the certificate as appropriate. If the Secretary or the Attorney General determines that the certificate holder has failed to comply with the request for information under paragraph (b) of this section, or has failed to file a complete annual report, and that the failure to comply or file should result in revocation of modification, the Secretary shall revoke or modify the certificate as appropriate. The determination will be final and will be issued to the certificate holder in writing. The notice to the certificate holder shall include a statement of the circumstances underlying and the reasons in support of the determination. If the Secretary determines to revoke or modify the certificate, the decision shall specify the effective date of the revocation or modification; this date must be at least thirty days but not more than ninety days after the Secretary notifies the certificate holder of his determination. The Secretary shall publish notice in the Federal Register of a revocation or modification or a decision not to revoke or modify.


(d) Investigative information. In proceedings under this section, the Attorney General shall make available to the Secretary any information that has 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.


§ 325.11 Judicial review.

(a) Review of certain determinations. (1) Any person aggrieved by a final determination of the Secretary under § 325.5, § 325.7, § 325.9, or § 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.


§ 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.


§ 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.


§ 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.


§ 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.


§ 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).


(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.


§ 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.


PARTS 326-399 [RESERVED]

CHAPTER IV – FOREIGN-TRADE ZONES BOARD, DEPARTMENT OF COMMERCE

PART 400 – REGULATIONS OF THE FOREIGN-TRADE ZONES BOARD


Authority:Foreign-Trade Zones Act of June 18, 1934, as amended (Pub. L. 73-397, 48 Stat. 998-1003 (19 U.S.C. 81a-81u)).


Source:77 FR 12139, Feb. 28, 2012, unless otherwise noted.


Editorial Note:Nomenclature changes to part 400 appear at 78 FR 69289, Nov. 19, 2013.

Subpart A – Scope, Definitions and Authority

§ 400.1 Scope.

(a) This part sets forth the regulations, including the rules of practice and procedure, of the Foreign-Trade Zones Board with regard to foreign-trade zones (FTZs or zones) in the United States pursuant to the Foreign-Trade Zones Act of 1934, as amended (19 U.S.C. 81a-81u). It includes the substantive and procedural rules for the authorization of zones and for the Board’s regulation of zone activity. The purpose of zones as stated in the Act is to “expedite and encourage foreign commerce, and other purposes.” The regulations provide the legal framework for accomplishing this purpose in the context of evolving U.S. economic and trade policy, and economic factors relating to international competition.


(b) Part 146 of the customs regulations (19 CFR part 146) governs zone operations, including the admission of merchandise into zones, zone activity involving such merchandise, and the transfer of merchandise from zones.


(c) To the extent zones are “activated” under U.S. Customs and Border Protection (CBP) procedures in 19 CFR part 146, and only for the purposes specified in the Act (19 U.S.C. 81c), zones are treated for purposes of the tariff laws and customs entry procedures as being outside the customs territory of the United States. Under zone procedures, foreign and domestic merchandise may be admitted into zones for operations such as storage, exhibition, assembly, manufacture and processing, without being subject to formal customs entry procedures and payment of duties, unless and until the foreign merchandise enters customs territory for domestic consumption. At that time, the importer ordinarily has a choice of paying duties either at the rate applicable to the foreign material in its condition as admitted into a zone, or if used in production activity, to the emerging product. Quota restrictions do not normally apply to foreign goods in zones. The Board can deny or limit the use of zone procedures in specific cases on public interest grounds. Merchandise moved into zones for export (zone-restricted status) may be considered exported for purposes such as federal excise tax rebates and customs drawback. Foreign merchandise (tangible personal property) admitted to a zone and domestic merchandise held in a zone for exportation are exempt from certain state and local ad valorem 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.


§ 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 § 400.11(b)(2)) to a CBP port of entry, operated as a public utility (within the meaning of § 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 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.


§ 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;


(9) Restrict or prohibit zone operations;


(10) Terminate reviews of applications under certain circumstances pursuant to § 400.36(g);


(11) Authorize under certain circumstances the entry of “zone-restricted merchandise” (19 CFR 146.44) into the customs territory pursuant to § 400.48;


(12) Impose fines for violations of the Act and this part;


(13) Instruct CBP to suspend activated status pursuant to § 400.62(h);


(14) Revoke grants of authority for cause;


(15) Determine, as appropriate, whether zone activity is or would be in the public interest or detrimental to the public interest, health or safety; and


(16) Issue and discontinue waivers pursuant to § 400.43(f).


(b) Authority of the Chairman of the Board. 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 § 400.36(g);


(2) Mitigate and assess fines pursuant to §§ 400.62(e) and (f) and instruct CBP to suspend activated status pursuant to § 400.62(h); and


(3) Restrict the use of zone procedures under certain circumstances pursuant to § 400.49(c).


(e) Determinations of the Board. Determinations of the Board shall be by the unanimous vote of the members (or alternate members) of the Board, which shall be recorded.


§ 400.4 Authority and responsibilities of the Executive Secretary.

The Executive Secretary has the following responsibilities and authority:


(a) Represent the Board in administrative, regulatory, operational, and public affairs matters;


(b) Serve as director of the Commerce Department’s Foreign-Trade Zones staff;


(c) Execute and implement orders of the Board;


(d) Arrange meetings and direct circulation of action documents for the Board;


(e) Arrange with other sections of the Department of Commerce and other governmental agencies for studies and comments on zone issues and proposals;


(f) Maintain custody of the seal, records, files and correspondence of the Board, with disposition subject to the regulations of the Department of Commerce;


(g) Issue notices on zone matters for publication in the Federal Register;


(h) Direct processing of applications and reviews, including designation of examiners and scheduling of hearings, under various sections of this part;


(i) Make determinations on questions pertaining to grantees’ applications for subzones as provided in § 400.12(d);


(j) Make recommendations in cases involving questions as to whether zone activity should be prohibited or restricted for public interest reasons, including proceedings and reviews under § 400.5;


(k) Determine questions of scope under § 400.14(d);


(l) Determine whether additional information is needed for evaluation of applications and other requests for decisions under this part, as provided for in various sections of this part, including §§ 400.21-400.25;


(m) Issue instructions, guidelines, forms and related documents specifying time, place, manner and formats for applications and notifications in various sections of this part, including §§ 400.21(b) and 400.43(f);


(n) Determine whether proposed modifications are major modifications or minor modifications under § 400.24(a)(2);


(o) Determine whether applications meet pre-docketing requirements under § 400.31(b);


(p) Terminate reviews of applications under certain circumstances pursuant to § 400.36(g);


(q) Authorize minor modifications to zones under § 400.38, commencement of production activity under § 400.37(d) and subzone designation under § 400.36(f);


(r) Review notifications for production authority under § 400.37;


(s) Direct monitoring and reviews of zone operations and activity under § 400.49;


(t) Review rate schedules and determine their sufficiency under § 400.44(c);


(u) Assess potential issues and make recommendations pertaining to uniform treatment under § 400.43 and review and decide complaint cases under § 400.45;


(v) Make certain determinations and authorizations pertaining to retail trade under § 400.47;


(w) Authorize under certain circumstances the entry of “zone-restricted merchandise” into the customs territory under § 400.48;


(x) Determine the format and deadlines for the annual reports of zone grantees to the Board and direct preparation of an annual report from the Board to Congress under § 400.51(c);


(y) Make recommendations and certain determinations regarding violations and fines, and undertake certain procedures related to the suspension of activated status, as provided in § 400.62; and


(z) Designate an acting Executive Secretary.


§ 400.5 Authority to restrict or prohibit certain zone operations.

The Board may conduct a proceeding, or the Executive Secretary a review, to consider a restriction or prohibition on zone activity. Such proceeding or review may be either self-initiated or in response to a complaint made to the Board by a person directly affected by the activity in question and showing good cause. After a proceeding or review, the Board may restrict or prohibit any admission of merchandise or process of treatment in an activated FTZ site when it determines that such activity is detrimental to the public interest, health or safety.


§ 400.6 Board headquarters.

The headquarters of the Board are located within the U.S. Department of Commerce (Herbert C. Hoover Building), 1401 Constitution Avenue NW., Washington, DC 20230, within the office of the Foreign-Trade Zones staff.


§ 400.7 CBP officials as Board representatives.

CBP officials with oversight responsibilities for a port of entry represent the Board with regard to the zones adjacent to the port of entry in question and are responsible for enforcement, including physical security and access requirements, as provided in 19 CFR part 146.


Subpart B – Ability To Establish Zone; Limitations and Restrictions on Authority Granted

§ 400.11 Number and location of zones and subzones.

(a) Number of zones – port of entry entitlement. (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:


(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.


§ 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 § 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 § 400.63 regarding appeals of decisions of the Executive Secretary).


§ 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.


(2) A grant of authority approved under this part includes authority for the grantee to permit the erection of buildings necessary to carry out the approved zone (subject to concurrence of CBP for an activated area of a zone).


(3) Approvals from the grantee (or other party acting on behalf of the grantee, where applicable) and CBP, pursuant to 19 CFR part 146, are required prior to the activation of any portion of an approved zone.


(4) Authority for a zone or a subzone shall lapse unless the zone (in case of subzones, the subzone facility) is activated, pursuant to 19 CFR part 146, and in operation not later than five years from the authorization of the zone or subzone, subject to the provisions of Board Order 849 (61 FR 53305, October 11, 1996).


(5) Zone grantees, operators, and users (and persons undertaking zone-related functions on behalf of grantees, where applicable) shall permit federal government officials acting in an official capacity to have access to the zone and records during normal business hours and under other reasonable circumstances.


(6) Activity involving production is subject to the specific provisions in § 400.14.


(7) A grant of authority may not be sold, conveyed, transferred, set over, or assigned (FTZ Act, section 17; 19 U.S.C. 81q).


(8) Private ownership of zone land and facilities is permitted, provided the zone grantee retains the control necessary to implement the approved zone. Such permission shall not constitute a vested right to zone designation, nor interfere with the Board’s regulation of the grantee or the permittee, nor interfere with or complicate the revocation of the grant by the Board. 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 § 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 § 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.


§ 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 §§ 400.22 and 400.37 shall be used. If Board review of a notification under § 400.37 results in a determination that further review is warranted for all or part of the notified activity, the application process pursuant to §§ 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 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 §§ 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.


§ 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 § 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 § 400.14(a)), provided the equipment is entered for consumption or exported prior to its use.


§ 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

§ 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 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 § 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 §§ 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 which the goals are based and how they relate to the zone project;


(ii) An economic profile of the community including discussion of:


(A) Dominant sectors in terms of employment or income;


(B) Area strengths and weaknesses;


(C) Unemployment rates; and


(D) Area foreign trade statistics;


(iii) A statement as to the role and objective of the zone project and a discussion of the anticipated economic impact, direct and indirect, of the zone project, including references to public costs and benefits, employment, and U.S. international trade;


(iv) A separate justification for each proposed site, including a specific explanation addressing the degree to which the site may duplicate types of facilities at other proposed or existing sites in the zone;


(v) A statement as to the need for zone services in the community, with specific expressions of interest from proposed zone users and letters of intent from those firms that are considered prime prospects for each specific proposed site; and


(vi) For any production activity to be conducted at a proposed site, the separate requirements of § 400.14(a) must also be met.


(5) Maps and site plans shall include the following documents:


(i) State and county maps showing the general location of the proposed site(s) in terms of the area’s transportation network;


(ii) For any proposed site, a legible, detailed site plan of the zone area showing zone boundaries in red, with street name(s), and showing existing and proposed structures; and


(iii) For proposals involving a change in existing zones, one or more maps showing the relationship between existing zone sites and the proposed changes.


(e) ASF applications. 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 § 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 ″ × 11″ (216 × 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, § 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.

§ 400.22 Notification for production authority.

Notifications requesting production authority pursuant to § 400.14(a) shall comply with any instructions, guidelines, and forms or related documents, published in the Federal Register 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;


(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, § 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.

§ 400.23 Application for production authority.

In addition to any applicable requirements set forth in § 400.21, an application requesting production authority pursuant to § 400.37(c) shall include:


(a) A summary as to the reasons for the application and an explanation of its anticipated economic effects;


(b) Identity of the user and its corporate affiliation;


(c) A description of the proposed activity, including:


(1) Finished products;


(2) Imported (foreign-status) materials and components;


(3) For each finished product and imported material or component, the tariff schedule category (6-digit HTSUS), tariff rate, and whether the material or component is subject to a trade-related measure or proceeding (e.g., AD/CVD order or proceeding, suspension of liquidation under AD/CVD procedures);


(4) Domestic inputs, foreign inputs, and plant value added as percentages of finished product value;


(5) Projected shipments to domestic market and export market (percentages);


(6) Estimated total or range of annual value of benefits to proposed user (broken down by category), including as a percent of finished product value;


(7) Annual production capacity (current and planned) for the proposed FTZ activity, in units;


(8) Information to assist the Board in making a determination under § 400.27(a)(3) and 400.27(b);


(9) Information as to whether alternative procedures have been considered as a means of obtaining the benefits sought;


(10) Information on the industry involved and extent of international competition; and


(11) Economic impact of the operation on the area; and


(d) Any additional information requested by the Board or the Executive Secretary in order to conduct the review.



Effective Date Note:At 77 FR 12139, Feb. 28, 2012, § 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.

§ 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 § 400.21, except that the content submitted pursuant to § 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 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 § 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 § 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 §§ 400.31-400.34 and 400.36 shall be followed, where relevant. If not, the procedure set forth in § 400.38 shall generally apply (although the Executive Secretary may elect to follow the procedures of §§ 400.31-400.34 and 400.36 when warranted).


§ 400.25 Application for subzone designation.

In addition to the requirements of §§ 400.21(d)(1)(i) and (ii) pertaining to legal authority, § 400.21(d)(2)(vii) pertaining to environmental aspects of the proposal, and § 400.21(d)(3)(i) and (iii) pertaining to operation, a grantee’s application for subzone designation shall contain the following information:


(a) The name of the operator/user for which subzone designation is sought;


(b) The nature of the activity at the proposed subzone;


(c) The address(es) and physical size (acreage or square feet) of the proposed subzone location(s); and


(d) One or more maps conforming to the requirements of section § 400.21(d)(5)(ii). For any production activity to be conducted at a proposed subzone, the separate requirements of § 400.14(a) must be met.



Effective Date Note:At 77 FR 12139, Feb. 28, 2012, § 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.

§ 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 § 400.27.


§ 400.27 Criteria applicable to evaluation of applications for production authority.

The Board shall apply the criteria set forth in this section in determining whether to approve an application for authority to conduct production activity pursuant to § 400.23. The Board’s evaluation shall take into account such factors as market conditions, price sensitivity, degree and nature of foreign competition, intra-industry and intra-firm trade, effect on exports and imports, ability to conduct the proposed activity outside the United States with the same U.S. tariff impact, analyses conducted in connection with prior Board actions, and net effect on U.S. employment and the U.S. economy:


(a) Threshold factors. 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 § 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.


§ 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 § 400.33(e)(1) or § 400.34(a)(5)(iv)(A) should contain evidence that is probative and substantial in addressing the matter at issue.


§ 400.29 Application fees.

(a) In general. This section sets forth a uniform system of charges in the form of fees to recover some costs incurred by the Foreign-Trade Zones staff of the Department of Commerce in processing the applications listed in paragraph (b) of this section. The legal authority for the fees is 31 U.S.C. 9701, which provides for the collection of user fees by agencies of the Federal Government.


(b) Uniform system of user fee charges. The following 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 (§ 400.21; § 400.11(a)(2)) – $3,200


(2) Special-purpose subzones (§ 400.25):


(i) Not involving production activity or involving production activity with fewer than three products – $4,000


(ii) Production activity with three or more products – $6,500


(3) Expansions (§ 400.24(b)) – $1,600


(c) 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 § 400.31(b), or are withdrawn by applicants prior to formal docketing, refunds will be made.


Subpart D – Procedures for Application Evaluation and Reviews

§ 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 §§ 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 § 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 §§ 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.


§ 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 § 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 §§ 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 § 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 § 400.28(c). Submissions must meet the requirements of § 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.


§ 400.33 Examiner’s review – application to establish or modify a zone.

An examiner assigned to review an application to establish, reorganize or expand a zone shall conduct a review taking into account the factors enumerated in § 400.26 and other appropriate sections of this part, which shall include:


(a) Conducting or participating in hearings scheduled by the Executive Secretary;


(b) Reviewing case records, including public comments;


(c) Requesting information and evidence from parties of record;


(d) Developing information and evidence necessary for evaluation and analysis of the application in accordance with the criteria of the Act and this part; and


(e) Developing recommendations to the Board and submitting a report to the Executive Secretary, generally within 150 days of the close of the period for public comment (75 days for reorganizations under the ASF) (see § 400.32):


(1) If the recommendations are unfavorable to the applicant, they shall be considered preliminary and the applicant shall be notified in writing (via electronic means, where appropriate) of the preliminary recommendations and the factors considered in their development. The applicant shall be given 30 days from the date of notification, subject to extensions upon request by the applicant, which shall not be unreasonably withheld, in which to respond to the recommendations and submit additional evidence pertinent to the factors considered in the development of the preliminary recommendations. Public comment may be invited on preliminary recommendations when warranted.


(2) If the response contains new evidence on which there has been no opportunity for public comment, the Executive Secretary shall publish a notice in the Federal Register 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 §§ 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.


§ 400.34 Examiner’s review – application for production authority.

(a) The examiner shall conduct a review taking into account the factors enumerated in this section, § 400.27, and other appropriate sections of this part, which shall include:


(1) Conducting or participating in hearings scheduled by the Executive Secretary;


(2) Reviewing case records, including public comments;


(3) Requesting information and evidence from parties of record and others, as warranted;


(4) Developing information and evidence necessary for analysis of the threshold factors and the economic factors enumerated in § 400.27; and


(5) Conducting an analysis to include:


(i) An evaluation of policy considerations pursuant to §§ 400.27(a)(1) and (2);


(ii) An evaluation of the economic factors enumerated in §§ 400.27(a)(3) and 400.27(b), which shall include an evaluation of the economic impact on domestic industry, considering both producers of like products and producers of components/materials used in the production activity;


(iii) Conducting appropriate industry research and surveys, as necessary; and


(iv) Developing recommendations to the Board and submitting a report to the Executive Secretary, generally within 150 days of the close of the period for public comment (although additional time may be required in circumstances such as when the applicant or other party has obtained a time extension for a particular procedural step):


(A) If the recommendations are unfavorable to the applicant, they shall be considered preliminary and the applicant shall be notified in writing (via electronic transmission where appropriate) of the preliminary recommendations and the factors considered in their development. The applicant shall be given 45 days from the date of notification in which to respond to the recommendations and submit additional evidence pertinent to the factors considered in the development of the preliminary recommendations. Public comment may be invited on preliminary recommendations when warranted.


(B) If the response contains new evidence on which there has not been an opportunity for public comment, the Executive Secretary shall publish notice in the Federal Register 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 §§ 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 (§ 400.27(a)) involves consideration of threshold factors. If an examiner or reviewer makes a negative finding on any of the factors in § 400.27(a) in the course of a review, the applicant shall be informed pursuant to § 400.34(a)(5)(iv)(A). When threshold factors are the basis for a negative recommendation in a review of ongoing activity, the zone grantee and directly affected party shall be notified and given an opportunity to submit evidence pursuant to § 400.34(a)(5)(iv)(A). If the Board determines in the negative regarding any of the factors in § 400.27(a), it shall deny or restrict authority for the proposed or ongoing activity.


(2) The second phase (§ 400.27(b)) involves consideration of the enumerated economic factors, taking into account their relative weight and significance under the circumstances. Previous evaluations in similar cases shall be considered.


§ 400.35 Examiner’s review – application for subzone designation.

The examiner shall develop a memorandum with a recommendation on whether to approve the application, taking into account the criteria enumerated in § 400.26. To develop that memorandum, the examiner shall review the case records including public comments, and may request information and evidence from parties of record, as necessary. The examiner’s memorandum shall generally be submitted to the Board within 30 days of the close of the period for public comment. However, additional time may be taken as necessary for analysis of any public comment in opposition to the application or if other complicating factors arise.


(a) If the examiner’s recommendation is unfavorable to the applicant, it shall be considered preliminary and the applicant shall be notified in writing (via electronic means, where appropriate) of the preliminary recommendation and the factors considered in its development. The applicant shall be given 30 days from the date of notification, subject to extensions upon request by the applicant, which shall not be unreasonably withheld, in which to respond to the recommendation and submit additional evidence pertinent to the factors considered in the development of the preliminary recommendations. Public comment may be invited on preliminary recommendations when warranted.


(b) If the response contains new evidence on which there has not been an opportunity for public comment, the Executive Secretary shall publish notice in the Federal Register 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 §§ 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.


§ 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, § 400.3(b)).


(d) The Commerce Department shall complete the decision process within 15 days of receiving the vote of the Treasury Board member, and the Executive Secretary shall publish the Board decision.


(e) If the Board is unable to reach a unanimous decision, the 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.


§ 400.37 Procedure for notification of proposed production activity.

(a) Submission of notification. A notification for production authority pursuant to §§ 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 § 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 § 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 § 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 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 § 400.23 and the procedural requirements of §§ 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 § 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 § 400.37(c) may also revoke the interim authorization until the Board makes a determination after conduct of that further review.


§ 400.38 Procedure for application for minor modification of zone.

(a) The Executive Secretary shall make a determination in cases under § 400.24(c) involving minor modifications of zones that do not require Board action, such as boundary modifications, including certain relocations, and shall notify the applicant in writing of the decision within 30 days of the determination that the application or request can be processed under § 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

§ 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 § 400.44.


(2) Approval or concurrence from the grantee and approval from CBP, pursuant to 19 CFR part 146, are required prior to the activation of any portion of an approved zone; and


(3) Prior to activation of a zone, the operator shall obtain all necessary permits from federal, state and local authorities, and except as otherwise specified in the Act or this part, shall comply with the requirements of those authorities.


§ 400.42 Operation as public utility.

(a) In general. 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.


§ 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 § 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.


(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 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, § 400.43 was added. Paragraph (f) of 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.

§ 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.


§ 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 § 400.45(a). The Executive Secretary shall review the complaint and issue a report and decision, which 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.


§ 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.


§ 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.


§ 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.


(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.


§ 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 § 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 § 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 § 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

§ 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 § 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 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.


§ 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, §§ 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 §§ 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 § 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.


§ 400.53 Official records; public access.

(a) Content. The Executive Secretary shall maintain at the location stated in § 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.


§ 400.54 Information.

(a) Request for information. The Executive Secretary, on behalf of the Board, may request submission of any information, including business proprietary information, and written argument necessary or appropriate to the proceeding.


(b) Public information. Except as provided in paragraph (c) of this section, the Board 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 §§ 400.21-400.25 is inherently public information to allow meaningful public evaluation pursuant to those sections and § 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 § 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

§ 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.


§ 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 §§ 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 § 400.62(j)), with each day during which a violation 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 § 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 § 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 § 400.62(j)). Consistent with § 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 § 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 § 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 §§ 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


(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 §§ 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 § 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 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).


§ 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]

CHAPTER VII – BUREAU OF INDUSTRY AND SECURITY, DEPARTMENT OF COMMERCE

SUBCHAPTER A – NATIONAL SECURITY INDUSTRIAL BASE REGULATIONS

PART 700 – DEFENSE PRIORITIES AND ALLOCATIONS SYSTEM


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.

Subpart A – Purpose

§ 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

§ 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]


§ 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]


§§ 700.4-700.7 [Reserved]

Subpart C – Definitions

§ 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, 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 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]


Subpart D – Industrial Priorities

§ 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]


§ 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 § 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 § 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]


§ 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 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 § 700.13(d)(2)].”


[79 FR 47565, Aug. 14, 2014]


§ 700.13 Acceptance and rejection of rated orders.

(a) Mandatory acceptance. (1) Except as otherwise specified in this section, a person shall accept every rated order received and must fill such orders regardless of any other rated or unrated orders that have been accepted.


(2) A person shall not discriminate against rated orders in any manner such as by charging higher prices or by imposing different terms and conditions than for comparable unrated orders.


(b) Mandatory rejection. Unless otherwise directed by Commerce:


(1) A person shall not accept a rated order for delivery on a specific date if unable to fill the order by that date. However, the person must inform the customer of the earliest date on which delivery can be made and offer to accept the order on the basis of that date. Scheduling conflicts with previously accepted lower rated or unrated orders are not sufficient reason for rejection under this section.


(2) A person shall not accept a DO rated order for delivery on a date which would interfere with delivery of any previously accepted DO or DX rated orders. However, the person must offer to accept the order based on the earliest delivery date otherwise possible.


(3) A person shall not accept a DX rated order for delivery on a date which would interfere with delivery of any previously accepted DX rated orders, but must offer to accept the order based on the earliest delivery date otherwise possible.


(4) If a person is unable to fill all the rated orders of equal priority status received on the same day, the person must accept, based upon the earliest delivery dates, only those orders which can be filled, and reject the other orders. For example, a person must accept order A requiring delivery on December 15 before accepting order B requiring delivery on December 31. However, the person must offer to accept the rejected orders based on the earliest delivery dates otherwise possible.


(c) Optional rejection. Unless otherwise directed by Commerce, rated orders may be rejected in any of the following cases as long as a supplier does not discriminate among customers:


(1) If the person placing the order is unwilling or unable to meet regularly established terms of sale or payment;


(2) If the order is for an item not supplied or for a service not performed;


(3) If the order is for an item produced, acquired, or provided only for the supplier’s own use for which no orders have been filled for two years prior to the date of receipt of the rated order. If, however, a supplier has sold some of these items, the supplier is obligated to accept rated orders up to that quantity or portion of production, whichever is greater, sold within the past two years;


(4) If the person placing the rated order, other than the U.S. Government, makes the item or performs the service being ordered;


(5) If acceptance of a rated order or performance against a rated order would violate any other regulation, official action, or order of the Department of Commerce issued under the authority of the Defense Production Act or the Selective Service Act and related statutes [See § 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 § 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]


§ 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 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 § 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 § 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]


§ 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]


§ 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 § 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]


§ 700.17 Use of rated orders.

(a) A person must use rated orders to obtain:


(1) Items which will be physically incorporated into other items to fill rated orders, including that portion of such items normally consumed, or converted into scrap or by-products, in the course of processing;


(2) Containers or other packaging materials required to make delivery of the finished items against rated orders;


(3) Services, other than contracts of employment, needed to fill rated orders; and


(4) MRO needed to produce the finished items to fill rated orders. However, for MRO, the priority rating used must contain the program identification symbol H7 along with the rating symbol contained on the customer’s rated order. For example, a person in receipt of a DO-A3 rated order, who needs MRO, would place a DO-H7 rated order with the person’s supplier.


(b) A person may use a rated order to replace inventoried items (including finished items) if such items were used to fill rated orders, as follows:


(1) The order must be placed within 90 days of the date of use of the inventory.


(2) A DO rating symbol and the program identification symbol indicated on the customer’s rated order must be used on the order. A DX rating symbol may not be used even if the inventory was used to fill a DX rated order.


(3) If the priority ratings on rated orders from one customer or several customers contain different program identification symbols, the rated orders may be combined. In this case, the program identification symbol H1 must be used (i.e., DO-H1).


(c) A person may combine DX and DO rated orders from one customer or several customers if the items covered by each level of priority are identified separately and clearly. If different program identification symbols are indicated on those rated orders of equal priority, the person must use the program identification symbol H1 (i.e., DO-H1 or DX-H1).


(d) Combining rated and unrated orders. (1) A person may combine rated and unrated order quantities on one purchase order provided that:


(i) The rated quantities are separately and clearly identified; and


(ii) The elements of a rated order, as required by § 700.12, are included on the order with the statement required in § 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 § 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 § 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]


§ 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;


(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 § 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 § 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

§ 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.


§ 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;


(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.

§ 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]


§ 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]


§ 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


(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]


§ 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]


§ 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]


§ 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.


(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]


§ 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

§ 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 § 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]


§ 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 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]


§ 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.


§ 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]


§ 700.54 Instances where assistance will not be provided.

Special priorities assistance is provided at the discretion of the Delegate 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]


§ 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]


§ 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 [email protected]


(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 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]


§ 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]


§ 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 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: [email protected], Web site: http://www.fema.gov/defense-production-act-program-division.


[79 FR 47568, Aug. 14, 2014]


Subpart I – Official Actions

§ 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 § 700.71(c). Directives are discussed in § 700.62.


[79 FR 47569, Aug. 14, 2014]


§ 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 § 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]


§ 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]


§ 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

§ 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 of Commerce, is a criminal act, punishable as provided in the Defense Production Act and as set forth in § 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]


§ 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 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]


§ 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]


§ 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]


§ 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 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]


§ 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

§ 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 § 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]


§ 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 § 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.


(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

§ 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]


§ 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 § 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 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]


§ 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]


§ 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 § 700.50, adjustments or exceptions under § 700.80, or appeals under § 700.81, must be submitted in the manner specified in those sections.


[79 FR 47571, Aug. 14, 2014]


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 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
A1AircraftDepartment of Defense.
A2MissilesDepartment of Defense.
A3ShipsDepartment of Defense.
A4Tank – AutomotiveDepartment of Defense.
A5WeaponsDepartment of Defense.
A6AmmunitionDepartment of Defense.
A7Electronic and communications equipmentDepartment of Defense.
B1Military building suppliesDepartment of Defense.
B8Production equipment (for defense contractor’s account)Department of Defense.
B9Production equipment (Government owned)Department of Defense.
C1Food resources (combat rations)Department of Defense.
C2Department of Defense constructionDepartment of Defense.
C3Maintenance, repair, and operating supplies (MRO) for Department of Defense facilitiesDepartment of Defense.
C9MiscellaneousDepartment of Defense.
Military Assistance to Canada
D1Canadian military programsDepartment of Commerce.
D2Canadian production and constructionDepartment of Commerce.
D3Canadian atomic energy programDepartment of Commerce.
Military Assistance to Other Foreign Nations
G1Certain munitions items purchased by foreign governments through domestic commercial channels for exportDepartment of Commerce.
G2Certain direct defense needs of foreign governments other than CanadaDepartment of Commerce.
G3Foreign nations (other than Canada) production and constructionDepartment of Commerce.
Critical Infrastructure Assistance to Foreign Nations
G4Foreign critical infrastructure programsDepartment of Commerce.
Co-Production
J1F-16 Co-Production ProgramDepartments of Commerce and Defense.
Atomic Energy Programs
E1ConstructionDepartment of Energy.
E2Operations – including maintenance, repair, and operating supplies (MRO)Department of Energy.
E3Privately owned facilitiesDepartment of Energy.
Domestic Energy Programs
F1Exploration, production, refining, and transportationDepartment of Energy.
F2ConservationDepartment of Energy.
F3Construction, repair, and maintenanceDepartment of Energy.
Other Defense, Energy, and Related Programs
H1Certain combined orders (see section 700.17(c))Department of Commerce.
H5Private domestic productionDepartment of Commerce.
H6Private domestic constructionDepartment of Commerce.
H7Maintenance, repair, and operating supplies (MRO)Department of Commerce.
H8Designated ProgramsDepartment of Commerce.
K1Federal supply itemsGeneral Services Administration.
Homeland Security Programs
N1Federal emergency preparedness, mitigation, response, and recoveryDepartment of Homeland Security.
N2State, local, tribal government emergency preparedness, mitigation, response, and recoveryDepartment of Homeland Security.
N3Intelligence and warning systemsDepartment of Homeland Security.
N4Border and transportation securityDepartment of Homeland Security.
N5Domestic counter-terrorism, including law enforcementDepartment of Homeland Security.
N6Chemical, biological, radiological, and nuclear countermeasuresDepartment of Homeland Security.
N7Critical infrastructure protection and restorationDepartment of Homeland Security.
N8MiscellaneousDepartment of Homeland Security.

[79 FR 47572, Aug. 14, 2014]


Appendix I to Part 700 – Form BIS-999 – Request for Special Priorities Assistance





[71 FR 39529, July 13, 2006]


PART 701 – REPORTING OF OFFSETS AGREEMENTS IN SALES OF WEAPON SYSTEMS OR DEFENSE-RELATED ITEMS TO FOREIGN COUNTRIES OR FOREIGN FIRMS


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.

§ 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]


§ 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 (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 in §§ 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 §§ 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]


§ 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]


§ 701.4 Procedures.

(a) Reporting period. The Department of Commerce publishes a notice in the Federal Register annually reminding the public that U.S. firms are required to report annually on contracts for the sale of defense-related items or defense-related services to foreign governments or foreign firms that are subject to offset agreements exceeding $5,000,000 in value. U.S. firms are also required to report annually on offset transactions completed in performance of existing offset commitments for which offset credit of $250,000 or more has been claimed from the foreign representative. Such reports must be submitted to the Department of Commerce no later than June 15 of each year and must contain offset agreement and transaction data for the previous calendar year.


(b) Reporting instructions. (1) U.S. firms must only report on offset agreements they have entered into with a foreign customer. U.S. firms must report offset transactions that they are directly responsible for reporting to the foreign customer, regardless of who performs the transaction (i.e., prime contractors must report for their subcontractors if the subcontractors are not a direct party to the offset agreement).


(2) Reports must be submitted in hardcopy to the Offset Program Manager, U.S. Department of Commerce, Bureau of Industry and Security, Room 3876, 14th Street and Constitution Avenue, NW., Washington, DC 20230, and as an e-mail attachment to [email protected] E-mail attachments must include the information in a computerized spreadsheet or database format. If unable to submit a report in computerized format, companies should contact the Offset Program Manager for guidance. All submissions must include a point of contact (name and telephone number) and must be submitted by a company official authorized to provide such information.


(c) Reports must include the information described below. Any necessary comments or explanations relating to the information shall be footnoted and supplied on separate sheets attached to the reports.


(1) Reporting on offset agreements. U.S. firms shall provide an itemized list of new offset agreements entered into during the reporting period, including the information about each such agreement described in paragraphs (c)(1)(i) through (c)(1)(ix) of this section.


(i) Name of foreign country. Identify the country of the foreign entity involved in the military export sale associated with the offset agreement.


(ii) Description of the military export sale. Provide a name and description of the defense article and/or defense service referenced in the military export sale, as well as the date (month and year) that the related offset agreement was signed.


(iii) Military export sale classification. Identify the six-digit North American Industry Classification System (“NAICS”) code(s) associated with the military export sale. Refer to U.S. Census Bureau’s U.S. NAICS Manual for a listing of applicable NAICS codes (http://www.census.gov/epcd/www/naics.html). Paragraphs (c)(1)(iii)(A) through (c)(1)(iii)(E) of this section provide examples that illustrate how to select the appropriate NAICS code(s).


(A) Example 1. Company A enters into an offset agreement associated with the sale of 24 fighter aircraft and guided missiles to country B. Fighter aircraft manufacturing is classified in the NAICS as NAICS 336411, Aircraft Manufacturing. Guided missiles are classified in the NAICS as NAICS 336414, Guided Missile and Space Vehicle Manufacturing. This military export sale should be classified under NAICS 336411 and NAICS 336414.


(B) Example 2. Company B enters into an offset agreement associated with the sale of a navigation system for a fleet of military aircraft to country C. Navigation system manufacturing is classified in the NAICS as NAICS 334511, Search, Detection, Navigation, Guidance, Aeronautical, and Nautical System and Instrument Manufacturing. This military export sale should be classified under NAICS 334511.


(C) Example 3. Company C enters into an offset agreement associated with the sale of radio communication equipment to country D. Radio communication equipment is classified in the NAICS as NAICS 334220, Radio and Television Broadcasting and Wireless Communication Equipment Manufacturing. This military export sale should be classified under NAICS 334220.


(D) Example 4. Company D enters into an offset agreement associated with the sale of 30 aircraft engines to country E. Aircraft engines are classified in the NAICS as NAICS 336412, Aircraft Engine and Engine Parts Manufacturing. This military export sale should be classified under NAICS 336412.


(E) Example 5. Company E enters into an offset agreement associated with the sale of armored vehicles to country F. Armored vehicles are classified in the NAICS as NAICS 336992, Military Armored Vehicle, Tank, and Tank Component Manufacturing. This military export sale should be classified under NAICS 336992.


(iv) Foreign party to offset agreement. Identify the foreign government agency or branch that is the signatory to the offset agreement.


(v) Military export sale value. Provide the U.S. dollar value of the military export sale. Should the military export sale involve more than one NAICS code, please separately list the values associated with each NAICS code.


(vi) Offset agreement value. Provide the U.S. dollar value of the offset agreement.


(vii) Offset agreement term. Identify the term of the offset agreement in months.


(viii) Offset agreement performance measures. Identify each category that describes the offset agreement’s performance measures: best efforts, accomplishment of obligation, or other (please describe).


(ix) Offset agreement penalties for non-performance. Identify each category that describes the offset agreement’s penalties for non-performance. For example, the agreement may include penalties such as liquidated damages, debarment from future contracts, added offset requirements, fees, commissions, bank credit guarantees, or other (please describe).


(2) Reporting on offset transactions. U.S. firms shall provide an itemized list of offset transactions completed during the reporting period, including the elements listed in paragraphs (c)(2)(i) through (c)(2)(x) of this section for each such transaction (numerical estimates are acceptable when actual figures are unavailable; estimated figures shall be followed by the letter “E”).


(i) Name of foreign country. Identify the country of the foreign entity involved in the military export sale associated with the offset transaction.


(ii) Description of the military export sale. Provide a name and description of the defense article and/or defense service referenced in the military export sale associated with the offset transaction, as well as the date the offset agreement was signed (month and year).


(iii) Offset transaction category. Identify each category that describes the offset transaction as co-production, technology transfer, subcontracting, training, licensing of production, investment, purchasing, credit assistance or other (please describe).


(iv) Offset transaction classification. Identify the six-digit NAICS code(s) associated with the offset transaction. Refer to U.S. Census Bureau’s U.S. NAICS Manual for a listing of applicable NAICS codes (http://www.census.gov/epcd/www/naics.html). Paragraphs (c)(2)(iv)(A) through (c)(2)(iv)(E) of this section provide examples that illustrate how to select the appropriate NAICS code in the instances described therein.


(A) Example 1. Company A completes an offset transaction by co-producing aircraft engines in country B. Aircraft engine manufacturing is classified in the NAICS as NAICS 336412, Aircraft Engine and Engine Parts Manufacturing. This offset transaction should be classified under NAICS 336412.


(B) Example 2. Company B completes an offset transaction by licensing the production of automotive electrical switches in country C. Company B also assists in structuring a wholesale distribution network for these products. Automotive electrical switch manufacturing is classified in the NAICS as NAICS 335931, Current Carrying Wiring Device Manufacturing, and the wholesale distribution network is classified in the NAICS as NAICS 423120, Motor 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]


§ 701.5 Confidentiality.

(a) As provided by § 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 § 701.1.


§ 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


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.

§ 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.


§ 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.).


§ 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.


(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.


§ 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.


(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.


§ 702.5 Consequences of failure to comply.

(a) Civil. If any person fails to comply with the requirements of § 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 § 702.4, may, upon conviction, be fined not more than $10,000 or imprisoned not more than one year, or both.


§ 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.


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.


– 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


Authority:Section 232 of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862) and Reorg. Plan No. 3 of 1979 (44 FR 69273, December 3, 1979).


Source:47 FR 14693, Apr. 6, 1982, unless otherwise noted. Redesignated at 54 FR 601, Jan. 9, 1989.

§ 705.1 Definitions.

As used in this part:


Department means the United States Department of Commerce and includes the Secretary of Commerce and the Secretary’s designees.


Secretary means the Secretary of Commerce or the Secretary’s designees.


Applicant means the person or entity submitting a request or application for an investigation pursuant to this part.


§ 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.


§ 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]


§ 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.


§ 705.5 Request or application for an investigation.

(a) A request or application for an investigation shall be in writing. The original, 1 copy and an electronic version of the report in the form of a Portable Document Format (PDF) file shall be filed with the Director, Office of Technology Evaluation, Room H-1093, U.S. Department of Commerce, Washington, DC 20230, with the PDF version being submitted to [email protected] An application for an investigation from an interested party that includes information submitted in confidence in accordance with the procedures of § 705.6 must also include a public version in written and electronic form containing all non-confidential information and public summaries of business confidential information as provided below. For persons seeking to submit business confidential information (trade secrets, commercial or financial information, or any other information considered sensitive or privileged), the public version of the application must contain a summary of the business confidential information in sufficient detail to permit a reasonable understanding of the substance of the information. Generally, numerical data will be considered adequately summarized if grouped or presented in terms of indices or figures within 10 percent of the actual figure. If an individual portion of the numerical data is voluminous (e.g., 5 pages of numerical data), at least one percent of the numerical data, representative of that portion, must be summarized. If the submitter claims that summarization is not possible, the claim must be accompanied by a full explanation of the reason(s). In order to submit business confidential information that is not for public release or classified national security information as a separate submission to the U.S. Department of Commerce, applicants must follow the procedures specified in § 705.6.



Note 1 to paragraph (a):

Requests for an investigation from United States Government agencies need not include a public version.


(b) When a request, application or motion is under investigation, or when an investigation has been completed pursuant to § 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 § 705.7(e) of this part, or rejected. In either event, an explanation for taking such action shall be promptly given to the applicant. If the request or application is rejected, it will not be returned unless requested by the applicant.


(c) Requests or applications shall describe how the quantity, availability, character, and uses of a particular imported article, or other circumstances related to its import, affect the national security, and shall contain the following information to the fullest extent possible:


(1) Identification of the applicant;


(2) A precise description of the article;


(3) Description of the domestic industry affected, including pertinent information regarding companies and their plants, locations, capacity and current output of the industry;


(4) Pertinent statistics on imports and domestic production showing the quantities and values of the article;


(5) Nature, sources, and degree of the competition created by imports of the article;


(6) The effect that imports of the article may have upon the restoration of domestic production capacity in the event of national emergency;


(7) Employment and special skills involved in the domestic production of the article;


(8) Extent to which the national economy, employment, investment, specialized skills, and productive capacity is or will be adversely affected;


(9) Revenues of Federal, State, or local Governments which are or may be adversely affected;


(10) National security supporting uses of the article including data on applicable contracts or sub-contracts, both past and current; and


(11) Any other information or advice relevant and material to the subject matter of the investigation.


(d) Statistical material presented should be, if possible, on a calendar-year basis for sufficient periods of time to indicate trends. Monthly or quarterly data for the latest complete years should be included as well as any other breakdowns which may be pertinent to show seasonal or short-term factors.


[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989, and amended at 63 FR 31623, June 10, 1998; 65 FR 62600, Oct. 19, 2000; 72 FR 25195, May 4, 2007; 86 FR 52964, Sept. 24, 2021]


§ 705.6 Confidential information.

(a) This paragraph (a) specifies the requirements for submission of classified national security information, business confidential information, and the treatment of United States Government communications during an investigation under Section 232 of the Trade Expansion Act of 1962, as amended (a “Section 232 investigation”), or as part of a request or application for an investigation.


(1) Classified national security information. Any information or material, which the applicant or any other party desires to submit in confidence at any stage of the investigation or as part of an application for an investigation, that is classified national security information (“classified information”) within the meaning of Executive Order 13526 shall be marked and submitted to the Bureau of Industry and Security (BIS) in accordance with the guidelines set forth in 32 CFR part 2001 regarding the handling of classified information. Before sending classified information, the applicant or any other party wishing to submit classified information must contact BIS for any additional handling instructions or submission requirements that may be applicable by contacting the Director, Office of Technology Evaluation, Room H-1093, U.S. Department of Commerce, Washington, DC 20230. Any information or material submitted that is identified as classified information must be accompanied at the time of submission by a statement indicating the degree of classification, the authority for the classification, and the identity of the classifying entity. Classified national security information described in this paragraph (a)(1) does not require a public version.


(2) Business confidential information. Any information or material submitted electronically, which the applicant or any other party desires to submit in confidence at any stage of the investigation or as part of an application for an investigation, that is business confidential information (trade secrets, commercial or financial information, or any other information considered sensitive or privileged) should be contained within a file beginning its name with the characters “BC”. Any page containing business confidential information must be clearly marked “BUSINESS CONFIDENTIAL” on the top of that page, and any pages not containing confidential information should not be so marked. By submitting information or material identified as business confidential information, 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. The public summary version required under § 705.5 must be clearly marked “PUBLIC”. When submitted electronically, the file name of the non-confidential version should begin with the character “P”. The “P” should be followed by the name of the person or entity submitting the information or material. All filers should name their files using the name of the person or entity submitting the comments.


(3) United States Government communications. Communications from agencies of the United States Government, including but not limited to requests for investigation submitted pursuant to § 705.5, will generally not be made available to the public.


(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.


[47 FR 14693, Apr. 6, 1982. Redesignated at 54 FR 601, Jan. 9, 1989, as amended at 86 FR 52964, Sept. 24, 2021]


§ 705.7 Conduct of an investigation.

(a) If the Department determines that it is appropriate to afford interested parties an opportunity to present information and advice relevant and material to an investigation, a public notice shall be published in the Federal Register soliciting from any interested party written comments, opinions, data, information or advice relative to the investigation. This material shall be submitted as directed within a reasonable time period to be specified in the notice. All material shall be submitted with 6 copies. In addition, public hearings may be held pursuant to § 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 § 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]


§ 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 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]


§ 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 § 705.7 of this part.


§ 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]


§ 705.11 Determination by the President and adjustment of imports.

(a) Upon the submission of a report to the President by the Secretary under § 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]


§ 705.12 Disposition of an investigation and report to the Congress.

(a) Upon the disposition of each request, application, or motion made under this part, a report of such disposition shall be submitted by the Secretary to the Congress and published in the Federal Register.


(b) As required by Section 232(e) of the Trade Expansion Act of 1962, as amended (19 U.S.C. 1862(c)), the President shall submit to the Congress an annual report on the operation of this part.


[63 FR 31623, June 10, 1998]


Supplement No. 1 to Part 705 – Requirements for Submissions Requesting Exclusions From the Adjustment of Imports of Aluminum and Steel Imposed Pursuant to Section 232 of the Trade Expansion Act of 1962, as Amended

On March 8, 2018, the President issued Proclamations 9704 and 9705 concurring with the findings of the January 11, 2018 reports of the Secretary of Commerce on the effects of imports of aluminum and steel mill articles (steel articles) on the national security and determining that adjusting aluminum and steel imports through the imposition of duties is necessary so that their imports will no longer threaten to impair the national security. Clause 3 of Proclamations 9704 and 9705 also authorized the Secretary of Commerce, in consultation with the Secretary of Defense, the Secretary of the Treasury, the Secretary of State, the United States Trade Representative, the Assistant to the President for Economic Policy, the Assistant to the President for National Security Affairs, and other senior Executive Branch officials as appropriate, to grant exclusions from the duties at the request of directly affected parties located in the United States if the requested steel or aluminum article is determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality or based upon specific national security considerations. On August 29, 2018, the President issued Proclamation 9776. Clause 1 of Proclamation 9776, authorizes the Secretary of Commerce, in consultation with the Secretary of State, the Secretary of the Treasury, the Secretary of Defense, the United States Trade Representative, the Assistant to the President for National Security Affairs, the Assistant to the President for Economic Policy, and such other senior Executive Branch officials as the Secretary deems appropriate, to provide relief from the applicable quantitative limitations set forth in Proclamation 9740 and Proclamation 9759 for steel articles and as set forth in Proclamation 9739 and 9758 for aluminum articles and their accompanying annexes, as amended, at the request of a directly affected party located in the United States for any steel or aluminum article determined by the Secretary to not be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality. The Secretary is also authorized to provide such relief based upon specific national security considerations.


(a) Scope. This supplement specifies the requirements and process for how directly affected parties located in the United States may submit requests for exclusions from the duties and quantitative limitations imposed by the President. This supplement also specifies the requirements and process for how parties in the United States may submit objections to submitted exclusion requests for relief from the duties or quantitative limitations imposed by the President and the process for rebuttals to submitted objections and surrebuttals (collectively, “232 submissions”). This supplement identifies the time periods for such submissions, the methods of submission, and the information that must be included in such submissions.


(b) Required forms. The 232 Exclusions Portal (https://www.commerce.gov/page/section-232-investigations) includes four web-based forms that are to be used for submitting exclusion requests, objections to exclusion requests, rebuttals, and surrebuttals described in this supplement. On the 232 Exclusions Portal, each web-based form is available on the portal at the bottom of the preceding filing. For example, a party submitting an objection will access the objection form by scrolling to the bottom of the exclusion request, a rebuttal filer will access the rebuttal form by scrolling to the bottom of the objection form, and a surrebuttal filer would access the surrebuttal form by scrolling to the bottom of the rebuttal form. The U.S. Department of Commerce requires requesters and objectors to use the appropriate form as specified under paragraphs (b)(1) and (2) of this supplement for submitting exclusion requests and objections to submitted exclusion requests and the forms specified under paragraphs (b)(3) and (4) of this supplement for submitting rebuttals and surrebuttals. In addition, submitters of exclusion requests, objections to submitted exclusion requests, rebuttals, and surrebuttals to the 232 Exclusions Portal will be required to complete a web-based registration on the 232 Exclusions Portal prior to submitting any documents. In order to register, submitters will be required to provide an email and establish a password for the account. After completing the registration, submitters will be able to login to an account on the 232 Exclusions Portal and submit exclusion requests, objections, rebuttals, and surrebuttal documents.


(1) Form required for submitting exclusion requests. The full name of the form used for submitting steel exclusion requests is Request for Exclusion from Remedies: Section 232 National Security Investigation of Steel Imports. The full name of the form used for submitting aluminum exclusion requests is Request for Exclusion from Remedies: Section 232 National Security Investigation of Aluminum Imports. The Title of the web-based fillable form for both steel and aluminum in the 232 Exclusions Portal is Exclusion Request.


(2) Form required for submitting objections to submitted exclusion requests. The name of the form used for submitting objections to submitted steel exclusion requests is Objection Filing to Posted Section 232 Exclusion Request: Steel. The name of the form used for submitting objections to submitted aluminum exclusion requests is Objection Filing to Posted Section 232 Exclusion Request: Aluminum. The Title of the web-based fillable form for both steel and aluminum in the 232 Exclusions Portal is Objection.


(3) Form required for submitting rebuttals. The name of the form used for submitting rebuttals to steel objections is Rebuttal to Objection Received for Section 232 Exclusion Request: Steel. The name of the form used for submitting rebuttals to aluminum objections is Rebuttal to Objection Received for Section 232 Exclusion Request: Aluminum. The Title of the web-based fillable form for both steel and aluminum in the 232 Exclusions Portal is Rebuttal.


(4) Form required for submitting surrebuttals. The name of the form used for submitting surrebuttals to steel objections is Surrebuttal to Rebuttal Received on Section 232 Objection: Steel. The name of the form used for submitting surrebuttals to aluminum objections is Surrebuttal to Rebuttal Received on Section 232 Objection: Aluminum. The Title of the web-based fillable form for both steel and aluminum in the 232 Exclusions Portal is Surrebuttal.



Note to Paragraphs (b)(1) Through (4):

On the 232 Exclusions Portal, each exclusion request is assigned a distinct ID #, which is also used with its associated 232 submissions, but preceded with an acronym indicating the file type: Exclusion Requests (ER ID #), Objection (OF ID #), Rebuttals (RB ID #) and Surrebuttals (SR ID #). For an example of the four possible types of 232 submissions associated with a single exclusion request, you could have ER ID 237, OF ID 237, RB ID 237 and SR ID 237. The 232 Exclusions Portal will automatically assign the two letter designator depending on the type of web-based form being submitted in the portal and will assign an ID number to the original exclusion request and that ID number will be common to any objection, rebuttal, or surrebuttal submitted pertaining to the same exclusion request.


(5) Public disclosure and information protected from public disclosure. (i) Information submitted in 232 submissions will be subject to public review and made available for public inspection and copying, except for the information described in paragraph (b)(5)(iii) of this supplement. Individuals and organizations must fully complete the relevant forms.


(ii) Information not subject to public disclosure should not be submitted. Personally identifiable information, including social security numbers and employer identification numbers, should not be provided. Information that is subject to government-imposed access and dissemination or other specific national security controls, e.g., classified information or information that has U.S. Government restrictions on dissemination to non-U.S. citizens or other categories of persons that would prohibit public disclosure of the information, may not be included in 232 submissions. Individuals and organizations that have confidential business information (“CBI”) that they believe relevant to the Secretary’s consideration of the 232 submission should so indicate in the appropriate field of the relevant form, or on the rebuttal or surrebuttal submission, following the procedures in paragraph (b)(5)(iii) of this supplement.


(iii) Procedures for identifying, but not disclosing confidential or proprietary business information (CBI) in the public version, and procedures for submitting CBI. For persons seeking to submit confidential or proprietary business information (CBI), the 232 submission available to the public must contain a summary of the CBI in sufficient detail to permit a reasonable understanding of the substance of the information. If the submitting person claims that summarization is not possible, the claim must be accompanied by a full explanation of the reasons supporting that claim. Generally, numerical data will be considered adequately summarized if grouped or presented in terms of indices or figures within ten percent of the actual figure. If an individual portion of the numerical data is voluminous (e.g., five pages of numerical data), at least one percent of the numerical data, representative of that portion, must be summarized. In order to submit CBI that is not for public release as a separate email submission to the U.S. Department of Commerce, you must follow the procedures in paragraphs (b)(3)(iii)(A)-(D) of this supplement to assist the U.S. Department of Commerce in identifying these submissions and associating these submissions with the respective 232 submission in the 232 Exclusions Portal. Submitters with classified information should contact the U.S. Department of Commerce for instructions on the appropriate methods to send this type of information.


(A) For CBI related to exclusion requests or objections, check the appropriate box in the 232 Exclusions Portal indicating that the filer has relevant CBI for consideration. If Commerce determines after review that the CBI is needed, Commerce will directly request the CBI from the exclusion requester or objector as warranted.


(B) For CBI related to rebuttals or surrebuttals, on the same day that you submit your 232 submission in the 232 Exclusions Portal, submit the CBI via email to the U.S. Department of Commerce. The email address used is different depending on the type of submission the emailed CBI is for, as follows: CBI for rebuttals use [email protected]; and CBI for surrebuttals use [email protected]


(C) For rebuttals and surrebuttals pertaining to 232 submissions for exclusion requests the email subject line must only include the original 232 Exclusions Portal Exclusion Request (ER) ID # and the body of the email must include the 232 Exclusions Portal Rebuttal (RB) ID #, or Surrebuttal (SR) ID # you received from the 232 Exclusions Portal when you successfully submitted your rebuttal or surrebuttal. These naming conventions used in the 232 Exclusions Portal, respectively, will assist the U.S. Department of Commerce to associate the CBI that will not be posted in the 232 Exclusions Portal with the information included in the public submission.


(D) Submit the CBI as an attachment to that email. The CBI is limited to a maximum of five pages per rebuttal or surrebuttal. The email is to be limited to sending your CBI. All other information for the public submission, and public versions of the CBI, where appropriate, for a 232 submission in the 232 Exclusions Portal following the procedures identified in this supplement, as appropriate.



Note 1 to Paragraph (b) for Submissions of Supporting Documents (Attachments):

Supporting attachments must be emailed as PDF documents.



Note 2 to Paragraph (b):

It is a criminal offense to willfully make a false statement or representation to any department or agency of the United States Government as to any matter within its jurisdiction [18 U.S.C. 1001(2018)].


(c) Exclusion requests. (1) Who may submit an exclusion request? Only directly affected individuals or organizations located in the United States may submit an exclusion request. An individual or organization is “directly affected” if they are using steel in business activities (e.g., construction, manufacturing, or supplying steel product to users) in the United States.


(2) Identification of exclusion requests. Separate exclusion requests must be submitted for steel products with chemistry by percentage breakdown by weight, metallurgical properties, surface quality (e.g., galvanized, coated), and critical dimensions covered by a common HTSUS statistical reporting number. Separate exclusion requests must be submitted for aluminum products with critical dimensions covered by a common HTSUS statistical reporting number. The exclusion request forms allow for minimum and maximum dimensions. A permissible range must be within the minimum and maximum range that is specified in the HTSUS statistical reporting number and applicable notes. Separate exclusion requests must also be submitted for products falling in more than one ten-digit HTSUS statistical reporting number. The U.S. Department of Commerce will approve exclusions on a product basis, and the approvals will be limited to the individual or organization that submitted the specific exclusion request, unless Commerce approves a broader application of the product-based exclusion request to apply to additional importers. Other directly-affected individuals or organizations located in the United States that wish to submit an exclusion request for a steel or aluminum product that has already been the subject of an approved exclusion request may submit an exclusion request under this supplement. These additional exclusion requests by other directly-affected individuals or organizations in the United States are not required to reference the previously approved exclusion but are advised to do so, if they want Commerce to take that exclusion into account when reviewing a subsequent exclusion request. Directly affected individuals and organizations in the United States will not be precluded from submitting a request for exclusion of a product even though an exclusion request submitted for that product by another requester or that requester was denied or is no longer valid.


(3) Where to submit exclusion requests? All exclusion requests must be submitted directly on the 232 Exclusions Portal (https://www.commerce.gov/page/section-232-investigations).


(4) No time limit for submitting exclusion requests. Exclusion requests may be submitted at any time.


(5)(i) Substance of exclusion requests. An exclusion request must specify the business activities in the United States within which the requester is engaged that qualify the individual or organization to be directly affected and thus eligible to submit an exclusion request. The request should clearly identify, and provide support for, the basis upon which the exclusion is sought. An exclusion will only be granted if an article is not produced in the United States in a sufficient, reasonably available amount, and of a satisfactory quality, or for specific national security considerations.


(ii) Certification for volume requested. In order to ensure that the volume requested in an exclusion request is consistent with legitimate business needs for the same steel or aluminum articles obtained (i.e., imported from abroad either directly by the requester or indirectly by purchasing from distributors) by the entity requesting an exclusion, the following certification in paragraphs (c)(5)(ii)(A)-(E) must be acknowledged in the 232 Exclusions Portal when completing the submission of a 232 exclusion request. The exclusion request certification for volume requested must be signed by an organization official specifically authorized to certify the document (the certification being made in the 232 Exclusions Portal) as being accurate and complete. The undersigned certifies in the 232 Exclusions Portal that the information herein supplied in response to this paragraph is complete and correct to the best of his/her knowledge. By signing the certification below, I attest that:


(A) My organization intends to manufacture, process, or otherwise transform the imported product for which I have filed an exclusion request or I have a purchase order or orders for such products;


(B) My organization does not intend to use the exclusion for which I have filed an exclusion request, if granted, solely to hedge or arbitrage the price;


(C) My organization expects to consume, sell, or otherwise use the total volume of product across all my active exclusions and pending exclusion requests in the course of my organization’s business activities within the next calendar year;


(D) If my organization is submitting an exclusion request for a product for which we previously received an exclusion, I certify that my organization either imported the full amount of our approved exclusion(s) last year or intended to import the full amount but could not due to one of the following reasons:


(1) Loss of contract(s);


(2) Unanticipated business downturns; or


(3) Other factors that were beyond my organization’s control that directly resulted in less need for steel or aluminum articles; and


(E) I certify that the exclusion amount requested this year is in line with what my organization expects to import based on our current business outlook. If requested by the Department of Commerce, my organization shall provide documentation that justifies its assertions in this certification regarding its past imports of steel or aluminum articles and its projections for the current year, as it relates to past and current calendar year exclusion requests.



Note to Paragraphs (c)(5)(i) and (ii):

Any exclusion request that does not include a certification made in accordance with (c)(5)(ii) will be treated as an incomplete submission and will therefore be rejected.


(6) Criteria used to review exclusion requests. The U.S. Department of Commerce will review each exclusion request to determine whether an article described in an exclusion request meets any of the following three criteria: The article is not produced in the United States in an amount which can be delivered in a time period equal to or less than the time needed for the requester to obtain the product from their foreign supplier, is not produced in the United States in a satisfactory quality, or for specific national security considerations. The reviews will be made on a case-by-case basis to determine whether the requester has shown that the article is not produced in the United States in sufficient and reasonably available amount or of a satisfactory quality, or that there are specific national security considerations to grant the exclusion. To provide additional context on the meaning and application of the criteria, paragraphs (c)(6)(i)-(iii) of this supplement define keys terms used in the review criteria and provide illustrative application examples. The U.S. Department of Commerce will use the same criteria identified in paragraphs (c)(6)(i)-(iii) of this supplement when determining whether it is warranted to approve broader product-based exclusions based on trends the Department may see over time with 232 submissions. The public is not permitted to request broader product-based exclusions that would apply to all importers, because the Department makes these determinations over time by evaluating the macro trends in 232 submissions. Items for which a broader determination has been made will be identified in supplements no. 2 or 3 to part 705.


(i) Not produced in the United States in a sufficient and reasonably available amount. The exclusion review criterion “Not produced in the United States in a sufficient and reasonably available amount” means that the amount that is needed by the end user requesting the exclusion is not available immediately in the United States to meet its specified business activities. Available “immediately” means that a product (whether it is currently being produced in the United States, or could be produced in the United States) can be delivered by a U.S. producer “within eight weeks”, or, if that is not possible, by a date earlier than the time required for the requester to obtain the entire quantity of the product from the requester’s foreign supplier. Furthermore, to the extent that an objector can produce and deliver a portion, which is less than 100 percent, but ten percent or more, of the amount of steel or aluminum needed in the business activities of the user in the United States described in the exclusion request, the Department of Commerce may deny a requested exclusion for that percentage of imported steel or aluminum. It is incumbent upon both the exclusion requester, and objecting producers, to provide supplemental evidence supporting their claimed delivery times.


(ii) Not produced in the United States in a satisfactory quality. The exclusion review criterion “not produced in the United States in a satisfactory quality” does not mean the steel or aluminum needs to be identical, but it does need to be equivalent as a substitute product. “Substitute product” for purposes of this review criterion means that the steel or aluminum being produced by an objector can meet “immediately” (see paragraph (c)(6)(i) of this supplement) the quality (e.g., industry specs or internal company quality controls or standards), regulatory, or testing standards, in order for the U.S.-produced steel to be used in that business activity in the United States by that end user.


(A) Steel application examples. For a steel example, if a U.S. business activity requires that steel plates to be provided must meet certain military testing and military specification standards in order to be used in military combat vehicles, that requirement would be taken into account when reviewing the exclusion request and any objections, rebuttals, and surrebuttals submitted. As another steel example, if a U.S. business activity requires that steel tubing to be provided must meet certain Food and Drug Administration (FDA) approvals to be used in medical devices, that requirement would be taken into account when reviewing the exclusion request and any objections, rebuttals, and surrebuttals submitted. Another steel example would be a food manufacturer that requires tin-plate approval from the U.S. Department of Agriculture (USDA) to make any changes in the tin-plate it uses to make cans for fruit juices. An objector would not have to make steel for use in making the cans that was identical, but it would have to be a “substitute product,” meaning it could meet the USDA certification standards.


(B) Aluminum application examples. For an aluminum example, if a U.S. business activity requires that aluminum to be provided must meet certain military testing and military specification standards in order to be used in military aircraft, that requirement would be taken into account when reviewing the exclusion request and any objections, rebuttals, and surrebuttals submitted. Another aluminum example would be a U.S. pharmaceutical manufacturer that requires approval from the Food and Drug Administration (FDA) to make any changes in its aluminum product pill bottle covers. An objector would not have to make aluminum for use in making the product covers that was identical, but it would have to be a “substitute product,” meaning it could meet the FDA certification standards.


(iii) For specific national security considerations. The exclusion review criterion “or for specific national security considerations” is intended to allow the U.S. Department of Commerce, in consultation with other parts of the U.S. Government as warranted, to make determinations whether a particular exclusion request should be approved based on specific national security considerations.


(A) Steel application examples. For example, if the steel included in an exclusion request is needed by a U.S. defense contractor for making critical items for use in a military weapons platform for the U.S. Department of Defense, and the duty or quantitative limitation will prevent the military weapons platform from being produced, the exclusion will likely be granted. The U.S. Department of Commerce, in consultation with the other parts of the U.S. Government as warranted, can consider other impacts to U.S. national security that may result from not approving an exclusion, e.g., the unintended impacts that may occur in other downstream industries using steel, but in such cases the demonstrated concern with U.S. national security would need to be tangible and clearly explained and ultimately determined by the U.S. Government.


(B) Aluminum application examples. For example, if the aluminum included in an exclusion request is needed by a U.S. defense contractor for making critical items for use in a military weapons platform for the U.S. Department of Defense, and the duty or quantitative limitation will prevent the military weapons platform from being produced, the exclusion will likely be granted. The U.S. Department of Commerce, in consultation with the other parts of the U.S. Government as warranted, can consider other impacts to U.S. national security that may result from not approving an exclusion, e.g., the unintended impacts that may occur in other downstream industries using aluminum, but in such cases the demonstrated concern with U.S. national security would need to be tangible and clearly explained and ultimately determined by the U.S. Government.


(d) Objections to submitted exclusion requests. (1) Who may submit an objection to a submitted exclusion request? Any individual or organization that manufactures steel or aluminum articles in the United States may file objections to steel exclusion requests, but the U.S. Department of Commerce will only consider information directly related to the submitted exclusion request that is the subject of the objection.


(2) Identification of objections to submitted exclusion requests. When submitting an objection to a submitted exclusion request, the objector must locate the exclusion request and submit the objection in response to the request directly in the 232 Exclusions Portal. Once the relevant exclusion request has been located, an individual or organization that would like to submit an objection will access the objection form by scrolling to the bottom of the exclusion request form and then fill out the web-based form for submitting their objection to the exclusion request in the 232 Exclusions Portal (https://www.commerce.gov/page/section-232-investigations).


(3) Time limit for submitting objections to submitted exclusions requests. All objections to submitted exclusion requests must be submitted directly on the 232 Exclusions Portal (https://www.commerce.gov/page/section-232-investigations) no later than 30 days after the related exclusion request is posted, with the 30-day clock starting at 11:59 p.m. Eastern Time on the calendar day an exclusion request is posted.


(4) Substance of objections to submitted exclusion requests. The objection should clearly identify, and provide support for, its opposition to the proposed exclusion, with reference to the specific basis identified in, and the support provided for, the submitted exclusion request. If the objector is asserting that it is not currently producing the steel or aluminum identified in an exclusion request but can produce the steel or aluminum and make that steel or aluminum available “immediately” in accordance with the time required for the user of steel or aluminum in the United States to obtain the product from its foreign suppliers, the objector must identify how it will be able to produce and deliver the quantity of steel or aluminum needed either within eight weeks, or if after eight weeks, by a date which is earlier than the named foreign supplier would deliver the entire quantity of the requested product. It is incumbent on both the exclusion requester, and objecting producers, to provide supplemental evidence supporting their claimed delivery times. This requirement includes specifying in writing to Department of Commerce as part of the objection, the timeline the objector anticipates in order to start or restart production of the steel included in the exclusion request to which it is objecting. For example, a summary timeline that specifies the steps that will occur over the weeks needed to produce that steel or aluminum would be helpful to include, not only for the Department of Commerce review of the objection, but also for the requester of the exclusion and its determination whether to file a rebuttal to the objection. The U.S. Department of Commerce understands that, in certain cases, regulatory approvals, such as from the Environmental Protection Agency (EPA) or some approvals at the state or local level, may be required to start or restart production and that some of these types of approvals may be outside the control of an objector.


(e) Limitations on the size of submissions. Each exclusion request and each objection to a submitted exclusion request is to be limited to a maximum of 5,000 words, inclusive of all exhibits and attachments, but exclusive of the respective forms and any CBI provided to the U.S. Department of Commerce. Each attachment to a submission must be less than 10 MB.


(f) Rebuttal process. Only individuals or organizations that have submitted an exclusion request pursuant to this supplement may submit a rebuttal to any objection(s) posted in the 232 Exclusions Portal (https://www.commerce.gov/page/section-232-investigations). The objections to submitted exclusion requests process identified under paragraph (d) of this supplement already establish a formal response process for steel and aluminum manufacturers in the United States.


(1) Identification of rebuttals. When submitting a rebuttal, the individual or organization that submitted the exclusion request will access the rebuttal form by scrolling to the bottom of the objection form and then filling out the web-based form for submitting their rebuttal to the objection in the 232 Exclusions Portal (https://www.commerce.gov/page/section-232-investigations).


(2) Format and size limitations for rebuttals. Similar to the exclusions process identified under paragraph (c) of this supplement and the objection process identified under paragraph (d) of this supplement, the rebuttal process requires the submission of a government form as specified in paragraph (b)(3) of this supplement. Each rebuttal is to be limited to a maximum of 2,500 words, inclusive of all exhibits and attachments, but exclusive of the rebuttal form and any CBI provided to the U.S. Department of Commerce. Each attachment to a submission must be less than 10 MB.


(3) Substance of rebuttals. Rebuttals must address an objection to the exclusion request made by the requester. If multiple objections were received on a particular exclusion, the requester may submit a rebuttal to each objector. The most effective rebuttals will be those that aim to correct factual errors or misunderstandings in the objection(s).


(4) Time limit for submitting rebuttals. The rebuttal period begins on the date the Department opens the rebuttal period after the posting of the last objection in the 232 Exclusions Portal. The rebuttal period ends seven days after the rebuttal comment period is opened. This seven-day rebuttal period allows for the individual or organization that submitted an exclusion request pursuant to this supplement to submit any written rebuttals that it believes are warranted.


(g) Surrebuttal process. Only individuals or organizations that have a posted objection to a submitted exclusion request pursuant to this supplement may submit a surrebuttal to a rebuttal (see paragraph (f) of this supplement) posted to their objection to an exclusion request in the 232 Exclusions Portal (https://www.commerce.gov/page/section-232-investigations).


(1) Identification of surrebuttals. When submitting a surrebuttal, the individual or organization that submitted the objection will access the surrebuttal form by scrolling to the bottom of the rebuttal form and then filling out the web-based form for submitting their surrebuttal to the rebuttal in the 232 Exclusions Portal (https://www.commerce.gov/page/section-232-investigations).


(2) Format and size limitations for surrebuttals. Similar to the exclusions process identified under paragraph (c) of this supplement, the objection process identified under paragraph (d) of this supplement, and the rebuttal process identified under paragraph (f) of this supplement, the surrebuttal process requires the submission of a government form as specified in paragraph (b)(4) of this supplement. The surrebuttal must be submitted in the 232 Exclusions Portal. Each surrebuttal is to be limited to a maximum of 2,500 words, inclusive of all exhibits and attachments, but exclusive of the surrebuttal form and any CBI provided to the U.S. Department of Commerce. Each attachment to a submission must be less than 10 MB.


(3) Substance of surrebuttals. Surrebuttals must address a rebuttal to an objection to the exclusion request made by the requester. The most effective surrebuttals will be those that aim to correct factual errors or misunderstandings in the rebuttal to an objection.


(4) Time limit for submitting surrebuttals. The surrebuttal period begins on the date the Department opens the surrebuttal comment period after the posting of the last rebuttal to an objection to an exclusion request in the 232 Exclusions Portal. The surrebuttal period ends seven days after the surrebuttal comment period is opened. This seven-day surrebuttal period allows for the individual or organization that submitted an objection to a submitted exclusion request pursuant to this supplement to submit any written surrebuttals that it believes are warranted to respond to a rebuttal.


(h) Disposition of 232 submissions – (1) Disposition of incomplete submissions. (i) Exclusion requests that do not satisfy the requirements specified in paragraphs (b) and (c) of this supplement will be rejected.


(ii) Objection filings that do not satisfy the requirements specified in paragraphs (b) and (d) will not be considered.


(iii) Rebuttal filings that do not satisfy the requirements specified in paragraphs (b) and (f) will not be considered.


(iv) Surrebuttal filings that do not satisfy the requirements specified in paragraphs (b) and (g) will not be considered.


(2) Disposition of complete submissions – (i) Posting of responses in the 232 Exclusions Portal. The U.S. Department of Commerce will post responses (decision memos) in the 232 Exclusions Portal to each exclusion request. The U.S. Department of Commerce response to an exclusion request will also be responsive to any of the objection(s), rebuttal(s) and surrebuttal(s) for that submitted exclusion request submitted through the 232 Exclusions Portal.


(ii) Streamlined review process for “No Objection” requests. The U.S. Department of Commerce will grant properly filed exclusion requests which meet the requisite criteria, receive no objections, and present no national security concerns. If an exclusion request’s 30-day comment period in the 232 Exclusions Portal has expired and no objections have been submitted, BIS will immediately assess the request for any national security concerns. If BIS identifies no national security concerns, it will post a decision granting the exclusion request in the 232 Exclusions Portal.


(iii) Effective date for approved exclusions and date used for calculating duty refunds – (A) Effective date for approved exclusions. Approved exclusions will be effective five business days after publication of the U.S. Department of Commerce response granting an exclusion in the 232 Exclusions Portal. Starting on that date, the requester will be able to rely upon the approved exclusion request in calculating the duties owed on the product imported in accordance with the terms listed in the approved exclusion request. Companies are able to receive retroactive relief on granted requests dating back to the date of the request’s submission on unliquidated entries.


(B) Contact for obtaining duty refunds. The U.S. Department of Commerce does not provide refunds on tariffs. Any questions on the refund of duties should be directed to CBP.


(iv) Validity period for exclusion requests. Exclusions will generally be approved for one year from the date of the signature on the decision memo, but may be valid for shorter or longer than one year depending on the specifics of the exclusion request; any objections filed; and analysis by the U.S. Department of Commerce and other parts of the U.S. Government, as warranted, of the current supply and demand in the United States, including any limitations or other factors that the Department determines should be considered in order to achieve the national security objectives of the duties and quantitative limitations.


(A) Examples of what fact patterns may warrant a longer exclusion validity period. Individuals or organizations submitting exclusion requests or objections may, and are encouraged to specify how long they believe an exclusion may be warranted and specify the rationale for that recommended time period. For example, an individual or organization submitting an exclusion request may request a longer validity period if there are factors outside of their control that may make it warranted to grant a longer period. These factors may include regulatory requirements that make a longer validity period justified, e.g., for an aircraft manufacturer that would require a certain number of years to make a change to an FAA-approved type certificate or for a manufacturer of medical items to obtain FDA approval. Business considerations, such as the need for a multi-year contract for steel with strict delivery schedules in order to complete a significant U.S. project by an established deadline, e.g., a large scale oil and gas exploration project, is another illustrative example of the types of considerations that a person submitting an exclusion request may reference.


(B) Examples of what criteria may warrant a shorter exclusion validity period. Objectors are encouraged to provide their suggestions for how long they believe an appropriate validity period should be for an exclusion request. In certain cases, this may be an objector indicating it has committed to adding new capacity that will be coming online within six months, so a shorter six-month period is warranted. Conversely, if an objector knows it will take two years to obtain appropriate regulatory approvals, financing and/or completing construction to add new capacity, the objector may, in responding to an exclusion that requests a longer validity period, e.g., three years, indicate that although they agree a longer validity period than one year may be warranted in this case, that two years is sufficient.


(C) None of the illustrative fact patterns identified in paragraphs (h)(2)(iv)(A) or (B) of this supplement will be determinative in and of themselves for establishing the appropriate validity period, but this type of information is helpful for the U.S. Department of Commerce to receive, when warranted, to help determine the appropriate validity period if a period other than one year is requested.


(3) Review period and implementation of any needed conforming changes – (i) Review period. The review period normally will not exceed 106 days for requests that receive objections, including adjudication of objections submitted on exclusion requests and any rebuttals to objections, and surrebuttals. The estimated 106-day period begins on the day the exclusion request is posted in the 232 Exclusions Portal, and ends once a decision to grant or deny is made on the exclusion request.


(ii) Coordination with other agencies on approval and implementation. Other agencies of the U.S. Government, such as CBP, will take any additional steps needed to implement an approved exclusion request. These additional steps needed to implement an approved exclusion request are not part of the review criteria used by the U.S. Department of Commerce to determine whether to approve an exclusion request, but are an important component in ensuring the approved exclusion request can be properly implemented. The U.S. Department of Commerce will provide CBP with information that will identify each approved exclusion request pursuant to this supplement. Individuals or organizations whose exclusion requests are approved must report information concerning any applicable exclusion in such form as CBP may require. These exclusion identifiers will be used by importers in the data collected by CBP in order for CBP to determine whether an import is within the scope of an approved exclusion request.


(i) For further information. If you have questions on this supplement, you may contact the Director, Industrial Studies, Office of Technology Evaluation, Bureau of Industry and Security, U.S. Department of Commerce, at (202) 482-5642 or [email protected] regarding steel exclusion requests, or at (202) 482-4757 or [email protected] regarding aluminum exclusion requests. The U.S. Department of Commerce website includes FAQs, best practices other companies have used for submitting exclusion requests and objections, and helpful checklists. The U.S. Department of Commerce has also included a manual providing instruction on the 232 Exclusions Portal for exclusion requests submitted on or after June 13, 2019, titled 232 Exclusions Portal Comprehensive Guide (“232 Exclusions Guide”) and posted online at (https://www.commerce.gov/page/section-232-investigations) to assist your understanding when making 232 submissions in the 232 Exclusions Portal.


[85 FR 81073, Dec. 14, 2020]


Supplement No. 2 to Part 705 – General Approved Exclusions (GAEs) for Steel Articles Under the Section 232 Exclusions Process

This supplement identifies steel articles that have been approved for import under a General Approved Exclusion (GAE). The Secretary of Commerce, in consultation with the Secretary of Defense, the Secretary of the Treasury, the Secretary of State, the United States Trade Representative, the Assistant to the President for Economic Policy, the Assistant to the President for National Security Affairs, and other senior Executive Branch officials as appropriate, makes these determinations that certain steel articles may be authorized under a GAE consistent with the objectives of the 232 Exclusions Process as outlined in supplement no. 1 to this part. The GAEs described in this supplement may be used by any importer. GAEs do not include quantity limits. Each GAE identifier will be effective fifteen calendar days after publication of a Federal Register notice either adding or revising a specific GAE identifier. There is no retroactive relief for GAEs. Relief is only available to steel articles that are entered for consumption, or withdrawn from warehouse for consumption, on or after the effective date of a GAE included in supplement no. 2 to this part. In order to use a GAE, the importer must include the GAE identifier in the Automated Commercial Environment (ACE) system that corresponds to the steel articles being imported. These GAEs are indefinite in length, but the Department of Commerce on behalf of the Secretary of Commerce may at any time issue a Federal Register notice removing, revising or adding to an existing GAE in this supplement as warranted to align with the objectives of the 232 exclusions process as described in supplement no. 1 to this part. The Department of Commerce on behalf of the Secretary of Commerce may periodically publish notices of inquiry in the Federal Register soliciting public comments on potential removals, revisions or additions to this supplement.


GAE Identifier
Description of steel that may be imported

(at 10-digit harmonized tariff schedule of the United States (HTSUS) statistical reporting number or more narrowly defined at product level)

Other

limitations

(e.g., country of

import or

quantity

allowed)

Federal Register citation
GAE.1.S: 73045920307304592030. TUBES/PIPES/HLLW PRFLS OTH ALLOY STL, SMLESS, CIRC CS, OTHER THAN COLD-DRAWN/COLD-ROLLED (COLD-REDUCED), SUITABLE FOR BOILERS ETC, HEAT-RESISTING STL85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.2.S: 73045920807304592080. TUBES/PIPES/H PRFLS ALLOY STL, SMLSS, CIRC CS, OTHER THAN COLD-DRAWN/COLD-ROLLED (COLD-REDUCED), SUIT FOR BOILERS ETC, NOT HT-RSST STL, OS DIAMETER >406.4MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.4.S: 72224060007222406000. ANGLES SHAPES AND SECTIONS STAINLESS STEEL, OTHER THAN HOT ROLLED, NOT DRILLED, NOT PUNCHED, AND NOT OTHERWISE ADVANCED85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.5.S: 73069010007306901000. OTH TUBES/PIPES/HOLLOW PROFILES IRON/NONALLOY STL, RIVETED/SIMILARLY CLOSED (NOT WELDED)85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.6.S: 72126000007212600000. FLAT-ROLLED IRON/NONALLOY STL, WDTH 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.8.S: 72202070607220207060. FLAT-ROLLED STAINLESS STL, WDTH 0.25MM BUT = 1.25MM, = 0.5% NICKEL 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.9.S: 72230050007223005000. FLAT WIRE OF STAINLESS STEEL85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.10.S: 72202080007220208000. FLAT-ROLLED STAINLESS STL, WDTH 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.11.S: 72171080607217108060. ROUND WIRE IRON/NONALLOY STL, NOT PLATED/COATED, >/= 0.6% CARBON, NOT HEAT-TREATED, OS DIAMETER 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.12.S: 72269230607226923060. FLAT-ROLLED OTH ALLOY STL, WDTH 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.13.S: 72299050107229905016. ROUND WIRE OTHER ALLOY STL, OS DIAMETER 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.15.S: 73045980607304598060. TUBES/PIPES/HLLW PRFLS OTH ALLOY STL, SMLESS, CIRC CS, OTHER THAN COLD-DRAWN/COLD-ROLLED (COLD-REDUCED), OS DIAMETER >285.8MM BUT 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.17.S: 73042460307304246030. TUBING (OIL/GAS DRILLING) STAINLESS STL, SEAMLESS, OS DIAMETER = 114.3MM, WALL THK >9.5MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.18.S: 72299050317229905031. ROUND WIRE OTHER ALLOY STL, WITH OS DIAMETER >/= 1.0MM BUT 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.19.S: 73045980107304598010. TUBES/PIPES/HOLLOW PROFILES OTH ALLOY STL, SEAMLESS, CIRC CS, OTHER THAN COLD-DRAWN/COLD-ROLLED (COLD-REDUCED), NOT HEAT-RESISTANT, OS DIAMETER 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.20.S: 72193100107219310010. FLAT-ROLLED STAINLESS STL, WDTH >/= 600MM, NFW THAN COLD-RLD (COLD-REDUCED), THK >/= 4.75MM, COILS85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.21.S: 73045980457304598045. TUBES/PIPES/HLLW PRFLS OTH ALLOY STL, SMLESS, CIRC CS, OTHER THAN COLD-DRAWN/COLD-ROLLED (COLD-REDUCED), NOT HEAT-RESISTANT, OS DIAMETER >/= 190.5MM BUT = 285.8MM, WALL THK 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.22.S: 73064010907306401090. OTH TUBES/PIPES/HOLLOW PRFLS STAINLESS STL, WELDED, CIRC CS, WALL THK 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.24.S: 72112960807211296080. FLAT-ROLLED IRON/NONALLOY STL, WIDTH >/= 300MM BUT /= 0.25% CRBN, THK = 1.25MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.25.S: 72172015007217201500. FLAT WIRE IRON/NONALLOY STL, PLATED/COATED WITH ZINC85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.26.S: 72191200267219120026. FLAT-ROLLED STAINLESS STL, WDTH >1575MM, HOT-RLD, COILS, THK >6.8MM BUT 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.28.S: 73042430107304243010. CASING (OIL/GAS DRILLING) STAINLESS STL, SEAMLESS, THREADED/COUPLED, OS DIAMETER 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.29.S: 72192200357219220035. FLAT-ROLLED STAINLESS STL, THICKNESS >/= 4.75MM BUT /= 600MM BUT 0.5% NICKEL85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.30.S: 72224030857222403085. SHAPES/SECTIONS STAINLESS STL, HOT-RLD, NOT DRILLED/PUNCHED/ADVANCED, MAX CROSS SECTION 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.31.S: 72224030457222403045. SHAPES/SECTIONS STAINLESS STL, HOT-RLD, NOT DRILLED/PUNCHED/ADVANCED, MAX CS >/= 80MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.32.S: 72191100607219110060. FLAT-ROLLED STAINLESS STL, WDTH >1575MM, HOT-RLD, COILS, THK >10MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.36.S: 72191100307219110030. FLAT-ROLLED STAINLESS STL, WIDTH >/= 600MM BUT 10MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.40.S: 72202060607220206060. FLAT-ROLLED STAINLESS STL, WDTH 1.25MM, = 0.5% NICKEL, 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.41.S: 72171080257217108025. ROUND WIRE IRON/NONALLOY STL, NOT PLATED/COATED, >0.6% CARBON, HEAT-TREATED, OS DIAMETER 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.42.S: 72201210007220121000. FLAT-ROLLED STAINLESS STL, WIDTH >/= 300MM BUT 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.43.S: 72099000007209900000. FLAT-ROLLED IRON/NONALLOY STL, WDTH >/= 600MM, COLD-RLD, NOT CLAD/PLATED/COATED, WHETHER OR NOT IN COILS85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.44.S: 72139130207213913020. BARS/RODS IRON/NA STL, IRR COILS, HOT-RLD, CIRC CS, OS DIAMETER 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.45.S: 73066170607306617060. OTH TUBES/PIPES/HOLLOW PROFILES OTH ALLOY STL (NOT STAINLESS), WELDED, SQ/RECT CS, WALL THK 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.46.S: 72163300907216330090. H SECTIONS IRON/NONALLOY STL, HOT-RLD/DRWN/EXTRD, HEIGHT >/= 80MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.47.S: 72179050307217905030. WIRE IRON/NONALLOY STL, NOT PLATED/COATED WITH BASE METALS OR PLASTICS, 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.48.S: 72269230307226923030. FLAT-ROLLED OTH ALLOY STL, WDTH 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.49.S: 72191200517219120051. FLAT-ROLLED STAINLESS STL, WIDTH >/= 1370MM BUT /= 4.75MM BUT 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.50.S: 72279060207227906020. BARS/RODS OTHER ALLOY STL, IRR COILS, HOT-RLD, NOT TOOL STL, WELDING QUALITY WIRE RODS85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.51.S: 72179050907217905090. WIRE IRON/NONALLOY STL, NOT PLATED/COATED WITH BASE METALS OR PLASTICS, >/= 0.6% CARBON85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.57.S: 73049010007304901000. TUBES/PIPES/HOLLOW PROFILES IRON/NONALLOY STL, SEAMLESS, NONCIRCULAR CROSS SECTION, WALL THK >/= 4MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.58.S: 73043900027304390002. TUBES/PIPES/HLLW PRFLS IRON/NA STL, SMLESS, CIRC CS, OTHER THAN COLD-DRAWN/COLD-ROLLED (COLD-REDUCED), SUITABLE FOR BOILERS ETC, OS DIAMETER 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.59.S: 72191200717219120071. FLAT-ROLLED STAINLESS STL, WDTH >600MM BUT /= 4.75MM BUT 0.5% NICKEL, = 1.5% OR >/= 5% MOLYBDENUM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.61.S: 72179050607217905060. WIRE IRON/NONALLOY STL, PLATED/COATED, >0.25% BUT 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.62.S: 72201250007220125000. FLAT-ROLLED STAINLESS STL, WDTH 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.63.S: 72269280057226928005. FLAT-ROLLED OTH ALLOY STL, WDTH 0.25MM, HIGH-NICKEL ALLOY STL85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.64.S: 72171060007217106000. OTHER WIRE IRON/NONALLOY STL, NOT PLATED/COATED, 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.65.S: 72191200217219120021. FLAT-ROLLED STAINLESS STL, WIDTH >/= 1370MM BUT = 1575MM, HOT-RLD, COILS, THICKNESS >6.8MM BUT = 10MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.66.S: 73043900167304390016. TUBES/PIPES/HOLLOW PROFILES IRON/NA STL, SEAMLESS, CIRC CS, OTHER THAN COLD-DRAWN/COLD-ROLLED (COLD-REDUCED), GALVANIZED, OS DIAMETER = 114.3MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.67.S: 73042440407304244040. CASING (OIL/GAS DRILLING) STAINLESS STL, SEAMLESS, NOT THREADED/COUPLED, OS DIAMETER >/= 215.9MM BUT = 285.8MM, WALL THK >/= 12.7MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.69.S: 73044130057304413005. TUBES/PIPES/HOLLOW PRFLS STAINLESS STL, SEAMLESS, CIRC CS, COLD-DRWN/RLD (COLD-REDUCED), OS DIAMETER 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.70.S: 72155000907215500090. OTHER BARS/RODS IRON/NONALLOY STL, COLD-FORMED/FINISHED, NOT COILS, >/= 0.6% CARBON85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.72.S: 72272000307227200030. BARS/RODS SILICO-MANGANESE STL, IRR COILS, HOT-RLD, WELDING QUALITY WIRE RODS, STAT NOTE 685 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.73.S: 73066970607306697060. OTH TUBES/PIPES/HOLLOW PROFILES OTH ALLOY STL (NOT STAINLESS), WELDED, OTH NONCIRCULAR CS, WALL THK 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.74.S: 73021010457302101045. RAILS IRON/NONALLOY STL, NEW, HEAT TREATED, >30KG/M85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.77.S: 73053160907305316090. OTHER TUBES/PIPES ALLOY STL, CIRC CS, OS DIAMETER >406.4MM, NOT LINE PIPE OR CASING (OIL/GAS), LONGITUDINALLY WELDED, NOT TAPERED PIPES/TUBES, NON-STAINLESS ALLOY STEEL85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.79.S: 72269901107226990110. FLAT-ROLLED OTH ALLOY STL, WDTH 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.80.S: 72255060007225506000. FLAT-ROLLED OTH ALLOY STL, WDTH >/= 600MM, COLD-RLD, THK >/= 4.75MM, NOT OF TOOL STEEL85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.81.S: 73049050007304905000. TUBES/PIPES/HOLLOW PROFILES IRON/NONALLOY STL, SEAMLESS, NOT CIRCULAR CS, WALL THK 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.82.S: 72192200057219220005. FLAT-ROLLED STAINLESS STL, WDTH >/= 600MM, HOT-RLD, NOT COILS, THICKNESS >/= 4.75MM BUT = 4.75MM BUT = 10MM, HIGH-NICKEL ALLOY STL85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.83.S: 72171040457217104045. ROUND WIRE IRON/NONALLOY STL, NOT PLATED/COATED, 2 KG85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.84.S: 72092700007209270000. FLAT-ROLLED IRON/NONALLOY STL, WDTH >/= 600MM, COLD-RLD, NOT CLAD/PLATED/COATED, NOT COILS, THK 0.5-1MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.85.S: 72199000607219900060. OTHER FLAT-ROLLED STAINLESS STL, WDTH >/= 600MM, FURTHER WORKED THAN COLD-RLD, = 0.5% NICKEL, 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.86.S: 72191200817219120081. FLAT-ROLLED STAINLESS STL, WIDTH >/= 600MM BUT /= 4.75MM BUT85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.88.S: 722410000057224100005. INGOTS AND OTHER PRIMARY FORMS OF HIGH-NICKEL ALLOY STEEL85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.89.S: 72132000807213200080. BARS/RODS IRON/NONALLOY STL, HOT-RLD, IRR COILS, FREE-CUTTING STL, 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.90.S: 72161000107216100010. U SECTIONS IRON/NONALLOY STL, HOT-ROLLED/DRAWN/EXTRUDED, HEIGHT 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.91.S: 73066950007306695000. OTH TUBES/PIPES/HOLLOW PROFILES IRON/NONALLOY STL, WELDED, OTH NONCIRCULAR CS, WALL THK 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.93.S: 72083800157208380015. FLAT-ROLLED IRON/NA STL, WDTH >/= 600MM, HOT-RLD, NOT CLAD/PLATED/COATED, COILS, THICKNESS >/= 3MM BUT 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.94.S: 72171040907217104090. ROUND WIRE IRON/NONALLOY STL, NOT PLATED/COATED, 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.95.S: 73021050207302105020. RAILS OF ALLOY STEEL, NEW85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.96.S: 72107060307210706030. FLAT-ROLLED IRON/NA STL, WDTH >/= 600MM, PAINTD/VARNSHD/COATD W/PLASTICS, ELECTROLYTICALLY PLATD/COATD W/ZINC85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.97.S: 73042440607304244060. CASING (OIL/GAS DRILLING) STAINLESS STL, SEAMLESS, NOT THREADED/COUPLED, OS DIAMETER >285.8MM BUT /=12.7MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.99.S: 73042430407304243040. CASING (OIL/GAS DRILLING) STAINLESS STL, SEAMLESS, THREADED/COUPLED, OS DIAMETER >/= 215.9MM BUT /=12.7MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.100.S: 73042430207304243020. CASING (OIL/GAS DRILLING) STAINLESS STL, SEAMLESS, THREADED/COUPLED, OS DIAMETER /= 12.7MM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.101.S: 72191300817219130081. FLAT-ROLLED STAINLESS STL, WIDTH >/= 600MM BUT /= 3MM BUT 24% NICKEL85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.102.S: 72111400907211140090. FLAT-ROLLED IRON/NONALLOY STL, WDTH /= 4.75MM, NOT HIGH-STRENGTH STEEL, COILS85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.103.S: 72189100307218910030. SEMIFINISHED STAINLESS STL, RECTANGULAR CROSS SECTION, WDTH /= 232 CM285 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.104.S: 73062130007306213000. CASING (OIL/GAS DRILLING) STAINLESS STL, WELDED, THREADED/COUPLED85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.105.S: 72112345007211234500. FLAT-ROLLED IRON/NONALLOY STL, WDTH 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.106.S: 72202060807220206080. FLAT-ROLLED STAINLESS STL, WDTH 1.25MM, NOT HIGH-NICKEL ALLOY, = 0.5% NICKEL, >/= 15% CHROMIUM85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.107.S: 73053910007305391000. OTHER TUBES/PIPES IRON/NONALLOY STL, CIRC CS, OS DIAMETER >406.4MM, WELDED, OTHER THAN LONGITUDALLY WELDED85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

GAE.108.S: 72172045507217204550. ROUND WIRE IRON/NONALLOY STL, PLATED/COATED WITH ZINC, OS DIAMETER >/= 1.0MM BUT /= 0.25% BUT 85 FR 81079, 12/14/2020. 86 FR 70009, 12/9/2021.

Note to Supplement No. 2: Harmonized Tariff Schedule of the United States (HTSUS) Classifications are identified by the U.S. International Trade Commission (ITC) through its web version of the Harmonized Tariff Schedule. The list of the HTSUS Classifications referenced in this table of GAEs is drawn from the HTSUS and ITC Change Records for HTSUS Classifications (compiled at https://hts.usitc.gov/) and will be amended when the ITC publishes subsequent Change Records. If there are any discrepancies between the list of the HTSUS Classifications in this table and the HTSUS Classifications identified by the ITC in the Harmonized Tariff Schedule of the United States and the associated Change Records, the ITC’s list of HTSUS Classifications shall be controlling. Therefore, if an HTSUS Classification defining a GAE is split or otherwise modified by the ITC in the HTSUS, GAEs are extended to the newly-created HTSUS Classification(s), so long as the new ‘child’ HTSUS Classification(s) contain products falling entirely within the scope of the old ‘parent’ HTSUS classification. These types of ‘inherited’ GAEs are effective from the effective date of the change to the HTSUS, even prior to a Commerce rule being published to add the new HTSUS number to the GAE list under supplement no. 2. During the period after the effective date of the change to the HTSUS and before the GAE is updated, ACE will reject entries claiming the exclusion with the new HTSUS number and importers will have to make entry without the exclusion. In order for importers to preserve their rights, if any, to the exclusion with the new HTSUS number during this period, importers are advised to seek extensions of liquidation of the affected entries with CBP until Commerce is able to update and publish a revised GAE list under this supplement no. 2.


[85 FR 81079, Dec. 14, 2020, as amended at 86 FR 70009, Dec. 9, 2021]


Supplement No. 3 to Part 705 – General Approved Exclusions (GAEs) for Aluminum Articles Under the Section 232 Exclusions Process

This supplement identifies aluminum articles that have been approved for import under a General Approved Exclusion (GAE). The Secretary of Commerce, in consultation with the Secretary of Defense, the Secretary of the Treasury, the Secretary of State, the United States Trade Representative, the Assistant to the President for Economic Policy, the Assistant to the President for National Security Affairs, and other senior Executive Branch officials as appropriate, makes these determinations that certain aluminum articles may be authorized under a GAE consistent with the objectives of the 232 exclusions process as outlined in supplement no. 1 to this part. The GAEs described in this supplement may be used by any importer. GAEs do not include quantity limits. Each GAE identifier will be effective fifteen calendar days after publication of a Federal Register notice either adding or revising a specific GAE identifier. There is no retroactive relief for GAEs. Relief is only available to aluminum articles that are entered for consumption, or withdrawn from warehouse for consumption, on or after the effective date of a GAE included in supplement no. 2 to this part. In order to use a GAE, the importer must reference the GAE identifier in the Automated Commercial Environment (ACE) system that corresponds to the aluminum articles being imported. These GAEs are indefinite in length, but the Department of Commerce on behalf of the Secretary of Commerce may at any time issue a Federal Register notice removing, revising or adding to an existing GAE in this supplement as warranted to align with the objectives of the 232 exclusions process as described in supplement no. 1 to this part. The Department of Commerce on behalf of the Secretary of Commerce may periodically publish notices of inquiry in the Federal Register soliciting public comments on potential removals, revisions or additions to this supplement.


GAE Identifier
Description of aluminum that may be imported

(at 10-digit Harmonized)

Tariff Schedule of the

United States (HTSUS)

statistical reporting

number or more

narrowly defined at

product level)

Other limitations

(e.g., country of import or

quantity allowed)

Federal Register

citation

GAE.1.A: 76090000007609000000. ALUMINUM TUBE OR PIPE FITTINGS (COUPLINGS, ELBOWS, SLEEVES)85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

GAE.3.A: 76071960007607196000. ALUMINUM FOIL OF THICKNESS = 0.2MM, NOT BACKED, OTHER THAN ROLLED BUT NOT FURTHER WORKED, OTHER THAN ETCHED CAPACITOR FOIL, OTHER THAN CUT TO SHAPE W/ THICKNESS = 0.15 MM85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

GAE.4.A: 76042100107604210010. ALUMINUM ALLOY HOLLOW PROFILES OF HEAT-TREATABLE INDUSTRIAL ALLOYS OF A KIND DESCRIBED IN NOTE 6 TO THIS CHAPTER85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

GAE.5.A: 76042910107604291010. ALUMINUM ALLOY PROFILES OTHER THAN HOLLOW PROFILES OF HEAT-TREATABLE INDUSTRIAL ALLOYS OF A KIND DESCRIBED IN NOTE 6 TO THIS CHAPTER85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

GAE.6.A: 76071910007607191000. ALUMINUM FOIL OF THICKNESS = 0.2MM, NOT BACKED OTHER THAN ROLLED BUT NOT FURTHER WORKED, ETCHED CAPACITOR FOIL85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

GAE.7.A: 76061160007606116000. ALUMINUM PLATES, SHEETS AND STRIP, THICKNESS > 0.2MM, RECTANGULAR (INCLUDING SQUARE), NOT ALLOYED, CLAD85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

GAE.8.A: 76052900007605290000. ALUMINUM WIRE ALLOY, MAXIMUM CROSS-SECTIONAL DIMENSION = 7MM85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

GAE.9.A: 76012090807601209080. UNWROUGHT ALUMINUM ALLOY, SHEET INGOT (SLAB) OF A KIND DESCRIBED IN STATISTICAL NOTE 3 TO THIS CHAPTER85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

GAE.10.A: 76071160107607116010. ALUMINUM FOIL OF THICKNESS >0.01 MM AND =0.15 MM, ROLLED, NOT BACKED, BOXED & WEIGHING =11.3 KG85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

GAE.12.A: 76072010007607201000. ALUMINUM FOIL OF THICKNESS =0.2 MM, BACKED COVERED OR DECORATED WITH A CHARACTER, DESIGN, FANCY EFFECT OR PATTERN85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

GAE.13.A: 76042950907604295090. ALUMINUM ALLOY BARS AND RODS, OTHER THAN ROUND CROSS SECTION, OTHER THAN HEAT-TREATABLE INDUSTRIAL ALLOYS OF A KIND DESCRIBED IN NOTES 5 & 6 OF THIS CHAPTER85 FR 81083, 12/14/2020. 86 FR 70013, 12/9/2021.

Note to Supplement No. 3: Harmonized Tariff Schedule of the United States (HTSUS) Classifications are identified by the U.S. International Trade Commission (ITC) through its web version of the Harmonized Tariff Schedule of the United States. The list of the HTSUS Classifications referenced in this table of GAEs is drawn from the HTSUS and ITC Change Records for HTSUS Classifications (compiled at https://hts.usitc.gov/) and will be amended when the ITC publishes subsequent Change Records. If there are any discrepancies between the list of HTSUS Classifications in this table and the HTSUS Classifications identified by the ITC in the Harmonized Tariff Schedule of the United States and the associated Change Records, the ITC’s list of HTSUS Classifications shall be controlling. Therefore, if an HTSUS Classification defining a GAE is split or otherwise modified by the ITC in the HTSUS, GAEs are extended to the newly-created HTSUS Classification(s), so long as the new ‘child’ HTSUS Classification(s) contain products falling entirely within the scope of the old ‘parent’ HTSUS classification. These types of ‘inherited’ GAEs are effective from the effective date of the change to the HTSUS, even prior to a Commerce rule being published to add the new HTSUS number to the GAE list under this supplement no. 3. During the period after the effective date of the change to the HTSUS and before the GAE is updated, ACE will reject entries claiming the exclusion with the new HTSUS number and importers will have to make entry without the exclusion. In order for importers to preserve their rights, if any, to the exclusion with the new HTSUS number during this period, importers are advised to seek extensions of liquidation of the affected entries with CBP until Commerce is able to update and publish a revised GAE list under this supplement no. 3.


[85 FR 81083, Dec. 14, 2020, as amended at 86 FR 70013, Dec. 9, 2021]


PARTS 706-709 [RESERVED]

SUBCHAPTER B – CHEMICAL WEAPONS CONVENTION REGULATIONS

PART 710 – GENERAL INFORMATION AND OVERVIEW OF THE CHEMICAL WEAPONS CONVENTION REGULATIONS (CWCR)


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.

§ 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.


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 (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.


(3) Production of a Schedule 1, Schedule 2 or Schedule 3 chemical is understood, for declaration purposes, to include intermediates, by-products, or waste products that are produced and consumed within a defined chemical manufacturing sequence, where such intermediates, by-products, or waste products are chemically stable and therefore exist for a sufficient time to make isolation from the manufacturing stream possible, but where, under normal or design operating conditions, isolation does not occur.


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:


(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 § 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 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; 86 FR 940, Jan. 7, 2021]


§ 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.


§ 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 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.


§ 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.


§ 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.


§ 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 §§ 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 (§§ 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]


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

  • 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 § 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]


    Supplement No. 2 to Part 710 – Definitions of Production

    Schedule 1 chemicals
    Schedule 2 and Schedule 3 chemicals
    Unscheduled discrete organic chemicals (UDOCs)
    Produced by a biochemical or biologically mediated reactionProduced by synthesis*
    Formation through chemical synthesis.

    Processing to extract and isolate Schedule 1 chemicals.
    All production steps in any units within the same plant which includes associated processes – purification, separation, extraction distillation or refining.**

    * Intermediates used in a single or multi-step process to produce another declared UDOC are not declarable.

    ** Intermediates are subject to declaration, except “transient intermediates,” which are those chemicals in a transition state in terms of thermodynamics and kinetics, that exist only for a very short period of time, and cannot be isolated, even by modifying or dismantling the plant, or by altering process operating conditions, or by stopping the process altogether are not subject to declaration.


    PART 711 – GENERAL INFORMATION REGARDING DECLARATION, REPORTING, AND ADVANCE NOTIFICATION REQUIREMENTS, AND THE ELECTRONIC FILING OF DECLARATIONS AND REPORTS


    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.

    § 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 § 711.6 of the CWCR).


    § 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.


    § 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.


    § 711.4 Assistance in determining your obligations.

    (a) Determining if your chemical is subject to declaration, reporting or advance notification requirements. (1) If you need assistance in determining if your chemical is classified as a Schedule 1, Schedule 2, or Schedule 3 chemical, or is an unscheduled discrete organic chemical, submit your written request for a chemical determination to BIS. Such requests must be sent via facsimile to (202) 482-1731, e-mailed to [email protected], or mailed to the Treaty Compliance Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 4515, 14th Street and Pennsylvania Avenue, NW., Washington, DC 20230, and must be marked “Attn: Chemical Determination.” Your request should include the information noted in paragraph (a)(2) of this section to ensure an accurate determination. Also include any additional information that you feel is relevant to the chemical or process involved (see part 718 of the CWCR for provisions regarding treatment of confidential business information). If you are unable to provide all of the information required in paragraph (a)(2) of this section, you should include an explanation identifying the reasons or deficiencies that preclude you from supplying the information. If BIS cannot make a determination based upon the information submitted, BIS will return the request to you and identify the additional information that is necessary to complete a chemical determination. BIS will provide a written response to your chemical determination request within 10 working days of receipt of the request.


    (2) Include the following information in each chemical determination request:


    (i) Date of request;


    (ii) Company name and complete street address;


    (iii) Point of contact;


    (iv) Phone and facsimile number of contact;


    (v) E-mail address of contact, if you want an acknowledgment of receipt sent via e-mail;


    (vi) Chemical Name;


    (vii) Structural formula of the chemical, if the chemical is not specifically identified by name and chemical abstract service registry number in Supplements No. 1 to parts 712 through 714 of the CWCR; and


    (viii) Chemical Abstract Service registry number, if assigned.


    (b) Other inquiries. If you need assistance in interpreting the provisions of the CWCR or need assistance with declaration, forms, reporting, advance notification, inspection or facility agreement issues, contact BIS’s Treaty Compliance Division by phone at (202) 482-1001. If you require a response from BIS in writing, submit a detailed request to BIS that explains your question, issue, or request. Send the request to the address or facsimile included in paragraph (a) of this section, or e-mail the request to [email protected] Your request must be marked, “ATTN: CWCR Assistance.”


    [71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]


    § 711.5 Numerical precision of submitted data.

    Numerical information submitted in declarations and reports is to be provided per applicable rounding rules in each part (i.e., parts 712 through 715 of the CWCR) with a precision equal to that which can be reasonably provided using existing documentation, equipment, and measurement techniques.


    § 711.6 Where to obtain forms.

    (a) Forms to complete declarations and reports required by the CWCR may be obtained by contacting: Treaty Compliance Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 4515, 14th Street and Pennsylvania Avenue, NW., Washington, DC 20230, Telephone: (202) 482-1001. Forms and forms software may also be downloaded from the Internet at www.cwc.gov.


    (b) If the amount of information you are required to submit is greater than the given form will allow, multiple copies of forms may be submitted.


    [71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]


    § 711.7 Where to submit declarations, reports and advance notifications.

    Declarations, reports and advance notifications required by the CWCR must be sent either by fax to (202) 482-1731 or by mail or courier delivery to the following address: Treaty Compliance Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 4515, 14th Street and Pennsylvania Avenue, NW., Washington, DC 20230, Telephone: (202) 482-1001. Specific types of declarations and reports and due dates are outlined in supplement no. 2 to parts 712 through 715 of the CWCR.


    [73 FR 78182, Dec. 22, 2008]


    § 711.8 How to request authorization from BIS to make electronic submissions of declarations or reports.

    (a) Scope. This section provides an optional method of submitting declarations or reports. Specifically, this section applies to the electronic submission of declarations and reports required under the CWCR. If you choose to submit declarations and reports by electronic means, all such electronic submissions must be made through the Web-Data Entry System for Industry (Web-DESI), which can be accessed on the CWC web site at www.cwc.gov.


    (b) Authorization. If you or your company has a facility, plant site, or trading company that has been assigned a U.S. Code Number (USC Number), you may submit declarations and reports electronically, once you have received authorization from BIS to do so. An authorization to submit declarations and reports electronically may be limited or withdrawn by BIS at any time. There are no prerequisites for obtaining permission to submit electronically, nor are there any limitations with regard to the types of declarations or reports that are eligible for electronic submission. However, BIS may direct, for any reason, that any electronic declaration or report be resubmitted in writing, either in whole or in part.


    (1) Requesting approval to submit declarations and reports electronically. To submit declarations and reports electronically, you or your company must submit a written request to BIS at the address identified in § 711.6 of the CWCR. Both the envelope and letter must be marked, “ATTN: Electronic Declaration or Report Request.” Your request should be on company letterhead and must contain your name or the company’s name, your mailing address at the company, the name of the facility, plant site or trading company and its U.S. Code Number, the address of the facility, plant site or trading company (this address may be different from the mailing address), the list of persons who are authorized to view, edit, and/or submit declarations and reports on behalf of your company, and the telephone number and name and title of the owner, operator, or senior management official responsible for certifying that each person listed in the request is authorized to view, edit, and/or submit declarations and reports on behalf of you or your company (i.e., the certifying official). Additional information required for submitting electronic declarations and reports may be found on BIS’s Web site at www.cwc.gov. Once you have completed and submitted the necessary certifications, BIS will review your request for authorization to view, edit, and/or submit declarations and reports electronically. BIS will notify you if additional information is required and/or upon completion of its review.



    Note to § 711.8(b)(1):

    You must submit a separate request for each facility, plant site or trading company owned by your company (e.g., each site that is assigned a unique U.S. Code Number).


    (2) Assignment and use of passwords for facilities, plant sites and trading companies (USC password) and Web-DESI user accounts (user name and password). (i) Each person, facility, plant site or trading company authorized to submit declarations and reports electronically will be assigned a password (USC password) that must be used in conjunction with the U.S.C. Number. Each person authorized by BIS to view, edit, and/or submit declarations and reports electronically for a facility, plant site or trading company will be assigned a Web-DESI user account (user name and password) telephonically by BIS. A Web-DESI user account will be assigned to you only if your company has certified to BIS that you are authorized to act for it in viewing, editing, and/or submitting electronic declarations and reports under the CWCR.



    Note to § 711.8(b)(2)(i):

    When persons must have access to multiple Web-DESI accounts, their companies must identify such persons on the approval request for each of these Web-DESI accounts. BIS will coordinate with such persons to ensure that the assigned user name and password is the same for each account.


    (ii) Your company may reveal the facility, plant site or trading company password (USC password) only to Web-DESI users with valid passwords, their supervisors, and employees or agents of the company with a commercial justification for knowing the password.


    (iii) If you are an authorized Web-DESI account user, you may not:


    (A) Disclose your user name or password to anyone;


    (B) Record your user name or password, either in writing or electronically;


    (C) Authorize another person to use your user name or password; or


    (D) Use your user name or password following termination, either by BIS or by your company, of your authorization or approval for Web-DESI use.


    (iv) To prevent misuse of the Web-DESI account:


    (A) If Web-DESI user account information (i.e., user name and password) is lost, stolen or otherwise compromised, the company and the user must report the loss, theft or compromise of the user account information, immediately, by calling BIS at (202) 482-1001. Within two business days of making the report, the company and the user must submit written confirmation to BIS at the address provided in § 711.6 of the CWCR.


    (B) Your company is responsible for immediately notifying BIS whenever a Web-DESI user leaves the employ of the company or otherwise ceases to be authorized by the company to submit declarations and reports electronically on its behalf.


    (v) No person may use, copy, appropriate or otherwise compromise a Web-DESI account user name or password assigned to another person. No person, except a person authorized access by the company, may use or copy the facility, plant site or trading company password (USC password), nor may any person steal or otherwise compromise this password.


    (c) Electronic submission of declarations and reports – (1) General instructions. Upon submission of the required certifications and approval of the company’s request to use electronic submission, BIS will provide instructions on both the method for transmitting declarations and reports electronically and the process for submitting required supporting documents, if any. These instructions may be modified by BIS from time to time.


    (2) Declarations and reports. The electronic submission of a declaration or report will constitute an official document as required under parts 712 through 715 of the CWCR. Such submissions must provide the same information as written declarations and reports and are subject to the recordkeeping provisions of part 720 of the CWCR. The company and Web-DESI user submitting the declaration or report will be deemed to have made all representations and certifications as if the submission were made in writing by the company and signed by the certifying official. Electronic submission of a declaration or report will be considered complete upon transmittal to BIS.


    (d) Updating. A company approved for electronic submission of declarations or reports under Web-DESI must promptly notify BIS of any change in its name, ownership or address. If your company wishes to have a person added as a Web-DESI user, your company must inform BIS and follow the instructions provided by BIS. Your company should conduct periodic reviews to ensure that the company’s designated certifying official and Web-DESI users are persons whose current responsibilities make it necessary and appropriate that they act for the company in either capacity.


    [71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78182, Dec. 22, 2008]


    PART 712 – ACTIVITIES INVOLVING SCHEDULE 1 CHEMICALS


    Authority:22 U.S.C. 6701 et seq.; 50 U.S.C. 1601 et seq.; 50 U.S.C. 1701 et seq.; E.O. 12938, 59 FR 59099, 3 CFR, 1994 Comp., p. 950, as amended by E.O. 13094, 63 FR 40803, 3 CFR, 1998 Comp., p. 200; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.


    Source:71 FR 24929, Apr. 27, 2006, unless otherwise noted.

    § 712.1 Round to zero rule that applies to activities involving Schedule 1 chemicals.

    Facilities that produce, export or import mixtures containing less than 0.5% aggregate quantities of Schedule 1 chemicals (see supplement no. 1 to this part) as unavoidable by-products or impurities may round to zero and are not subject to the provisions of this part 712. Schedule 1 content may be calculated by volume or weight, whichever yields the lesser percent. Note that such mixtures may be subject to the regulatory requirements of other federal agencies.


    § 712.2 Restrictions on activities involving Schedule 1 chemicals.

    (a) You may not produce Schedule 1 chemicals for protective purposes.


    (b) You may not import any Schedule 1 chemical unless:


    (1) The import is from a State Party;


    (2) The import is for research, medical, pharmaceutical, or protective purposes;


    (3) The import is in types and quantities strictly limited to those that can be justified for such purposes; and


    (4) You have notified BIS at least 45 calendar days prior to the import, pursuant to § 712.6 of the CWCR.



    Note 1 to § 712.2(b):

    Pursuant to § 712.6, advance notifications of import of saxitoxin of 5 milligrams or less for medical/diagnostic purposes must be submitted to BIS at least 3 days prior to import.



    Note 2 to § 712.2(b):

    For specific provisions relating to the prior advance notification of exports of all Schedule 1 chemicals, see § 745.1 of the Export Administration Regulations (EAR) (15 CFR parts 730 through 774). For specific provisions relating to license requirements for exports of Schedule 1 chemicals, see § 742.2 and § 742.18 of the EAR for Schedule 1 chemicals subject to the jurisdiction of the Department of Commerce and see the International Traffic in Arms Regulations (22 CFR parts 120 through 130) for Schedule 1 chemicals subject to the jurisdiction of the Department of State.


    (c)(1) The provisions of paragraphs (a) and (b) of this section do not apply to the retention, ownership, possession, transfer, or receipt of a Schedule 1 chemical by a department, agency, or other entity of the United States, or by a person described in paragraph (c)(2) of this section, pending destruction of the Schedule 1 chemical;


    (2) A person referred to in paragraph (c)(1) of this section is:


    (i) Any person, including a member of the Armed Forces of the United States, who is authorized by law or by an appropriate officer of the United States to retain, own, possess transfer, or receive the Schedule 1 chemical; or


    (ii) In an emergency situation, any otherwise non-culpable person if the person is attempting to seize or destroy the Schedule 1 chemical.


    [71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]


    § 712.3 Initial declaration requirements for declared facilities which are engaged in the production of Schedule 1 chemicals for purposes not prohibited by the CWC.

    Initial declarations submitted in February 2000 remain valid until amended or rescinded. If you plan to change/amend the technical description of your facility submitted with your initial declaration, you must submit an amended initial declaration to BIS 200 calendar days prior to implementing the change (see § 712.5(b)(1)(ii) of the CWCR).


    § 712.4 New Schedule 1 production facility.

    (a) Establishment of a new Schedule 1 production facility. (1) If your facility has never before been declared under § 712.5 of the CWCR, or the initial declaration for your facility has been withdrawn pursuant to § 712.5(g) of the CWCR, and you intend to begin production of Schedule 1 chemicals at your facility in quantities greater than 100 grams aggregate per year for research, medical, or pharmaceutical purposes, you must provide an initial declaration (with a current detailed technical description of your facility) to BIS in no less than 200 calendar days in advance of commencing such production. Such facilities are considered to be “new Schedule 1 production facilities” and are subject to an initial inspection within 200 calendar days of submitting an initial declaration.


    (2) New Schedule 1 production facilities that submit an initial declaration pursuant to paragraph (a)(1) of this section are considered approved Schedule 1 production facilities for purposes of the CWC, unless otherwise notified by BIS within 30 days of receipt by BIS of that initial declaration.


    (b) Types of declaration forms required. If your new Schedule 1 production facility will produce in excess of 100 grams aggregate of Schedule 1 chemicals, you must complete the Certification Form, Form 1-1 and Form A. You must also provide a detailed technical description of the new facility or its relevant parts, and a detailed diagram of the declared areas in the facility.


    (c) Two hundred days after a new Schedule 1 production facility submits its initial declaration, it is subject to the declaration requirements in § 712.5(a)(1) and (a)(2) and § 712.5(b)(1)(ii) of the CWCR.


    § 712.5 Annual declaration requirements for facilities engaged in the production of Schedule 1 chemicals for purposes not prohibited by the CWC.

    (a) Declaration requirements – (1) Annual declaration on past activities. You must complete the forms specified in paragraph (b)(2) of this section if you produced at your facility in excess of 100 grams aggregate of Schedule 1 chemicals in the previous calendar year. As a declared Schedule 1 facility, in addition to declaring the production of each Schedule 1 chemical that comprises your aggregate production of Schedule 1 chemicals, you must also declare any Schedule 1, Schedule 2, or Schedule 3 precursor used to produce the declared Schedule 1 chemical. You must further declare each Schedule 1 chemical used (consumed) and stored at your facility, and domestically transferred from your facility during the previous calendar year, whether or not you produced that Schedule 1 chemical at your facility.


    (2) Annual declaration on anticipated activities. You must complete the forms specified in paragraph (b)(3) of this section if you anticipate that you will produce at your facility more than 100 grams aggregate of Schedule 1 chemicals in the next calendar year. If you are not already a declared facility, you must complete an initial declaration (see § 712.4 of the CWCR) 200 calendar days before commencing operations or increasing production which will result in production of more than 100 grams aggregate of Schedule 1 chemicals.


    (b) Declaration forms to be used – (1) Initial declaration. (i) You must have completed the Certification Form, Form 1-1 and Form A if you produced at your facility in excess of 100 grams aggregate of Schedule 1 chemicals in calendar years 1997, 1998, or 1999. You must have provided a detailed current technical description of your facility or its relevant parts including a narrative statement, and a detailed diagram of the declared areas in the facility.


    (ii) If you plan to change the technical description of your facility from your initial declaration completed and submitted pursuant to § 712.3 or § 712.4 of the CWCR, you must submit an amended initial declaration to BIS 200 calendar days prior to the change. Such amendments to your initial declaration must be made by completing a Certification Form, Form 1-1 and Form A, including the new description of the facility. See § 712.7 of the CWCR for additional instructions on amending Schedule 1 declarations.


    (2) Annual declaration on past activities. If you are subject to the declaration requirement of paragraph (a)(1) of this section, you must complete the Certification Form and Forms 1-1, 1-2, 1-2A, 1-2B, and Form A if your facility was involved in the production of Schedule 1 chemicals in the previous calendar year. Form B is optional.


    (3) Annual declaration on anticipated activities. If you anticipate that you will produce at your facility in excess of 100 grams aggregate of Schedule 1 chemicals in the next calendar year you must complete the Certification Form and Forms 1-1, 1-4, and Form A. Form B is optional.


    (c) Quantities to be declared. If you produced in excess of 100 grams aggregate of Schedule 1 chemicals in the previous calendar year, you must declare the entire quantity of such production, rounded to the nearest gram. You must also declare the quantity of any Schedule 1, Schedule 2 or Schedule 3 precursor used to produce the declared Schedule 1 chemical, rounded to the nearest gram. You must further declare the quantity of each Schedule 1 chemical consumed or stored by, or domestically transferred from, your facility, whether or not the Schedule 1 chemical was produced by your facility, rounded to the nearest gram. In calculating the amount of Schedule 1 chemical you produced, consumed or stored, count only the amount of the Schedule 1 chemical(s) in a mixture, not the total weight of the mixture (i.e., do not count the weight of the solution, solvent, or container).


    (d) For the purpose of determining if a Schedule 1 chemical is subject to declaration, you must declare a Schedule 1 chemical that is an intermediate, but not a transient intermediate.


    (e) “Declared” Schedule 1 facilities and routine inspections. Only facilities that submitted a declaration pursuant to paragraph (a)(1) or (a)(2) of this section or § 712.4 of the CWCR are considered “declared” Schedule 1 facilities. A “declared” Schedule 1 facility is subject to initial and routine inspection by the OPCW (see part 716 of the CWCR).


    (f) Approval of declared Schedule 1 production facilities. Facilities that submit declarations pursuant to this section are considered approved Schedule 1 production facilities for purposes of the CWC, unless otherwise notified by BIS within 30 days of receipt by BIS of an annual declaration on past activities or annual declaration on anticipated activities (see paragraphs (a)(1) and (a)(2) of this section). If your facility does not produce more than 100 grams aggregate of Schedule 1 chemicals, no approval by BIS is required.


    (g) Withdrawal of Schedule 1 initial declarations. A facility subject to §§ 712.3, 712.4 and 712.5 of the CWCR may withdraw its initial declaration at any time by notifying BIS in writing. A notification requesting the withdrawal of the initial declaration should be sent on company letterhead to the address in § 711.6 of the CWCR. BIS will acknowledge receipt of the withdrawal of the initial declaration. Facilities withdrawing their initial declaration may not produce subsequently in excess of 100 grams aggregate of Schedule 1 chemicals within a calendar year unless pursuant to § 712.4.


    § 712.6 Advance notification and annual report of all exports and imports of Schedule 1 chemicals to, or from, other States Parties.

    Pursuant to the Convention, the United States is required to notify the OPCW not less than 30 days in advance of every export or import of a Schedule 1 chemical, in any quantity, to or from another State Party. In addition, the United States is required to provide a report of all exports and imports of Schedule 1 chemicals to or from other States Parties during each calendar year. If you plan to export or import any quantity of a Schedule 1 chemical from or to your declared facility, undeclared facility or trading company, you must notify BIS in advance of the export or import and complete an annual report of exports and imports that actually occurred during the previous calendar year. The United States will transmit to the OPCW the advance notifications and a detailed annual declaration of each actual export or import of a Schedule 1 chemical from/to the United States. Note that the advance notification and annual report requirements of this section do not relieve you of any requirement to obtain a license for export of Schedule 1 chemicals subject to the EAR or ITAR or a license for import of Schedule 1 chemicals from the Department of Justice under the Alcohol, Tobacco, Firearms and Explosives Regulations in 27 CFR part 447. Only “declared” facilities, as defined in § 712.5(e) of the CWCR, are subject to initial and routine inspections pursuant to part 716 of the CWCR.


    (a) Advance notification of exports and imports. You must notify BIS at least 45 calendar days prior to exporting or importing any quantity of a Schedule 1 chemical, except for exports or imports of 5 milligrams or less of Saxitoxin – B (7) – for medical/diagnostic purposes, listed in supplement no. 1 to this part to or from another State Party. Advance notification of export or import of 5 milligrams or less of Saxitoxin for medical/diagnostic purposes only, must be submitted to BIS at least 3 calendar days prior to export or import. Note that advance notifications for exports may be sent to BIS prior to or after submission of a license application to BIS for Schedule 1 chemicals subject to the EAR and controlled under ECCN 1C351 or to the Department of State for Schedule 1 chemicals controlled under the ITAR. Such advance notifications must be submitted separately from license applications.


    (1) Advance notifications should be on company letterhead or must clearly identify the reporting entity by name of company, complete address, name of contact person and telephone and facsimile numbers, along with the following information:


    (i) Chemical name;


    (ii) Structural formula of the chemical;


    (iii) Chemical Abstract Service (CAS) Registry Number;


    (iv) Quantity involved in grams;


    (v) Planned date of export or import;


    (vi) Purpose (end-use) of export or import (i.e., research, medical, pharmaceutical, or protective purposes);


    (vii) Name(s) of exporter and importer;


    (viii) Complete street address(es) of exporter and importer;


    (ix) U.S. export license or control number, if known; and


    (x) Company identification number, once assigned by BIS.


    (2) Send the advance notification either by fax to (202) 482-1731 or by mail or courier delivery to the following address: Treaty Compliance Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 4515, 14th Street and Pennsylvania Avenue, NW., Washington, DC 20230, and mark it “Attn: Advance Notification of Schedule 1 Chemical [Export] [Import].”


    (3) Upon receipt of the advance notification, BIS will inform the exporter or importer of the earliest date after which the shipment may occur under the advance notification procedure. To export a Schedule 1 chemical subject to an export license requirement either under the EAR or the ITAR, the exporter must have applied for and been granted a license (see § 742.2 and § 742.18 of the EAR, or the ITAR at 22 CFR parts 120 through 130).


    (b) Annual report requirements for exports and imports of Schedule 1 chemicals. Any person subject to the CWCR that exported or imported any quantity of Schedule 1 chemical to or from another State Party during the previous calendar year has a reporting requirement under this section.


    (1) Annual report on exports and imports. Declared and undeclared facilities, trading companies, and any other person subject to the CWCR that exported or imported any quantity of a Schedule 1 chemical to or from another State Party in a previous calendar year must submit an annual report on exports and imports.


    (2) Report forms to submit – (i) Declared Schedule 1 facilities. (A) If your facility declared production of a Schedule 1 chemical and you also exported or imported any amount of that same Schedule 1 chemical, you must report the export or import by submitting either:


    (1) Combined declaration and report. Submit, along with your declaration, Form 1-3 for that same Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form B is optional; or


    (2) Report. Submit, separately from your declaration, a Certification Form, Form 1-1, and a Form 1-3 for each Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form B is optional.


    (B) If your facility declared production of a Schedule 1 chemical and exported or imported any amount of a different Schedule 1 chemical, you must report the export or import by submitting either:


    (1) Combined declaration and report. Submit, along with your declaration, a Form 1-3 for each Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form B is optional; or


    (2) Report. Submit, separately from your declaration, a Certification Form, Form 1-1, and a Form 1-3 for each Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form B is optional.


    (ii) If you are an undeclared facility, trading company, or any other person subject to the CWCR, and you exported or imported any amount of a Schedule 1 chemical, you must report the export or import by submitting a Certification Form, Form 1-1, and a Form 1-3 for each Schedule 1 chemical to be reported. Attach Form A, as appropriate; Form B is optional.


    (c) Paragraph (a) of this section does not apply to the activities and persons set forth in § 712.2(b) of the CWCR.


    [71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]


    § 712.7 Amended declaration or report.

    In order for BIS to maintain accurate information on previously submitted facility declarations, including information necessary to facilitate inspection notifications and activities or to communicate declaration or report requirements, amended declarations or reports will be required under the following circumstances described in this section. This section applies only to annual declarations on past activities and annual reports on exports and imports submitted for the previous calendar year or annual declarations on anticipated activities covering the current calendar year, unless specified otherwise in a final inspection report.


    (a) Changes to information that directly affect inspection of a declared facility’s Annual Declaration of Past Activities (ADPA) or Annual Declaration on Anticipated Activities (ADAA). You must submit an amended declaration or report to BIS within 15 days of any change in the following information:


    (1) Types of Schedule 1 chemicals produced (e.g., additional Schedule 1 chemicals);


    (2) Quantities of Schedule 1 chemicals produced;


    (3) Activities involving Schedule 1 chemicals; and


    (4) End-use of Schedule 1 chemicals (e.g., additional end-use(s)).


    (b) Changes to export or import information submitted in Annual Reports on Exports and Imports from undeclared facilities, trading companies and U.S. persons. You must submit an amended report or amended combined declaration and report for changes to export or import information within 15 days of any change in the following export or import information:


    (1) Types of Schedule 1 chemicals exported or imported (e.g., additional Schedule 1 chemicals);


    (2) Quantities of Schedule 1 chemicals exported or imported;


    (3) Destination(s) of Schedule 1 chemicals exported;


    (4) Source(s) of Schedule 1 chemicals imported;


    (5) Activities involving exports and imports of Schedule 1 chemicals; and


    (6) End-use(s) of Schedule 1 chemicals exported or imported (e.g., additional end-use(s)).


    (c) Changes to company and facility information previously submitted to BIS in the ADPA, the ADAA, and the Annual Report on Exports and Imports – (1) Internal company changes. You must submit an amended declaration or report to BIS within 30 days of any change in the following information:


    (i) Name of declaration/report point of contact (D-POC), including telephone number, facsimile number, and e-mail address;


    (ii) Name(s) of inspection point(s) of contact (I-POC), including telephone number(s), and facsimile number(s);


    (iii) Company name (see § 712.7(c)(2) of the CWCR for other company changes);


    (iv) Company mailing address;


    (v) Facility name;


    (vi) Facility owner, including telephone number, and facsimile number; and


    (vii) Facility operator, including telephone number, and facsimile number.


    (2) Change in ownership of company or facility. If you sold or purchased a declared facility or trading company, you must submit an amended declaration or report to BIS, either before the effective date of the change or within 30 days after the effective date of the change. The amended declaration or report must include the following information:


    (i) Information that must be submitted to BIS by the company selling a declared facility:


    (A) Name of seller (i.e., name of the company selling a declared facility);


    (B) Name of the declared facility and U.S. Code Number for that facility;


    (C) Name of purchaser (i.e., name of the new company purchasing a declared facility) and identity of contact person for the purchaser, if known;


    (D) Date of ownership transfer or change;


    (E) Additional details on sale of the declared facility relevant to ownership or operational control over any portion of that facility (e.g., whether the entire facility or only a portion of the declared facility has been sold to a new owner); and


    (F) Details regarding whether the new owner will submit the next declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the facility or trading company.


    (1) If the new owner is responsible for submitting the declaration or report for the entire current year, it must have in its possession the records for the period of the year during which the previous owner owned the facility.


    (2) If the previous owner and new owner will submit separate declarations for the periods of the calendar year during which each owned the facility (“part-year declarations”), and if, at the time of transfer of ownership, the previous owner’s activities are not above the declaration thresholds set forth in §§ 712.4 and 712.5 of the CWCR, the previous owner and the new owner must still submit declarations to BIS with the below threshold quantities indicated.


    (3) If the part-year declarations submitted by the previous owner and the new owner are not, when combined, above the declaration threshold set forth in §§ 712.4 and 712.5 of the CWCR, BIS will return the declarations without action as set forth in § 712.8 of the CWCR.


    (4) If part-year reports are submitted by the previous owner and the new owner as required in § 712.5 of the CWCR, BIS will submit both reports in the OPCW.


    (ii) Information that must be submitted to BIS by the company purchasing a declared facility:


    (A) Name of purchaser (i.e., name of company purchasing a declared facility;


    (B) Mailing address of purchaser;


    (C) Name of declaration point of contact (D-POC) for the purchaser, including telephone number, facsimile number, and e-mail address;


    (D) Name of inspection points of contact (I-POC) for the purchaser, including telephone number(s), facsimile number(s) and e-mail address(es);


    (E) Name of the declared facility and U.S. Code Number for that facility;


    (F) Location of the declared facility;


    (G) Owner and operator of the declared facility, including telephone number, and facsimile number; and


    (H) Details on the next declaration or report submission on whether the new owner will submit the declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the facility or trading company.


    (1) If the new owner is taking responsibility for submitting the declaration or report for the entire current year, it must have in its possession the records for the period of the year during which the previous owner owned the facility.


    (2) If the previous owner and new owner will submit separate declarations for the periods of the calendar year during which each owned the facility, and, at the time of transfer of ownership, the previous owner’s activities are not above the declaration thresholds set forth in §§ 712.4 and 712.5 of the CWCR, the previous owner and the new owner must still submit declarations to BIS with the below threshold quantities indicated.


    (3) If the part-year declarations submitted by the previous owner and the new owner are not, when combined, above the declaration threshold set forth in §§ 712.4 and 712.5 of the CWCR, BIS will return the declarations without action as set forth in § 712.8 of the CWCR.


    (4) If part-year reports are submitted by the previous owner and the new owner as required in § 712.5 of the CWCR, BIS will submit both reports to the OPCW.



    Note 1 to § 712.7(c):

    You must submit an amendment to your most recently submitted declaration or report for declaring changes to internal company information (e.g., company name change) or changes in ownership of a facility or trading company that have occurred since the submission of this declaration or report. BIS will process the amendment to ensure current information is on file regarding the facility or trading company (e.g., for inspection notifications and correspondence) and will also forward the amended declaration to the OPCW to ensure that they also have current information on file regarding your facility or trading company.



    Note 2 to § 712.7(c):

    You may notify BIS of change in ownership via a letter to the address given in § 711.6 of the CWCR. If you are submitting an amended declaration or report, use Form B to address details regarding the sale of the declared facility or trading company.



    Note 3 to § 712.7(c):

    For ownership changes, the declared facility or trading company will maintain its original U.S. Code Number, unless the facility or trading company is sold to multiple owners, at which time BIS will assign new U.S. Code Numbers for the new facilities.


    (d) Inspection-related amendments. If, following completion of an inspection (see parts 716 and 717 of the CWCR), you are required to submit an amended declaration based on the final inspection report, BIS will notify you in writing of the information that will be required pursuant to §§ 716.10 and 717.5 of the CWCR. You must submit an amended declaration to BIS no later than 45 days following your receipt of the BIS post-inspection letter.


    (e) Non-substantive changes. If, subsequent to the submission of your declaration or report to BIS, you discover one or more non-substantive typographical errors in your declaration or report, you are not required to submit an amended declaration or report to BIS. Instead, you may correct these errors in a subsequent declaration or report.


    (f) Documentation required for amended declarations or reports. If you are required to submit an amended declaration or report to BIS pursuant to paragraph (a), (b), (c), or (d) of this section, you must submit either:


    (1) A letter containing all of the corrected information required, in accordance with the provisions of this section, to amend your declaration or report; or


    (2) Both of the following:


    (i) A new Certification Form (i.e., Form 1-1); and


    (ii) The specific forms (e.g., annual declaration on past activities) containing the corrected information required, in accordance with the provisions of this part 712, to amend your declaration or report.


    § 712.8 Declarations and reports returned without action by BIS.

    If you submit a declaration or report and BIS determines that the information contained therein is not required by the CWCR, BIS will return the original declaration or report to you, without action, accompanied by a letter explaining BIS’s decision. In order to protect your confidential business information, BIS will not maintain a copy of any declaration or report that is returned without action (RWA). However, BIS will maintain a copy of the RWA letter.


    § 712.9 Deadlines for submission of Schedule 1 declarations, reports, advance notifications, and amendments.

    Declarations, reports, advance notifications, and amendments required under this part must be postmarked by the appropriate date identified in supplement no. 2 to this part 712. Required declarations, reports, advance notifications, and amendments include:


    (a) Annual declaration on past activities (Schedule 1 chemical production during the previous calendar year);


    (b) Annual report on exports and imports of Schedule 1 chemicals from facilities, trading companies, and other persons (during the previous calendar year);


    (c) Combined declaration and report (production of Schedule 1 chemicals, as well as exports or imports of the same or different Schedule 1 chemicals, by a declared facility during the previous calendar year);


    (d) Annual declaration on anticipated activities (anticipated production of Schedule 1 chemicals in the next calendar year);


    (e) Advance notification of any export to or import from another State Party;


    (f) Initial declaration of a new Schedule 1 chemical production facility; and


    (g) Amended declaration or report, including combined declaration and report.


    Supplement No. 1 to Part 712 – Schedule 1 Chemicals


    CAS

    registry No.
    A. Toxic Chemicals:
    1. Family: O-Alkyl(≤C10, incl. cycloalkyl) alkyl (Me, Et, n-Pr or i-Pr)- phosphonofluoridates
    Not limited to the following examples:
    Sarin: O-Isopropyl methylphosphonofluoridate107-44-8
    Soman: O-Pinacolyl methylphosphonofluoridate96-64-0
    2. Family: O-Alkyl (≤C10, incl. cycloalkyl) N,N-dialkyl (Me, Et, n-Pr or i-Pr) phosphoramidocyanidates
    Not limited to the following example:
    Tabun: O-Ethyl N,N-dimethyl phosphoramidocyanidate77-81-6
    3. Family: O-Alkyl (H or ≤C10, incl. cycloalkyl) S-2-dialkyl (Me, Et, n-Pr or i-Pr)-aminoethyl alkyl (Me, Et, n-Pr or i-Pr) phosphonothiolates and corresponding alkylated or protonated salts
    Not limited to the following example:
    VX: O-Ethyl S-2-diisopropylaminoethyl methyl phosphonothiolate50782-69-9
    4. Sulfur mustards:
    2-Chloroethylchloromethylsulfide2625-76-5
    Mustard gas: Bis(2-chloroethyl)sulfide505-60-2
    Bis(2-chloroethylthio)methane63869-13-6
    Sesquimustard: 1,2-Bis(2-chloroethylthio)ethane3563-36-8
    1,3-Bis(2-chloroethylthio)-n-propane63905-10-2
    1,4-Bis(2-chloroethylthio)-n-butane142868-93-7
    1,5-Bis(2-chloroethylthio)-n-pentane142868-94-8
    Bis(2-chloroethylthiomethyl)ether63918-90-1
    O-Mustard: Bis(2-chloroethylthioethyl)ether63918-89-8
    5. Lewisites:
    Lewisite 1: 2-Chlorovinyldichloroarsine541-25-3
    Lewisite 2: Bis(2-chlorovinyl)chloroarsine40334-69-8
    Lewisite 3: Tris(2-chlorovinyl)arsine40334-70-1
    6. Nitrogen mustards:
    HN1: Bis(2-chloroethyl)ethylamine538-07-8
    HN2: Bis(2-chloroethyl)methylamine51-75-2
    HN3: Tris(2-chloroethyl)amine555-77-1
    7. Saxitoxin35523-89-8
    8. Ricin9009-86-3
    13. Family: Р-alkyl (H or ≤C10, incl. cycloalkyl) N-(1-(dialkyl(≤C10, incl. cycloalkyl)amino))alkylidene(H or ≤C10, incl. cycloalkyl) phosphonamidic fluorides and corresponding alkylated or protonated salts
    Not limited to the following examples:
    N-(1-(di-n-decylamino)-n-decylidene)-P-decylphosphonamidic fluoride2387495-99-8
    Methyl-(1-(diethylamino)ethylidene)phosphonamidofluoridate2387496-12-8
    14. Family: O-alkyl (H or ≤C10, incl. cycloalkyl) N-(1-(dialkyl(≤C10, incl. cycloalkyl)amino))alkylidene(H or ≤C10, incl. cycloalkyl) phosphoramidofluoridates and corresponding alkylated or protonated salts
    Not limited to the following examples:
    O-n-Decyl N-(1-(di-n-decylamino)-n decylidene)phosphoramidofluoridate2387496-00-4
    Methyl (1-(diethylamino)ethylidene)phosphoramidofluoridate2387496-04-8
    Ethyl (1-(diethylamino)ethylidene)phosphoramidofluoridate2387496-06-0
    15. Methyl-(bis(diethylamino)methylene)phosphonamidofluoridate2387496-14-0
    16. Carbamates (quaternaries and bisquaternaries of dimethylcarbamoyloxypyridines)
    16.1. Family: Quaternaries of dimethylcarbamoyloxypyridines: 1-[N,N-dialkyl(≤C10)-N-(n-(hydroxyl, cyano, acetoxy)alkyl(≤C10)) ammonio]-n-[N-(3-dimethylcarbamoxy-α-picolinyl)-N,N-dialkyl(≤C10) ammonio]decane dibromide (n=1-8)
    Not limited to the following example:
    1-[N,N-dimethyl-N-(2-hydroxy)ethylammonio]-10-[N-(3-dimethylcarbamoxy-α-picolinyl)-N,N-dimethylammonio]decane dibromide77104-62-2
    16.2. Family: Bisquaternaries of dimethylcarbamoyloxypyridines:1,n-Bis[N-(3-dimethylcarbamoxy-α-picolyl)-N,N-dialkyl(≤C10) ammonio]-alkane-(2,(n-1)-dione) dibromide (n=2-12)
    Not limited to the following example:
    1,10-Bis[N-(3-dimethylcarbamoxy-α-picolyl)-N-ethyl-N- methylammonio]decane-2,9-dione dibromide77104-00-8
    B. Precursors:
    9. Family: Alkyl (Me, Et, n-Pr or i-Pr) phosphonyldifluorides
    Not limited to the following example:
    DF: Methylphosphonyldifluoride676-99-3
    10. Family: O-Alkyl (H or ≤C10, incl. cycloalkyl) O-2-dialkyl (Me, Et, n-Pr or i-Pr)-aminoethyl alkyl (Me, Et, n-Pr or i-Pr) phosphonites and corresponding alkylated or protonated salts
    Not limited to the following example:
    QL: O-Ethyl O-2-diisopropylaminoethyl methylphosphonite57856-11-8
    11. Chlorosarin: O-Isopropyl methylphosphonochloridate1445-76-7
    12. Chlorosoman: O-Pinacolyl methylphosphonochloridate7040-57-5

    Notes to Supplement No. 1

    Note 1: Note that the following Schedule 1 chemicals are controlled for export purposes under the Export Administration Regulations (see part 774 of the EAR, the Commerce Control List): Saxitoxin (35523-89-8) and Ricin (9009-86-3).

    Note 2: All Schedule 1 chemicals not listed in Note 1 to this Supplement are controlled for export purposes by the Directorate of Defense Trade Controls of the Department of State under the International Traffic in Arms Regulations (22 CFR parts 120 through 130).

    Note 3: The numerical sequence of the “Schedule 1” Toxic Chemicals and Precursors is not consecutive so as to align with the December 23, 2019, consolidated textual changes to “Schedule 1” of the Annex on Chemicals to the Chemical Weapons Convention (CWC), which reflect the decisions adopted by the CWC Conference of the States Parties in November 2019.


    [71 FR 24929, Apr. 27, 2006, as amended at 86 FR 941, Jan. 7, 2021]


    Supplement No. 2 to Part 712 – Deadlines for Submission of Schedule 1 Declarations, Advance Notifications, Reports, and Amendments

    Declarations, advance notifications and reports
    Applicable forms
    Due dates
    Annual Declaration on Past Activities (previous calendar year) – Declared facility (past production)Certification, 1-1, 1-2,1-2A,1-2B, A (as appropriate), B (optional)February 28th of the year following any calendar year in which more than 100 grams aggregate of Schedule 1 chemicals were produced,
    Annual report on exports and imports (previous calendar year) (facility, trading company, other persons)Certification, 1-1,1-3, A (as appropriate), B (optional)February 28th of the year following any calendar year in which Schedule 1 chemicals were exported or imported.
    Combined Declaration and ReportCertification, 1-1, 1-2, 1-2A, 1-2B, 1-3, A (as appropriate), B (optional)February 28th of the year following any calendar year in which Schedule 1 chemicals were produced, exported, or imported.
    Annual Declaration of Anticipated Activities (next calendar year)Certification, 1-1, 1-4, A (as appropriate), B (optional)September 3rd of the year prior to any calendar year in which Schedule 1 activities are anticipated to occur.
    Advance Notification of any export to or import from another State PartyNotify on letterhead. See § 712.6 of the CWCR45 calendar days prior to any export or import of Schedule 1 chemicals, except 3 days prior to export or import of 5 milligrams or less of saxitoxin for medical/diagnositc purposes.
    Initial Declaration of a new Schedule 1 facility (technical description)Certification, 1-1, A (as appropriate), B (optional)200 calendar days prior to producing in excess of 100 grams aggregate of Schedule 1 chemicals.
    Amended DeclarationCertification, 1-1, 1-2, 1-2A
    – Chemicals/Activities: § 712.7(a) – 15 calendar days after change in information.
    – Company information: § 712.7(c) – 30 calendar days after change in information.
    – Post-inspection letter: § 712.7(d) – 45 calendar days after receipt of letter.
    Amended Report § 712.7(b)Certification, 1-1, 1-3, A (as appropriate), B (optional) – 15 calendar days after change in information.
    Amended Combined Declaration & ReportCertification, 1-1, 1-2, 1-2A, 1-3, A (as appropriate), B (optional) – 15 calendar days after change in information.

    PART 713 – ACTIVITIES INVOLVING SCHEDULE 2 CHEMICALS


    Authority:22 U.S.C. 6701 et seq.; 50 U.S.C. 1601 et seq.; 50 U.S.C. 1701 et seq.; E.O. 12938 59 FR 59099, 3 CFR, 1994 Comp., p. 950, as amended by E.O. 13094, 63 FR 40803, 3 CFR, 1998 Comp., p. 200; E.O. 13128, 64 FR 36703, 3 CFR 1999 Comp., p. 199.


    Source:71 FR 24929, Apr. 27, 2006, unless otherwise noted.

    § 713.1 Prohibition on exports and imports of Schedule 2 chemicals to and from States not Party to the CWC.

    (a) You may not export any Schedule 2 chemical (see supplement no. 1 to this part) to any destination or import any Schedule 2 chemical from any destination other than a State Party to the Convention. See supplement no. 1 to part 710 of the CWCR for a list of States that are party to the Convention.



    Note to § 713.1(a):

    See § 742.18 of the Export Administration Regulations (EAR) (15 CFR part 742) for prohibitions that apply to exports of Schedule 2 chemicals to States not Party to the CWC.


    (b) Paragraph (a) of this section does not apply to:


    (1) The export or import of a Schedule 2 chemical to or from a State not Party to the CWC by a department, agency, or other entity of the United States, or by any person, including a member of the Armed Forces of the United States, who is authorized by law, or by an appropriate officer of the United States to transfer or receive the Schedule 2 chemical;


    (2) Mixtures containing Schedule 2A chemicals, if the concentration of each Schedule 2A chemical in the mixture is 1% or less by weight (note, however, that such mixtures may be subject to the regulatory requirements of other federal agencies);


    (3) Mixtures containing Schedule 2B chemicals if the concentration of each Schedule 2B chemical in the mixture is 10% or less by weight (note, however, that such mixtures may be subject to the regulatory requirements of other federal agencies); or


    (4) Products identified as consumer goods packaged for retail sale for personal use or packaged for individual use.


    § 713.2 Annual declaration requirements for plant sites that produce, process or consume Schedule 2 chemicals in excess of specified thresholds.

    (a) Declaration of production, processing or consumption of Schedule 2 chemicals for purposes not prohibited by the CWC – (1) Quantities of production, processing or consumption that trigger declaration requirements. You must complete the forms specified in paragraph (b) of this section if you have been or will be involved in the following activities:


    (i) Annual declaration on past activities. (A) You produced, processed or consumed at one or more plants on your plant site during any of the previous three calendar years, a Schedule 2 chemical in excess of any of the following declaration threshold quantities:


    (1) 1 kilogram of chemical BZ: 3-Quinuclidinyl benzilate (see Schedule 2, paragraph A.3 in supplement no. 1 to this part);


    (2) 100 kilograms of chemical PFIB: 1,1,3,3,3-Pentafluoro-2(trifluoromethyl)-1-propene or 100 kilograms of chemical Amiton: 0,0-Diethyl S-[2-(diethylamino) ethyl] phosphorothiolate and corresponding alkylated or protonated salts (see Schedule 2, paragraphs A.1 and A.2 in supplement no. 1 to this part); or


    (3) 1 metric ton of any chemical listed in Schedule 2, Part B (see supplement no. 1 to this part).


    (B) In order to trigger a declaration requirement for a past activity (i.e., production, processing or consumption) involving a Schedule 2 chemical, a plant on your plant site must have exceeded the applicable declaration threshold for that particular activity during one or more of the previous three calendar years. For example, if a plant on your plant site produced 800 kilograms of thiodiglycol and consumed 300 kilograms of the same Schedule 2 chemical, during the previous calendar year, you would not have a declaration requirement based on these activities, because neither activity at your plant would have exceeded the declaration threshold of 1 metric ton for that Schedule 2 chemical. However, a declaration requirement would apply if an activity involving a Schedule 2 chemical at the plant exceeded the declaration threshold in an earlier year (i.e., during the course of any other calendar year within the past three calendar years), as indicated in the example provided in the note to this paragraph.



    Note to § 713.2(a)(1)(i)(B):

    To determine whether or not you have an annual declaration on past activities requirement for Schedule 2 chemicals, you must determine whether you produced, processed or consumed a Schedule 2 chemical above the applicable threshold at one or more plants on your plant site in any one of the three previous calendar years. For example, for the 2004 annual declaration on past activities period, if you determine that one plant on your plant site produced greater than 1 kilogram of the chemical BZ in calendar year 2002, and no plants on your plant site produced, processed or consumed any Schedule 2 chemical above the applicable threshold in calendar years 2003 or 2004, you still have a declaration requirement under this paragraph for the previous calendar year (2004). However, you must only declare on Form 2-3 (question 2-3.1), production data for calendar year 2004. You would declare “0” production because you did not produce BZ above the applicable threshold in calendar year 2004. Since the plant site did not engage in any other declarable activity (i.e., consumption, processing) in the 2002-2004 declaration period, you would leave blank questions 2-3.2 and 2-3.3 on Form 2-3. Note that declaring a “0” production quantity for 2004, as opposed to leaving the question blank, permits BIS to distinguish the activity that triggered the declaration requirement from activities that were not declarable during that period.


    (ii) Annual declaration on anticipated activities. You anticipate that you will produce, process or consume at one or more plants on your plant site during the next calendar year, a Schedule 2 chemical in excess of the applicable declaration threshold set forth in paragraphs (a)(1)(i)(A)(1) through (3) of this section.



    Note to § 713.2(a)(1)(ii):

    A null “0” declaration is not required if you do not plan to produce, process or consume a Schedule 2 chemical in the next calendar year.


    (2) Schedule 2 chemical production. (i) For the purpose of determining Schedule 2 production, you must include all steps in the production of a chemical in any units within the same plant through chemical reaction, including any associated processes (e.g., purification, separation, extraction, distillation, or refining) in which the chemical is not converted into another chemical. The exact nature of any associated process (e.g., purification, etc.) is not required to be declared.


    (ii) For the purpose of determining if a Schedule 2 chemical is subject to declaration, you must declare an intermediate Schedule 2 chemical, but not a transient intermediate Schedule 2 chemical.


    (3) Mixtures containing a Schedule 2 chemical – (i) Mixtures that must be counted. You must count the quantity of each Schedule 2 chemical in a mixture, when determining the total quantity of a Schedule 2 chemical produced, processed, or consumed at a plant on your plant site, if the concentration of each Schedule 2 chemical in the mixture is 30% or more by volume or by weight, whichever yields the lesser percent. Do not count a Schedule 2 chemical in the mixture that represents less than 30% by volume or by weight.


    (ii) How to count the quantity of each Schedule 2 chemical in a mixture. If your mixture contains 30% or more concentration of a Schedule 2 chemical, you must count the quantity (weight) of each Schedule 2 chemical in the mixture, not the total weight of the mixture. You must separately declare each Schedule 2 chemical with a concentration in the mixture that is 30% or more and exceeds the quantity threshold detailed in paragraphs (a)(1)(i)(A)(1) through (3) of this section.


    (iii) Determining declaration requirements for production, processing and consumption. If the total quantity of a Schedule 2 chemical produced, processed or consumed at a plant on your plant site, including mixtures that contain 30% or more concentration of a Schedule 2 chemical, exceeds the applicable declaration threshold set forth in paragraphs (a)(1)(i)(A)(1) through (3) of this section, you have a declaration requirement. For example, if during calendar year 2001, a plant on your plant site produced a mixture containing 300 kilograms of thiodiglycol in a concentration of 32% and also produced 800 kilograms of thiodiglycol, the total amount of thiodiglycol produced at that plant for CWCR purposes would be 1100 kilograms, which exceeds the declaration threshold of 1 metric ton for that Schedule 2 chemical. You must declare past production of thiodiglycol at that plant site for calendar year 2001. If, on the other hand, a plant on your plant site processed a mixture containing 300 kilograms of thiodiglycol in a concentration of 25% and also processed 800 kilograms of thiodiglycol in other than mixture form, the total amount of thiodiglycol processed at that plant for CWCR purposes would be 800 kilograms and would not trigger a declaration requirement. This is because the concentration of thiodiglycol in the mixture is less than 30% and therefore did not have to be “counted” and added to the other 800 kilograms of processed thiodiglycol at that plant.


    (b) Types of declaration forms to be used – (1) Annual declaration on past activities. You must complete the Certification Form and Forms 2-1, 2-2, 2-3, 2-3A, and Form A if one or more plants on your plant site produced, processed or consumed more than the applicable threshold quantity of a Schedule 2 chemical described in paragraphs (a)(1)(i)(A)(1) through (3) of this section in any of the three previous calendar years. Form B is optional. If you are subject to annual declaration requirements, you must include data for the previous calendar year only.


    (2) Annual declaration on anticipated activities. You must complete the Certification Form and Forms 2-1, 2-2, 2-3, 2-3A, 2-3C, and Form A if you plan to produce, process, or consume at any plant on your plant site a Schedule 2 chemical above the applicable threshold set forth in paragraphs (a)(1)(i)(A)(1) through (3) of this section during the following calendar year. Form B is optional.


    (c) Quantities to be declared – (1) Production, processing and consumption of a Schedule 2 chemical above the declaration threshold – (i) Annual declaration on past activities. If you are required to complete forms pursuant to paragraph (a)(1)(i) of this section, you must declare the aggregate quantity resulting from each type of activity (production, processing or consumption) from each plant on your plant site that exceeds the applicable threshold for that Schedule 2 chemical. Do not include in these aggregate production, processing, and consumption quantities any data from plants on the plant site that did not individually produce, process or consume a Schedule 2 chemical in amounts greater than the applicable threshold. For example, if a plant on your plant site produced a Schedule 2 chemical in an amount greater than the applicable declaration threshold during the previous calendar year, you would have to declare only the production quantity from that plant, provided that the total amount of the Schedule 2 chemical processed or consumed at the plant did not exceed the applicable declaration threshold during any one of the previous three calendar years. If in the previous calendar year your production, processing and consumption activities all were below the applicable declaration threshold, but your declaration requirement is triggered because of production activities occurring in an earlier year, you would declare “0” only for the declared production activities.


    (ii) Annual declaration on anticipated activities. If you are required to complete forms pursuant to paragraph (a)(1)(ii) of this section, you must declare the aggregate quantity of any Schedule 2 chemical that you plan to produce, process or consume at any plant(s) on your plant site above the applicable thresholds set forth in paragraphs (a)(1)(i)(A)(1) through (3) of this section during the next calendar year. Do not include in these anticipated aggregate production, processing, and consumption quantities any data from plants on the plant site that you do not anticipate will individually produce, process or consume a Schedule 2 chemical in amounts greater than the applicable thresholds.


    (2) Rounding. For the chemical BZ, report quantities to the nearest hundredth of a kilogram (10 grams). For PFIB and the Amiton family, report quantities to the nearest 1 kilogram. For all other Schedule 2 chemicals, report quantities to the nearest 10 kilograms.


    (d) “Declared” Schedule 2 plant site. A plant site that submitted a declaration pursuant to paragraph (a)(1) of this section is a “declared” plant site.


    (e) Declared Schedule 2 plant sites subject to initial and routine inspections. A “declared” Schedule 2 plant site is subject to initial and routine inspection by the Organization for the Prohibition of Chemical Weapons if it produced, processed or consumed in any of the three previous calendar years, or is anticipated to produce, process or consume in the next calendar year, in excess of ten times the applicable declaration threshold set forth in paragraphs (a)(1)(i)(A)(1) through (3) of this section (see part 716 of the CWCR). A “declared” Schedule 2 plant site that has received an initial inspection is subject to routine inspection.


    § 713.3 Annual declaration and reporting requirements for exports and imports of Schedule 2 chemicals.

    (a) Declarations and reports of exports and imports of Schedule 2 chemicals – (1) Declarations. A Schedule 2 plant site that is declared because it produced, processed or consumed a Schedule 2 chemical at one or more plants above the applicable threshold set forth in paragraph (b) of this section, and also exported from or imported to the plant site that same Schedule 2 chemical above the applicable threshold, must submit export and import information as part of its declaration.


    (2) Reports. The following persons must submit a report if they individually exported or imported a Schedule 2 chemical above the applicable threshold indicated in paragraph (b) of this section:


    (i) A declared plant site that exported or imported a Schedule 2 chemical that was different than the Schedule 2 chemical produced, processed or consumed at one or more plants at the plant site above the applicable declaration threshold;


    (ii) An undeclared plant site;


    (iii) A trading company; or


    (iv) Any other person subject to the CWCR.



    Note to § 713.3(a)(1) and (a)(2)(i):

    A declared Schedule 2 plant site may need to declare exports or imports of Schedule 2 chemicals that it produced, processed or consumed above the applicable threshold and also report exports or imports of different Schedule 2 chemicals that it did not produce, process or consume above the applicable threshold quantities. The report may be submitted to BIS either with or separately from the annual declaration on past activities (see § 713.3(d) of the CWCR).



    Note to § 713.3(a)(2):

    The U.S. Government will not submit to the OPCW company-specific information relating to the export or import of Schedule 2 chemicals contained in reports. The U.S. Government will add all export and import information contained in reports to export and import information contained in declarations to establish the U.S. national aggregate declaration on exports and imports.



    Note to § 713.3(a)(1) and (2):

    Declared and undeclared plant sites must count, for declaration or reporting purposes, all exports from and imports to the entire plant site, not only from or to individual plants on the plant site.


    (b) Quantities of exports or imports that trigger a declaration or reporting requirement. (1) You have a declaration or reporting requirement and must complete the forms specified in paragraph (d) of this section if you exported or imported a Schedule 2 chemical in excess of the following threshold quantities:


    (i) 1 kilogram of chemical BZ: 3-Quinuclidinyl benzilate (See Schedule 2, paragraph A.3 included in supplement no. 1 to this part);


    (ii) 100 kilograms of chemical PFIB: 1,1,3,3,3-Pentafluoro-2(trifluoromethyl)-1-propene or 100 kilograms of Amiton: O,O Diethyl S-[2(diethylamino)ethyl] phosphorothiolate and corresponding alkylated or protonated salts (see Schedule 2, paragraphs A.1 and A.2 included in supplement no.1 to this part); or


    (iii) 1 metric ton of any chemical listed in Schedule 2, Part B (see supplement no.1 to this part).


    (2) Mixtures containing a Schedule 2 chemical. The quantity of each Schedule 2 chemical contained in a mixture must be counted for the declaration or reporting of an export or import only if the concentration of each Schedule 2 chemical in the mixture is 30% or more by volume or by weight, whichever yields the lesser percent. You must declare separately each Schedule 2 chemical whose concentration in the mixture is 30% or more.



    Note 1 to § 713.3(b)(2):

    See § 713.2(a)(2)(ii) of the CWCR for information on counting amounts of Schedule 2 chemicals contained in mixtures and determining declaration and reporting requirements.



    Note 2 to § 713.3(b)(2):

    The “30% and above” mixtures rule applies only for declaration and reporting purposes. This rule does not apply for purposes of determining whether the export of your mixture to a non-State Party requires an End-Use Certificate or for determining whether you need an export license from BIS (see § 742.2, § 742.18 and § 745.2 of the Export Administration Regulations) or from the Department of State (see the International Traffic in Arms Regulations (22 CFR parts 120 through130)).


    (c) Declaration and reporting requirements – (1) Annual declaration on past activities. A plant site described in paragraph (a)(1) of this section that has an annual declaration requirement for the production, processing, or consumption of a Schedule 2 chemical for the previous calendar year also must declare the export and/or import of that same Schedule 2 chemical if the amount exceeded the applicable threshold set forth in paragraph (b) of this section. The plant site must declare such export or import information as part of its annual declaration of past activities.


    (2) Annual report on exports and imports. Declared plant sites described in paragraph (a)(2)(i) of this section, and undeclared plant sites, trading companies or any other person (described in paragraphs (a)(2)(ii) through (iv) of this section) subject to the CWCR that exported or imported a Schedule 2 chemical in a previous calendar year in excess of the applicable thresholds set forth in paragraph (b) of this section must submit an annual report on such exports or imports.


    (d) Types of declaration and reporting forms to be used – (1) Annual declaration on past activities. If you are a declared Schedule 2 plant site, as described in paragraph (a)(1) of this section, you must complete Form 2-3B, in addition to the forms required by § 713.2(b)(1) of the CWCR, for each declared Schedule 2 chemical exported or imported above the applicable threshold in the previous calendar year.


    (2) Annual report on exports and imports. (i) If you are a declared plant site, as described in paragraph (a)(2)(i) of this section, you may fulfill your annual reporting requirements by:


    (A) Submitting, with your annual declaration on past activities, a Form 2-3B for each Schedule 2 chemical you exported or imported above the applicable threshold. Attach Form A, as appropriate; Form B is optional; or


    (B) Submitting, separately from your annual declaration on past activities, a Certification Form, Form 2-1, and Form 2-3B for each Schedule 2 chemical you exported or imported above the applicable threshold. Attach Form A, as appropriate; Form B is optional.


    (ii) If you are an undeclared plant site, trading company or any other person subject to the CWCR, you must complete the Certification Form, Form 2-1, and Form 2-3B for each Schedule 2 chemical you exported or imported above the applicable threshold. Attach Form A, as appropriate; Form B is optional.


    (e) Quantities to be declared – (1) Calculations. If you exported from or imported to your plant site, trading company, or other location more than the applicable threshold of a Schedule 2 chemical in the previous calendar year, you must declare or report all exports and imports of that chemical by country of destination or country of origin, respectively, and indicate the total amount exported to or imported from each country.


    (2) Rounding. For purposes of declaring or reporting exports and imports of a Schedule 2 chemical, you must total all exports and imports per calendar year per recipient or source and then round as follows: For the chemical BZ, the total quantity for each country of destination or country of origin (source) should be reported to the nearest hundredth of a kilogram (10 grams); for PFIB and Amiton and corresponding alkylated or protonated salts, the quantity for each destination or source should be reported to the nearest 1 kilogram; and for all other Schedule 2 chemicals, the total quantity for each destination or source should be reported to the nearest 10 kilograms.


    § 713.4 Advance declaration requirements for additionally planned production, processing, or consumption of Schedule 2 chemicals.

    (a) Declaration requirements for additionally planned activities. (1) You must declare additionally planned production, processing, or consumption of Schedule 2 chemicals after the annual declaration on anticipated activities for the next calendar year has been delivered to BIS if:


    (i) You plan that a previously undeclared plant on your plant site under § 713.2(a)(1)(ii) of the CWCR will produce, process, or consume a Schedule 2 chemical above the applicable declaration threshold;


    (ii) You plan to produce, process, or consume at a plant declared under § 713.2(a)(1)(ii) of the CWCR an additional Schedule 2 chemical above the applicable declaration threshold;


    (iii) You plan an additional activity (production, processing, or consumption) at your declared plant above the applicable declaration threshold for a chemical declared under § 713.2(a)(1)(ii) of the CWCR;


    (iv) You plan to increase the production, processing, or consumption of a Schedule 2 chemical by a plant declared under § 713.2(a)(1)(ii) of the CWCR from the amount exceeding the applicable declaration threshold to an amount exceeding the applicable inspection threshold (see § 716.1(b)(2) of the CWCR);


    (v) You plan to change the starting or ending date of anticipated production, processing, or consumption declared under § 713.2(a)(1)(ii) of the CWCR by more than three months; or


    (vi) You plan to increase your production, processing, or consumption of a Schedule 2 chemical by a declared plant site by 20 percent or more above that declared under § 713.2(a)(1)(ii) of the CWCR.


    (2) If you must submit a declaration on additionally planned activities because you plan to engage in any of the activities listed in paragraphs (a)(1)(i) through (vi) of this section, you also should declare changes to your declaration relating to the following activities. You do not have to submit an additionally planned declaration if you are only changing the following non-quantitative activities:


    (i) Changes to the plant’s production capacity;


    (ii) Changes or additions to the product group codes for the plant site or the plant(s);


    (iii) Changes to the plant’s activity status (i.e., dedicated, multipurpose, or other status);


    (iv) Changes to the plant’s multipurpose activities;


    (v) Changes to the plant site’s status relating to domestic transfer of the chemical;


    (vi) Changes to the plant site’s purposes for which the chemical will be produced, processed or consumed; or


    (vii) Changes to the plant site’s status relating to exports of the chemical or the addition of new countries for export.


    (b) Declaration forms to be used. If you are required to declare additionally planned activities pursuant to paragraph (a) of this section, you must complete the Certification Form and Forms 2-1, 2-2, 2-3, and 2-3C as appropriate. Such forms are due to BIS at least 15 days prior to beginning the additional activity.


    § 713.5 Amended declaration or report.

    In order for BIS to maintain accurate information on previously submitted plant site declarations, including information necessary to facilitate inspection notifications and activities or to communicate declaration or reporting requirements, amended declarations or reports will be required under the circumstances described in this section. This section applies only to annual declarations on past activities submitted for the three previous calendar years, annual reports on exports and imports for the previous calendar year or annual declarations on anticipated activities covering the current calendar year, unless specified otherwise in a final inspection report.


    (a) Changes to information that directly affect inspection of a declared plant site’s Annual Declaration of Past Activities (ADPA) or Combined Annual Declaration and Report. You must submit an amended declaration or report to BIS within 15 days of any change in the following information:


    (1) Types of Schedule 2 chemicals produced, processed, or consumed;


    (2) Quantities of Schedule 2 chemicals produced, processed, or consumed;


    (3) Activities involving Schedule 2 chemicals (production, processing, consumption);


    (4) End-use of Schedule 2 chemicals (e.g., additional end-use(s));


    (5) Product group codes for Schedule 2 chemicals produced, processed, or consumed;


    (6) Production capacity for manufacturing a specific Schedule 2 chemical at particular plant site;


    (7) Exports or imports (e.g., changes in the types of Schedule 2 chemicals exported or imported or in the quantity, recipients, or sources of such chemicals);


    (8) Domestic transfers (e.g., changes in the types of Schedule 2 chemicals, types of destinations, or product group codes); and


    (9) Addition of new plant(s) for the production, processing, or consumption of Schedule 2 chemicals.


    (b) Changes to export or import information submitted in Annual Reports on Exports and Imports from undeclared plant sites, trading companies and U.S. persons. You must submit an amended report or amended combined declaration and report to BIS within 15 days of any change in the following export or import information:


    (1) Types of Schedule 2 chemicals exported or imported (additional Schedule 2 chemicals);


    (2) Quantities of Schedule 2 chemicals exported or imported;


    (3) Destination(s) of Schedule 2 chemicals exported; and


    (4) Source(s) of Schedule 2 chemicals imported.


    (c) Changes to company and plant site information that must be maintained by BIS for the ADPA, Annual Declaration on Anticipated Activities (ADAA), and the Annual Report on Exports and Imports – (1) Internal company changes. You must submit an amended declaration or report to BIS within 30 days of any change in the following information:


    (i) Name of declaration/report point of contact (D-POC), including telephone number, facsimile number, and e-mail address;


    (ii) Name(s) of inspection point(s) of contact (I-POC), including telephone number(s), facsimile number(s) and e-mail address(es);


    (iii) Company name (see paragraph (c)(2) of this section for other company changes);


    (iv) Company mailing address;


    (v) Plant site name;


    (vi) Plant site owner, including telephone number, and facsimile number;


    (vii) Plant site operator, including telephone number, and facsimile number;


    (viii) Plant name;


    (ix) Plant owner, including telephone number, and facsimile number; and


    (x) Plant operator, including telephone number and facsimile number.


    (2) Change in ownership of company, plant site, or plant. If you sold or purchased a declared plant site, plant, or trading company you must submit an amended declaration or report to BIS, either before the effective date of the change or within 30 days after the effective date of the change. The amended declaration or report must include the following information:


    (i) Information that must be submitted to BIS by the company selling a declared plant site:


    (A) Name of seller (i.e., name of the company selling a declared plant site);


    (B) Name of the declared plant site and U.S. Code Number for that plant site;


    (C) Name of purchaser (i.e., name of the new company/owner purchasing a declared plant site) and identity of contact person for the purchaser, if known;


    (D) Date of ownership transfer or change;


    (E) Additional (e.g., unique) details on the sale of the declared plant site relevant to ownership or operational control over any portion of the declared plant site (e.g., whether the entire plant site or only a portion of the declared plant site has been sold to a new owner); and


    (F) Details regarding whether the new owner will submit the next declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site or trading company.


    (1) If the new owner is responsible for submitting the declaration or report for the entire current year, it must have in its possession the records for the period of the year during which the previous owner owned the plant site.


    (2) If the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site, and, if at the time of transfer of ownership, the previous owner’s activities are not above the declaration or reporting thresholds set forth in § 713.2(a)(1)(i)(A)(1) through (3) and § 713.3(b)(1)(i) through (iii) of the CWCR, respectively, the previous owner and the new owner must still submit declarations to BIS with the below threshold quantities indicated.


    (3) If the part-year declarations submitted by the previous owner and the new owner are not, when combined, above the declaration thresholds set forth in § 713.2(a)(1)(i)(A)(1) through (3) of the CWCR, BIS will return the declarations without action as set forth in § 713.6 of the CWCR.


    (4) If part-year reports submitted by the previous owner and the new owner are not, when combined, above the thresholds in §§ 713.3(b)(1)(i) through (iii) of the CWCR, BIS will return the reports without action as set forth in § 713.6 of the CWCR.


    (ii) Information that must be submitted to BIS by the company purchasing a declared plant site:


    (A) Name of purchaser (i.e., name of individual or company purchasing a declared plant site);


    (B) Mailing address of purchaser;


    (C) Name of declaration point of contact (D-POC) for the purchaser, including telephone number, facsimile number, and e-mail address;


    (D) Name of inspection point(s) of contact (I-POC) for the purchaser, including telephone number(s), facsimile number(s) and e-mail address(es);


    (E) Name of the declared plant site and U.S. Code Number for that plant site;


    (F) Location of the declared plant site;


    (G) Owner of the declared plant site, including telephone number, and facsimile number;


    (H) Operator of the declared plant site, including telephone number, and facsimile number;


    (I) Name of plant(s) where Schedule 2 activities exceed the applicable declaration threshold;


    (J) Owner and operator of plant(s) where Schedule 2 activities exceed the applicable declaration threshold, including telephone numbers, and facsimile numbers;


    (K) Location of the plant where Schedule 2 activities exceed the applicable declaration threshold; and


    (L) Details on the next declaration or report submission on whether the new owner will submit the declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site or trading company.



    Note 1 to § 713.5(c):

    You must submit an amendment to your most recently submitted declaration or report for declaring changes to internal company information (e.g., company name change) or changes in ownership of a facility or trading company that have occurred since the submission of this declaration or report. BIS will process the amendment to ensure current information is on file regarding the facility or trading company (e.g., for inspection notifications and correspondence) and will also forward the amended declaration to the OPCW to ensure that they also have current information on file regarding your facility or trading company.



    Note 2 to § 713.5(c):

    You may notify BIS of change in ownership via a letter to the address given in § 711.6 of the CWCR. If you are submitting an amended declaration or report, use Form B to address details regarding the sale of the declared plant site or trading company.



    Note 3 to § 713.5(c):

    For ownership changes, the declared facility or trading company will maintain its original U.S. Code Number, unless the plant site or trading company is sold to multiple owners, at which time BIS will assign new U.S. Code Numbers.


    (d) Inspection-related amendments. If, following the completion of an inspection (see parts 716 and 717 of the CWCR), you are required to submit an amended declaration based on the final inspection report, BIS will notify you in writing of the information that will be required pursuant to §§ 716.10 and 717.5 of the CWCR. You must submit an amended declaration to BIS no later than 45 days following your receipt of BIS’s post-inspection letter.


    (e) Non-substantive changes. If, subsequent to the submission of your declaration or report to BIS, you discover one or more non-substantive typographical errors in your declaration or report, you are not required to submit an amended declaration or report to BIS. Instead, you may correct these errors in a subsequent declaration or report.


    (f) Documentation required for amended declarations or reports. If you are required to submit an amended declaration or report to BIS pursuant to paragraph (a), (b), (c), or (d) of this section, you must submit either:


    (1) A letter containing all of the corrected information required, in accordance with the provisions of this section, to amend your declaration or report; or


    (2) Both of the following:


    (i) A new Certification Form; and


    (ii) The specific forms required for the declaration or report type being amended (e.g., annual declaration on past activities) containing the corrected information required, in accordance with the requirements of this section, to amend your declaration or report.


    § 713.6 Declarations and reports returned without action by BIS.

    If you submit a declaration or report and BIS determines that the information contained therein is not required by the CWCR, BIS will return the original declaration or report to you, without action, accompanied by a letter explaining BIS’s decision. In order to protect your confidential business information, BIS will not maintain a copy of any declaration or report that is returned without action (RWA). However, BIS will maintain a copy of the RWA letter.


    § 713.7 Deadlines for submission of Schedule 2 declarations, reports, and amendments.

    Declarations, reports, and amendments required under this part must be postmarked by the appropriate date identified in supplement no. 2 to this part 713. Required declarations, reports, and amendments include:


    (a) Annual declaration on past activities (production, processing, or consumption of Schedule 2 chemicals during the previous calendar year);


    (b) Annual report on exports and imports of Schedule 2 chemicals by plant sites, trading companies, and other persons subject to the CWCR (during the previous calendar year);


    (c) Combined declaration and report (production, processing, or consumption of Schedule 2 chemicals, as well as exports or imports of the same or different Schedule 2 chemicals, by a declared plant site during the previous calendar year);


    (d) Annual declaration on anticipated activities (production, processing or consumption) involving Schedule 2 chemicals during the next calendar year;


    (e) Declaration on Additionally Planned Activities (production, processing or consumption) involving Schedule 2 chemicals; and


    (f) Amended declaration and report, including combined declaration and report.


    Supplement No. 1 to Part 713 – Schedule 2 Chemicals


    (CAS registry number)
    A. Toxic chemicals:
    (1) Amiton: O,O-Diethyl S-[2-(diethylamino)ethyl] phosphorothiolate and corresponding alkylated or protonated salts(78-53-5)
    (2) PFIB: 1,1,3,3,3-Pentafluoro-2-(trifluoromethyl)-1-propene(382-21-8)
    (3) BZ: 3-Quinuclidinyl benzilate(6581-06-2)
    B. Precursors:
    (4) Chemicals, except for those listed in Schedule 1, containing a phosphorus atom to which is bonded one methyl, ethyl or propyl (normal or iso) group but not further carbon atoms, e.g. Methylphosphonyl dichloride(676-97-1)
    Dimethyl methylphosphonate(756-79-6)
    Exemption: Fonofos: O-Ethyl S-phenyl ethylphosphono-thiolothionate(944-22-9)
    (5) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) phosphoramidic dihalides
    (6) Dialkyl (Me, Et, n-Pr or i-Pr) N,N-dialkyl (Me, Et, n-Pr or i-Pr)-phosphoramidates
    (7) Arsenic trichloride(7784-34-1)
    (8) 2,2-Diphenyl-2-hydroxyacetic acid(76-93-7)
    (9) Quinuclidine-3-ol(1619-34-7)
    (10) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethyl-2-chlorides and corresponding protonated salts
    (11) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethane-2-ols and corresponding protonated salts
    Exemptions: N,N-Dimethylaminoethanol and corresponding protonated salts(108-01-0)
    N,N-Diethylaminoethanol and corresponding protonated salts(100-37-8)
    (12) N,N-Dialkyl (Me, Et, n-Pr or i-Pr) aminoethane-2-thiols and corresponding protonated salts
    (13) Thiodiglycol: Bis(2-hydroxyethyl)sulfide(111-48-8)
    (14) Pinacolyl alcohol: 3,3-Dimethylbutane-2-ol(464-07-3)

    Notes to Supplement No. 1

    Note 1: Note that the following Schedule 2 chemicals are controlled for export purposes by the Directorate of Defense Trade Controls of the Department of State under the International Traffic in Arms Regulations (22 CFR parts 120 through 130): Amiton: O,O-Diethyl S-[2-(diethylamino)ethyl] phosphorothiolate and corresponding alkylated or protonated salts (78-53-5); BZ: 3-Quinuclidinyl benzilate 6581-06-2); and Methylphosphonyl dichloride (676-97-1).

    Note 2: All Schedule 2 chemicals not listed in Note 1 to this Supplement are controlled for export purposes under the Export Administration Regulations (see part 774 of the EAR, the Commerce Control List).


    Supplement No. 2 to Part 713 – Deadlines for Submission of Schedule 2 Declarations, Reports, and Amendments

    Declarations and reports
    Applicable forms
    Due dates
    Annual Declaration on Past Activities (previous calendar year) – Declared plant site (production, processing, or consumption)Certification, 2-1, 2-2, 2-3, 2-3A, 2-3B (if also exported or imported), A (as appropriate), B (optional)February 28 of the year following any calendar year in which the production, processing, or consumption of a Schedule 2 chemical exceeded the applicable declaration thresholds in § 713.2(a)(1)(i) of the CWCR.
    Annual Report on Exports and Imports (previous calendar year) – Plant site, trading company, other personsCertification, 2-1, 2-3B, A (as appropriate), B (optional)February 28 of the year following any calendar year in which exports or imports of a Schedule 2 chemical by a plant site, trading company, or other person subject to the CWCR (as described in § 713.3(a)(2) of the CWCR) exceeded the applicable thresholds in § 713.3(b)(1) of the CWCR.
    Combined Declaration & Report – Declared plant site (production, processing, or consumption; exports and imports)Certification, 2-1, 2-2, 2-3, 2-3A, 2-3B, A (as appropriate), B (optional)February 28 of the year following any calendar year in which the production, processing, or consumption of a Schedule 2 chemical and the export or import of the same or a different Schedule 2 chemical by a declared plant site exceeded the applicable thresholds in §§ 713.2(a)(1)(i) and 713.3(b)(1), respectively, of the CWCR.
    Annual Declaration on Anticipated Activities (next calendar year)Certification, 2-1, 2-2, 2-3, 2-3A, 2-3C, A (as appropriate), B (optional)September 3 of the year prior to any calendar year in which Schedule 2 activities are anticipated to occur.
    Declaration on Additionally Planned Activities (production, processing and consumption)Certification, 2-1, 2-2, 2-3, 2-3A, 2-3C, A (as appropriate), B (optional)15 calendar days before the additionally planned activity begins.
    Amended DeclarationCertification, 2-1, 2-2, 2-3 2-3A, 2-3B (if also exported or imported), A (as appropriate), B (optional)
    – Declaration information – 15 calendar days after change in information.
    – Company information – 30 calendar days after change in information.
    – Post-inspection letter – 45 calendar days after receipt of letter.
    Amended ReportCertification, 2-1, 2-3B, A (as appropriate), B (optional) – 15 calendar days after change in information.
    Amended Combined Declaration & ReportCertification, 2-1, 2-2, 2-3, 2-3A, 2-3B, A (as appropriate), B (optional) – 15 calendar days after change in information.

    PART 714 – ACTIVITIES INVOLVING SCHEDULE 3 CHEMICALS


    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.

    § 714.1 Annual declaration requirements for plant sites that produce a Schedule 3 chemical in excess of 30 metric tons.

    (a) Declaration of production of Schedule 3 chemicals for purposes not prohibited by the CWC – (1) Production quantities that trigger the declaration requirement. You must complete the appropriate forms specified in paragraph (b) of this section if you have produced or anticipate producing a Schedule 3 chemical (see supplement no. 1 to this part) as follows:


    (i) Annual declaration on past activities. You produced at one or more plants on your plant site in excess of 30 metric tons of any single Schedule 3 chemical during the previous calendar year.


    (ii) Annual declaration on anticipated activities. You anticipate that you will produce at one or more plants on your plant site in excess of 30 metric tons of any single Schedule 3 chemical in the next calendar year.


    (2) Schedule 3 chemical production. (i) For the purpose of determining Schedule 3 production, you must include all steps in the production of a chemical in any units within the same plant through chemical reaction, including any associated processes (e.g., purification, separation, extraction, distillation, or refining) in which the chemical is not converted into another chemical. The exact nature of any associated process (e.g., purification, etc.) is not required to be declared.


    (ii) For the purpose of determining if a Schedule 3 chemical is subject to declaration, you must declare an intermediate Schedule 3 chemical, but not a transient intermediate Schedule 3 chemical.


    (3) Mixtures containing a Schedule 3 chemical – (i) When you must count the quantity of a Schedule 3 chemical in a mixture for declaration purposes. The quantity of each Schedule 3 chemical contained in a mixture must be counted for declaration purposes only if the concentration of each Schedule 3 chemical in the mixture is 80% or more by volume or by weight, whichever yields the lesser percent.


    (ii) How to count the amount of a Schedule 3 chemical in a mixture. If your mixture contains 80% or more concentration of a Schedule 3 chemical, you must count only the amount (weight) of the Schedule 3 chemical in the mixture, not the total weight of the mixture.


    (b) Types of declaration forms to be used – (1) Annual declaration on past activities. You must complete the Certification Form and Forms 3-1, 3-2, 3-3, and Form A if one or more plants on your plant site produced in excess of 30 metric tons of any single Schedule 3 chemical during the previous calendar year. Form B is optional.


    (2) Annual declaration on anticipated activities. You must complete the Certification Form, and Forms 3-1 and 3-3 if you anticipate that you will produce at one or more plants on your plant site in excess of 30 metric tons of any single Schedule 3 chemical in the next calendar year.


    (c) Quantities to be declared – (1) Production of a Schedule 3 chemical in excess of 30 metric tons. If your plant site is subject to the declaration requirements of paragraph (a) of this section, you must declare the range within which the production at your plant site falls (30 to 200 metric tons, 200 to 1,000 metric tons, etc.) as specified on Form 3-3. When specifying the range of production for your plant site, you must aggregate the production quantities of all plants on the plant site that produced the Schedule 3 chemical in amounts greater than 30 metric tons. Do not aggregate amounts of production from plants on the plant site that did not individually produce a Schedule 3 chemical in amounts greater than 30 metric tons. You must complete a separate Form 3-3 for each Schedule 3 chemical for which production at your plant site exceeds 30 metric tons.


    (2) Rounding. To determine the production range into which your plant site falls, add all the production of the declared Schedule 3 chemical during the calendar year from all plants on your plant site that produced the Schedule 3 chemical in amounts exceeding 30 metric tons, and round to the nearest ten metric tons.


    (d) “Declared” Schedule 3 plant site. A plant site that submitted a declaration pursuant to paragraph (a)(1) of this section is a “declared” Schedule 3 plant site.


    (e) Routine inspections of declared Schedule 3 plant sites. A “declared” Schedule 3 plant site is subject to routine inspection by the Organization for the Prohibition of Chemical Weapons (see part 716 of the CWCR) if:


    (1) The declared plants on your plant site produced in excess of 200 metric tons aggregate of any Schedule 3 chemical during the previous calendar year; or


    (2) You anticipate that the declared plants on your plant site will produce in excess of 200 metric tons aggregate of any Schedule 3 chemical during the next calendar year.


    § 714.2 Annual reporting requirements for exports and imports in excess of 30 metric tons of Schedule 3 chemicals.

    (a) Any person subject to the CWCR that exported from or imported into the United States in excess of 30 metric tons of any single Schedule 3 chemical during the previous calendar year has a reporting requirement under this section.


    (1) Annual report on exports and imports. Declared plant sites, undeclared plant sites, trading companies, or any other person subject to the CWCR that exported from or imported into the United States in excess of 30 metric tons of any single Schedule 3 chemical during the previous calendar year must submit an annual report on exports and imports.



    Note 1 to § 714.2(a)(1):

    Declared and undeclared plant sites must count, for reporting purposes, all exports from and imports to the entire plant site, not only from or to individual plants on the plant site.



    Note 2 to § 714.2(a)(1):

    The U.S. Government will not submit to the OPCW company-specific information relating to the export or import of Schedule 3 chemicals contained in reports. The U.S. Government will add all export and import information contained in reports to establish the U.S. national aggregate declaration on exports and imports.


    (2) Mixtures containing a Schedule 3 chemical. The quantity of a Schedule 3 chemical contained in a mixture must be counted for reporting an export or import only if the concentration of the Schedule 3 chemical in the mixture is 80% or more by volume or by weight, whichever yields the lesser percent. For reporting purposes, only count the weight of the Schedule 3 chemical in the mixture, not the entire weight of the mixture.



    Note to § 714.2(a)(2):

    The “80% and above” mixtures rule applies only for reporting purposes. This rule does not apply for purposes of determining whether the export of your mixture to a non-State Party requires an End-Use Certificate or for determining whether you need an export license from BIS (see 15 CFR 742.2, 742.18 and 745.2 of the Export Administration Regulations) or from the Department of State (see the International Traffic in Arms Regulations (22 CFR parts 120 through 130)).


    (b) Types of forms to be used – (1) Declared Schedule 3 plant sites. (i) If your plant site is declared for production of a Schedule 3 chemical (and has completed questions 3-3.1 and 3-3.2 on Form 3-3) and you also exported from or imported to your plant site in excess of 30 metric tons of that same Schedule 3 chemical, you must report the export or import by either:


    (A) Completing question 3-3.3 on Form 3-3 on your declaration for that same Schedule 3 chemical; or


    (B) Submitting, separately from your declaration, a Certification Form, Form 3-1, and a Form 3-3 for each Schedule 3 chemical to be reported, completing only question 3-3.3. Attach Form A, as appropriate; Form B is optional.


    (ii) If your plant site is declared for production of a Schedule 3 chemical and you exported or imported in excess of 30 metric tons of a different Schedule 3 chemical, you must report the export or import by either:


    (A) Submitting, along with your declaration, a Form 3-3 for each Schedule 3 chemical to be reported, completing only question 3-3.3. Attach Form A, as appropriate; Form B is optional; or


    (B) Submitting, separately from your declaration, a Certification Form, Form 3-1 and a Form 3.3 for each Schedule 3 chemical to be reported, completing only question 3-3.3. Attach Form A, as appropriate; Form B is optional.


    (2) If you are an undeclared plant site, a trading company, or any other person subject to the CWCR, you must submit a Certification Form, Form 3-1, and a Form 3-3 for each Schedule 3 chemical to be reported, completing only question 3-3.3. Attach Form A, as appropriate; Form B is optional.


    (c) Quantities to be reported – (1) Calculations. If you exported from or imported to your plant site or trading company more than 30 metric tons of a Schedule 3 chemical in the previous calendar year, you must report all exports and imports of that chemical by country of destination or country of origin, respectively, and indicate the total amount exported to or imported from each country.


    (2) Rounding. For purposes of reporting exports and imports of a Schedule 3 chemical, you must total all exports and imports per calendar year per recipient or source and then round to the nearest 0.1 metric tons.



    Note to § 714.2(c):

    Under the Convention, the United States is obligated to provide the OPCW a national aggregate annual declaration of the quantities of each Schedule 3 chemical exported and imported, with a quantitative breakdown for each country or destination involved. The U.S. Government will not submit your company-specific information relating to the export or import of a Schedule 3 chemical reported under this § 714.2. The U.S. Government will add all export and import information submitted by various facilities under this section to produce a national aggregate annual declaration of destination-by-destination trade for each Schedule 3 chemical.


    § 714.3 Advance declaration requirements for additionally planned production of Schedule 3 chemicals.

    (a) Declaration requirements. (1) You must declare additionally planned production of Schedule 3 chemicals after the annual declaration on anticipated activities for the next calendar year has been delivered to BIS if:


    (i) You plan that a previously undeclared plant on your plant site under § 714.1(a)(1)(ii) of the CWCR will produce a Schedule 3 chemical above the declaration threshold;


    (ii) You plan to produce at a plant declared under § 714.1(a)(1)(ii) of the CWCR an additional Schedule 3 chemical above the declaration threshold;


    (iii) You plan to increase the production of a Schedule 3 chemical by declared plants on your plant site from the amount exceeding the applicable declaration threshold to an amount exceeding the applicable inspection threshold (see § 716.1(b)(3) of the CWCR); or


    (iv) You plan to increase the aggregate production of a Schedule 3 chemical at a declared plant site to an amount above the upper limit of the range previously declared under § 714.1(a)(1)(ii) of the CWCR.


    (2) If you must submit a declaration on additionally planned activities because you plan to engage in any of the activities listed in paragraphs (a)(1)(i) through (iv) of this section, you also should declare any changes to the anticipated purposes of production or product group codes. You do not have to submit a declaration on additionally planned activities if you are only changing your purposes of production or product group codes.


    (b) Declaration forms to be used. If you are required to declare additionally planned activities pursuant to paragraph (a) of this section, you must complete the Certification Form and Forms 3-1, 3-2, and 3-3 as appropriate. Such forms are due to BIS at least 15 days in advance of the beginning of the additional or new activity.


    § 714.4 Amended declaration or report.

    In order for BIS to maintain accurate information on previously submitted plant site declarations, including information necessary to facilitate inspection notifications and activities or to communicate declaration or reporting requirements, amended declarations or reports will be required under the following circumstances described in this section. This section applies only to annual declarations on past activities and annual reports on exports and imports submitted for the previous calendar year or annual declarations on anticipated activities covering the current calendar year, unless specified otherwise in a final inspection report.


    (a) Changes to information that directly affects a declared plant site’s Annual Declaration of Past Activities (ADPA) or Combined Annual Declaration or Report which was previously submitted to BIS. You must submit an amended declaration or report to BIS within 15 days of determining that there has been a change in any of the following information that you have previously declared or reported:


    (1) Types of Schedule 3 chemicals produced (e.g., production of additional Schedule 3 chemicals);


    (2) Production range (e.g., from 30 to 200 metric tons to above 200 to 1000 metric tons) of Schedule 3 chemicals;


    (3) Purpose of Schedule 3 chemical production (e.g., additional end-uses); or


    (4) Addition of new plant(s) for production of Schedule 3 chemicals.


    (b) Changes to export or import information submitted in Annual Reports on Exports and Imports from undeclared plant sites, trading companies and U.S. persons. You must submit an amended report or amended combined declaration and report to BIS within 15 days of any change in the following export or import information:


    (1) Types of Schedule 3 chemicals exported or imported (additional Schedule 3 chemicals);


    (2) Quantities of Schedule 3 chemicals exported or imported;


    (3) Destination(s) of Schedule 3 chemicals exported; and


    (4) Source(s) of Schedule 3 chemicals imported.


    (c) Changes to company and plant site information submitted in the ADPA, the Annual Declaration of Anticipated Activities, and the Annual Report on Exports and Imports – (1) Internal company changes. You must submit an amended declaration or report to BIS within 30 days of any change in the following information:


    (i) Name of declaration/report point of contact (D-POC), including telephone number, facsimile number, and e-mail address;


    (ii) Name(s) of inspection point(s) of contact (I-POC), including telephone number, and facsimile number, and e-mail address(es);


    (iii) Company name (see 714.4(c)(2) for other company changes);


    (iv) Company mailing address;


    (v) Plant site name;


    (vi) Plant site owner, including telephone number and facsimile number;


    (vii) Plant site operator, including telephone number and facsimile number;


    (viii) Plant name;


    (xi) Plant owner, including telephone number and facsimile number; and


    (x) Plant operator, including telephone number and facsimile number.


    (2) Change in ownership of company, plant site, or plant. If you sold or purchased a declared company, plant site or plant, you must submit an amended declaration or report to BIS, either before the effective date of the change or within 30 days after the effective date of the change. The amended declaration or report must include the following information.


    (i) Information that must be submitted to BIS by a company selling a declared plant site:


    (A) Name of seller (i.e., name of the company selling a declared plant site);


    (B) Name of declared plant site and U.S. Code Number for that plant site;


    (C) Name of purchaser (i.e., name of company purchasing a declared plant site) and identity of the new owner and contact person for the purchaser, if known;


    (D) Date of ownership transfer;


    (E) Additional (e.g., unique) details on the sale of the plant site relevant to ownership or operational control over any portion of the declared plant site (e.g., whether the entire plant site or only a portion of the declared plant site has been sold to a new owner); and


    (F) Details regarding whether the new owner will submit the declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and the new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site or trading company.


    (1) If the new owner is responsible for submitting the declaration or report for the entire current year, it must have in its possession the records for the period of the year during which the previous owner owned the plant site or trading company.


    (2) If the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site or trading company, and, at the time of transfer of ownership, the previous owner’s activities are not above the declaration or reporting thresholds set forth in § 714.1(a)(1) and § 714.2(a)(1) of the CWCR, respectively, the previous owner and the new owner must still submit declarations to BIS with the below threshold quantities indicated.


    (3) If the part-year declarations submitted by the previous owner and the new owner are not, when combined, above the declaration threshold set forth in § 714.1(a)(1) of the CWCR, BIS will return the declarations without action as set forth in § 714.5 of the CWCR.


    (4) If part-year reports are not, when combined, above the reporting threshold set forth in § 714.2(a)(1) of the CWCR, BIS will return the reports without action as set forth in § 714.5 of the CWCR.


    (ii) Information that must be submitted to BIS by the company purchasing a declared plant site:


    (A) Name of purchaser (i.e., name of individual or company purchasing a declared plant site);


    (B) Mailing address of purchaser;


    (C) Name of declaration point of contact (D-POC) for the purchaser, including telephone number, facsimile number, and e-mail address;


    (D) Name(s) of inspection point(s)s of contact (I-POC) for the purchaser, including telephone number, facsimile number, and e-mail address(es);


    (E) Name of the declared plant site and U.S. Code Number for that plant site;


    (F) Location of the declared plant site;


    (G) Operator of the declared plant site, including telephone number, and facsimile number;


    (H) Name of plant where Schedule 3 production exceeds the declaration threshold;


    (I) Owner of plant where Schedule 3 production exceeds the declaration threshold;


    (J) Operator of plant where Schedule 3 production exceeds the declaration threshold; and


    (K) Details on the next declaration or report submission on whether the new owner will submit the declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or reports for the periods of the calendar year during which each owned the plant site or trading company.



    Note 1 to § 714.4(c):

    You must submit an amendment to your most recently submitted declaration or report for declaring changes to internal company information (e.g., company name change) or changes in ownership of a facility or trading company that have occurred since the submission of this declaration or report. BIS will process the amendment to ensure current information is on file regarding the facility or trading company (e.g., for inspection notifications and correspondence) and will also forward the amended declaration to the OPCW to ensure that they also have current information on file regarding your facility or trading company.



    Note 2 to § 714.4(c):

    You may notify BIS of change in ownership via a letter to the address given in § 711.6 of the CWCR. If you are submitting an amended declaration or report, use Form B to address details regarding the sale of the declared plant site or trading company.



    Note 3 to § 714.4(c):

    For ownership changes, the declared plant site or trading company will maintain its original U.S. Code Number, unless the plant site or trading company is sold to multiple owners, at which time BIS will assign new U.S. Code Numbers.


    (d) Inspection-related amendments. If, following the completion of an inspection (see parts 716 and 717 of the CWCR), you are required to submit an amended declaration based on the final inspection report, BIS will notify you in writing of the information to be amended pursuant to §§ 716.10 and 717.5(b) of the CWCR. Amended declarations must be submitted to BIS no later than 45 days following your receipt of BIS’s post-inspection letter.


    (e) Non-substantive changes. If, subsequent to the submission of your declaration or report to BIS, you discover one or more non-substantive typographical errors in your declaration or report, you are not required to submit an amended declaration or report to BIS. Instead, you may correct these errors in a subsequent declaration or report.


    (f) Documentation required for amended declarations or reports. If you are required to submit an amended declaration or report to BIS pursuant to paragraph (a), (b), (c), or (d) of this section, you must submit either:


    (1) A letter containing all of the corrected information required, in accordance with the provisions of this section, to amend your declaration or report; or


    (2) Both of the following:


    (i) A new Certification Form; and


    (ii) The specific forms required for the declaration or report type being amended (e.g., annual declaration on past activities) containing the corrected information required, in accordance with the requirements of this section, to amend your declaration or report.


    § 714.5 Declarations and reports returned without action by BIS.

    If you submit a declaration or report and BIS determines that the information contained therein is not required by the CWCR, BIS will return the original declaration or report to you, without action, accompanied by a letter explaining BIS’s decision. In order to protect your confidential business information, BIS will not maintain a copy of any declaration or report that is returned without action. However, BIS will maintain a copy of the RWA letter.


    § 714.6 Deadlines for submission of Schedule 3 declarations, reports, and amendments.

    Declarations, reports, and amendments required under this part must be postmarked by the appropriate date identified in supplement no. 2 to this part 714 of the CWCR. Required declarations, reports, and amendments include:


    (a) Annual declaration on past activities (production of Schedule 3 chemicals during the previous calendar year);


    (b) Annual report on exports and imports of Schedule 3 chemicals from plant sites, trading companies, and other persons subject to the CWCR (during the previous calendar year);


    (c) Combined declaration and report (production of Schedule 3 chemicals, as well as exports or imports of the same or different Schedule 3 chemicals, by a declared plant site during the previous calendar year);


    (d) Annual declaration on anticipated activities (anticipated production of Schedule 3 chemicals during the next calendar year);


    (e) Declaration on Additionally Planned Activities (additionally planned production of Schedule 3 chemicals); and


    (f) Amended declaration and report, including combined declaration and report.


    Supplement No. 1 to Part 714 – Schedule 3 Chemicals


    (CAS registry number)
    A. Toxic chemicals:
    (1) Phosgene: Carbonyl dichloride(75-44-5)
    (2) Cyanogen chloride(506-77-4)
    (3) Hydrogen cyanide(74-90-8)
    (4) Chloropicrin: Trichloronitromethane(76-06-2)
    B. Precursors:
    (5) Phosphorus oxychloride(10025-87-3)
    (6) Phosphorus trichloride(7719-12-2)
    (7) Phosphorus pentachloride(10026-13-8)
    (8) Trimethyl phosphite(121-45-9)
    (9) Triethyl phosphite(122-52-1)
    (10) Dimethyl phosphite(868-85-9)
    (11) Diethyl phosphite(762-04-9)
    (12) Sulfur monochloride(10025-67-9)
    (13) Sulfur dichloride(10545-99-0)
    (14) Thionyl chloride(7719-09-7)
    (15) Ethyldiethanolamine(139-87-7)
    (16) Methyldiethanolamine(105-59-9)
    (17) Triethanolamine(102-71-6)

    Note to Supplement No. 1: Refer to supplement no. 1 to part 774 of the Export Administration Regulations (the Commerce Control List), ECCNs 1C350 and 1C355, for export controls related to Schedule 3 chemicals.


    Supplement No. 2 to Part 714 – Deadlines for Submission of Schedule 3 Declarations, Reports, and Amendments

    Declarations
    Applicable forms
    Due dates
    Annual Declaration on Past Activities (previous calendar year) – Declared plant site (production)Certification, 3-1, 3-2, 3-3 (if also exported or imported), A (as appropriate), B (optional)February 28 of the year following any calendar year in which the production of a Schedule 3 chemical exceeded the declaration threshold in § 714.1(a)(1)(i) of the CWCR.
    Annual Report on Exports and Imports (previous calendar year) – Plant site, trading company, other personsCertification, 3-1, 3-3.3 and 3-3.4, A (as appropriate), B (optional)February 28 of the year following any calendar year in which exports or imports of a Schedule 3 chemical by a plant site, trading company, or other person subject to the CWCR (as described in § 714.2(a) of the CWCR) exceeded the threshold in § 714.2(a) of the CWCR.
    Combined Declaration & ReportCertification, 3-1, 3-2, and 3-3, A (as appropriate), B (optional)February 28 of the year following any calendar year in which the production of a Schedule 3 chemical and the export or import of the same or a different Schedule 3 chemical by a declared plant site exceeded the applicable thresholds in §§ 714.1(a)(1)(i) and 714.2(a), respectively, of the CWCR.
    Annual Declaration on Anticipated Activities (Production) (next calendar year)Certification, 3-1, 3-2, 3-3.2, A (as appropriate), B (optional)September 3 of the year prior to any calendar year in which Schedule 3 production is anticipated to occur.
    Declaration on Additionally Planned ActivitiesCertification, 3-1, 3-3.1 and 3-3.2, A (as appropriate), B (optional)15 calendar days before the additionally planned activity begins.
    Amended DeclarationCertification, 3-1, 3-2, 3-3
    – Declaration information – 15 calendar days after change in information.
    – Company information – 30 calendar days after change in information.
    – Post-inspection letter – 45 calendar days after receipt of letter.
    Amended ReportCertification, 3-1, 3-2, 3-3, A (as appropriate), B (optional) – 15 calendar days after change in information.
    Amended Combined Declaration & ReportCertification, 3-1, 3-2, 3-3, A (as appropriate), B (optional) – 15 calendar days after change in information.

    PART 715 – ACTIVITIES INVOLVING UNSCHEDULED DISCRETE ORGANIC CHEMICALS (UDOCs)


    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.

    § 715.1 Annual declaration requirements for production by synthesis of unscheduled discrete organic chemicals (UDOCs).

    (a) Declaration of production by synthesis of UDOCs for purposes not prohibited by the CWC – (1) Production quantities that trigger the declaration requirement. See § 711.6 of the CWCR for information on obtaining the forms you will need to declare production of unscheduled discrete organic chemicals. You must complete the forms specified in paragraph (b) of this section if your plant site produced by synthesis:


    (i) In excess of 200 metric tons aggregate of all UDOCs (including all UDOCs containing the elements phosphorus, sulfur or fluorine, referred to as “PSF chemicals”) during the previous calendar year; or


    (ii) In excess of 30 metric tons of an individual PSF chemical at one or more plants at your plant site during the previous calendar year.



    Note to § 715.1(a)(1)(ii):

    In calculating the aggregate production quantity of each individual PSF chemical produced by a PSF plant, do not include production of a PSF chemical that was produced in quantities less than 30 metric tons. Include only production quantities from those PSF plants that produced more than 30 metric tons of an individual PSF chemical.


    (2) UDOCs subject to declaration requirements under this part. (i) UDOCs subject to declaration requirements under this part are those produced by synthesis that have been isolated for:


    (A) Use; or


    (B) Sale as a specific end product.


    (ii) Exemptions. (A) Polymers and oligomers consisting of two or more repeating units;


    (B) Chemicals and chemical mixtures produced through a biological or biomediated process;


    (C) Products from the refining of crude oil, including sulfur-containing crude oil;


    (D) Metal carbides (i.e., chemicals consisting only of metal and carbon); and


    (E) UDOCs produced by synthesis that are ingredients or by-products in foods designed for consumption by humans and/or animals.



    Note to § 715.1(a)(2):

    See supplement no. 2 to this part 715 for examples of UDOCs subject to the declaration requirements of this part, and for examples of activities that are not considered production by synthesis.


    (3) Exemptions for UDOC plant sites. UDOC plant sites that exclusively produced hydrocarbons or explosives are exempt from UDOC declaration requirements. For the purposes of this part, the following definitions apply for hydrocarbons and explosives:


    (i) Hydrocarbon means any organic compound that contains only carbon and hydrogen; and


    (ii) Explosive means a chemical (or a mixture of chemicals) that is included in Class 1 of the United Nations Organization hazard classification system.


    (b) Types of declaration forms to be used – (1) Annual declaration on past activities. You must complete the Certification Form and Form UDOC (consisting of two pages), unless there are no changes from the previous year’s declaration and you submit a No Changes Authorization Form pursuant to paragraph (b)(2) of this section. Attach Form A as appropriate; Form B is optional.



    Note to § 715.1(b)(1):

    If there is a change in the inspection status of your plant site, as described in paragraph (d)(2) of this section, you may submit an Annual Declaration on Past Activities, in lieu of a Change in Inspection Status Form, under the circumstances described in Note 3 to paragraph (d)(2). In this case, the due date for submitting the Annual Declaration on Past Activities to BIS, covering UDOC production at your plant site during the current calendar year, would be December 15th of the current calendar year, instead of February 28th of the next calendar year (also see supplement no. 3 to this part). If you choose to submit your Annual Declaration on Past Activities to BIS by December 15th and, subsequently, you determine that the production by synthesis of UDOCs at your plant site actually exceeded the UDOC inspection threshold level specified in paragraph (d)(1) of this section, you must submit an amendment to your Annual Declaration on Past Activities (see § 715.2 of the CWCR) and indicate, on Form B, the reason your plant site exceeded the UDOC inspection threshold.


    (2) No Changes Authorization Form. You may complete the No Changes Authorization Form if there are no updates or changes to any information (except the certifying official and dates signed and submitted) in your plant site’s previously submitted annual declaration on past activities. Your plant site’s activities will be declared to the OPCW and subject to inspection, if applicable, based upon the data reported in the most recent UDOC Declaration that you submitted to BIS.



    Note to § 715.1(b)(2):

    If, after submitting the No Changes Authorization Form, you have changes to information, you must submit a complete amendment to the annual declaration on past activities. See § 715.2 of the CWCR.


    (c) “Declared” UDOC plant site. A plant site that submitted a declaration pursuant to paragraph (a)(1) of this section is a “declared” UDOC plant site.


    (d) Routine inspections of declared UDOC plant sites – (1) Inspection requirement. A “declared” UDOC plant site is subject to routine inspection by the Organization for the Prohibition of Chemical Weapons (OPCW) (see part 716 of the CWCR) if it produced by synthesis more than 200 metric tons aggregate of UDOCs during the previous calendar year.


    (2) Change in inspection status. You may complete the Change in Inspection Status Form, to ensure that your facility does not remain subject to inspection during the first 90 days of the next calendar year (i.e., prior to the submission of the U.S. declaration to the OPCW), if:


    (i) Your plant site is currently subject to inspection, pursuant to paragraph (d)(1) of this section, based on your plant site’s production by synthesis of UDOCs during the previous calendar year; and


    (ii) Your plant site’s production by synthesis of UDOCs in the current calendar year will be below the inspection threshold level specified in paragraph (d)(1) of this section by the deadline indicated in supplement no. 3 to this part, and is anticipated to remain below that threshold level through the remainder of the current calendar year.



    Note 1 to § 715.1(d)(2):

    Upon receipt of the Change in Inspection Status Form, BIS will inform the Organization for the Prohibition of Chemical Weapons (OPCW) that your plant site is not subject to inspection during the next calendar year.



    Note 2 to § 715.1(d)(2):

    If, after submitting your Change in Inspection Status Form to BIS, you determine that the production by synthesis of UDOCs at your plant site actually exceeded the UDOC inspection threshold level specified in paragraph (d)(1) of this section, you must indicate this fact when you submit your Annual Declaration on Past Activities to BIS and indicate, on Form B, the reason your plant site exceeded the UDOC inspection threshold.



    Note 3 to § 715.1(d)(2):

    You may submit the Annual Declaration on Past Activities described in paragraph (b)(1) of this section, instead of the Change in Inspection Status Form, if you anticipate that UDOC production at your plant site during the current calendar year will be below the inspection threshold level specified in paragraph (d)(1) of this section, but you expect your plant site to remain subject to the UDOC declaration requirements in paragraph (a)(1) of this section. In this case, the due date for the Annual Declaration on Past Activities will be December 15th of the current calendar year, instead of February 28th of the next calendar year. Note that any changes to information contained in the Annual Declaration on Past Activities must be addressed in accordance with the amendment requirements in § 715.2 of the CWCR. For example, if subsequent to the submission of your Annual Declaration on Past Activities to BIS on December 15th, you determine that the production by synthesis of UDOCs at your plant site actually exceeded the UDOC inspection threshold level specified in paragraph (d)(1) of this section, you must submit an amendment to your Annual Declaration on Past Activities (see § 715.2 of the CWCR) and indicate, on Form B, the reason your plant site exceeded the UDOC inspection threshold.



    Note 4 to § 715.1(d)(2):

    Currently inspectable UDOC plant sites that do not submit either a Change in Inspection Status Form or Annual Declaration of Past Activities by December 15th of the current calendar year, in accordance with paragraph (d)(2) of this section, will remain subject to inspection through at least the 90-day period at the beginning of the next calendar year.


    [71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14408, Mar. 28, 2007]


    § 715.2 Amended declaration.

    In order for BIS to maintain accurate information on previously submitted plant site declarations, including current information necessary to facilitate inspection notifications and activities or to communicate declaration requirements, amended declarations will be required under the following circumstances described in this section. This section applies only to annual declarations on past activities submitted for the previous calendar year, unless specified otherwise in a final inspection report.


    (a) Changes to information that directly affects a declared plant site’s Annual Declaration of Past Activities (ADPA) which was previously submitted to BIS. You must submit an amended declaration to BIS within 15 days of any change in the following information:


    (1) Product group codes for UDOCs produced in quantities exceeding the applicable declaration threshold specified in § 715.1(a)(1) of the CWCR;


    (2) Approximate number of plants at the declared plant site that produced any amount of UDOCs (including all PSF chemicals);


    (3) Aggregate amount of production (by production range) of UDOCs produced by all plants at the declared plant site;


    (4) Exact number of plants at the declared plant site that individually produced more than 30 metric tons of a single PSF chemical; and


    (5) Production range of each plant at the declared plant site that individually produced more than 30 metric tons of a single PSF chemical.


    (b) Changes to company and plant site information submitted in the ADPA that must be maintained by BIS – (1) Internal company changes. You must submit an amended declaration to BIS within 30 days of any change in the following information:


    (i) Name of declaration point of contact (D-POC), including telephone number, facsimile number, and e-mail address;


    (ii) Name(s) of inspection point(s) of contact (I-POC), including telephone number, facsimile number(s) and e-mail address(es);


    (iii) Company name (see 715.2(b)(2) for other company changes);


    (iv) Company mailing address;


    (v) Plant site name;


    (vi) Plant site owner, including telephone number and facsimile number; and


    (vii) Plant site operator, including telephone number and facsimile number.


    (2) Change in ownership of company or plant site. If you sold or purchased a declared plant site, you must submit an amended declaration to BIS, either before the effective date of the change or within 30 days after the effective date of the change. The amended declaration must include the following information.


    (i) Information that must be submitted to BIS by the company selling a declared plant site:


    (A) Name of seller (i.e., name of company selling a declared plant site);


    (B) Name of declared plant site name and U.S. Code Number for that plant site;


    (C) Name of purchaser (i.e., name of new company purchasing a declared plant site) and identity of contact person for the purchaser, if known;


    (D) Date of ownership transfer or change;


    (E) Additional details on the sale of the declared plant site relevant to ownership or operational control over any portion of the declared plant site (e.g., whether the entire plant site or only a portion of the declared plant site has been sold to a new owner); and


    (F) Details regarding whether the new owner will submit the declaration for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations for the periods of the calendar year during which each owned the plant site.


    (1) If the new owner is responsible for submitting the declaration for the entire current year, it must have in its possession the records for the period of the year during which the previous owner owned the plant site.


    (2) If the previous owner and new owner will submit separate declarations for the periods of the calendar year during which each owned the plant site, and, if at the time of transfer of ownership, the previous owner’s activities are not above the declaration thresholds set forth in § 715.1(a)(1) of the CWCR, the previous owner and the new owner must still submit declarations to BIS with the below threshold quantities indicated.


    (3) If the part-year declarations submitted by the previous owner and the new owner are not, when combined, above the declaration threshold set forth in § 715.1(a)(1) of the CWCR, BIS will return the declarations without action as set forth in § 715.3 of the CWCR.


    (ii) Information that must be submitted to BIS by the company purchasing a declared plant site:


    (A) Name of purchaser (i.e., name of individual or company purchasing a declared plant site);


    (B) Mailing address of purchaser;


    (C) Name of declaration point of contact (D-POC) for the purchaser, including telephone number, facsimile number, and e-mail address;


    (D) Name(s) of inspection point(s) of contact (I-POC) for the purchaser, including telephone number(s), facsimile number(s), and e-mail address(es);


    (E) Name of the declared plant site and U.S. Code Number for that plant site;


    (F) Location of the declared plant site;


    (G) Name of plant site where the production of UDOCs exceeds the applicable declaration threshold;


    (H) Owner of plant site where the production of UDOCs exceeds the applicable declaration threshold, including telephone number and facsimile number;


    (I) Operator of plant site where the production of UDOCs exceeds the applicable declaration threshold, including telephone number and facsimile number; and


    (J) Details on the next declaration or report submission on whether the new owner will submit the declaration or report for the entire calendar year during which the ownership change occurred, or whether the previous owner and new owner will submit separate declarations or report for the periods of the calendar year during which each owned the plant site.



    Note 1 to § 715.2(b):

    You must submit an amendment to your most recently submitted declaration or report for declaring changes to internal company information (e.g., company name change) or changes in ownership of a facility or trading company that have occurred since the submission of this declaration or report. BIS will process the amendment to ensure current information is on file regarding the facility or trading company (e.g., for inspection notifications and correspondence) and will also forward the amended declaration to the OPCW to ensure that they also have current information on file regarding your facility or trading company.



    Note 2 to § 715.2(b):

    You may notify BIS of change in ownership via a letter to the address given in § 711.6 of the CWCR. If you are submitting an amended declaration, use Form B to address details regarding the sale of the declared plant site.



    Note 3 to § 715.2(b):

    For ownership changes, the declared plant site will maintain its original U.S. Code Number, unless the plant site is sold to multiple owners, at which time BIS will assign new U.S. Code Numbers.


    (c) Inspection-related amendments. If, following completion of an inspection (see part 716 or 717 of the CWCR), you are required to submit an amended declaration based on the final inspection report, BIS will notify you in writing of the information that will be required pursuant to §§ 716.10 and 717.5 of the CWCR. You must submit an amended declaration to BIS no later than 45 days following your receipt of BIS’s post-inspection letter.


    (d) Non-substantive changes. If, subsequent to the submission of your declaration to BIS, you discover one or more non-substantive typographical errors in your declaration, you are not required to submit an amended declaration to BIS. Instead, you may correct these errors in a subsequent declaration.


    (e) Documentation required for amended declarations. If you are required to submit an amended declaration to BIS pursuant to paragraph (a), (b), or (c) of this section, you must submit either:


    (1) A letter containing all of the corrected information required, in accordance with the provisions of this section, to amend your declaration; or


    (2) Both of the following:


    (i) A new Certification Form; and


    (ii) The specific form required for the declaration containing the corrected information required, in accordance with the requirements of this section, to amend your declaration.


    § 715.3 Declarations returned without action by BIS.

    If you submit a declaration and BIS determines that the information contained therein is not required by the CWCR, BIS will return the original declaration to you, without action, accompanied by a letter explaining BIS’s decision. In order to protect your confidential business information, BIS will not maintain a copy of any declaration that is returned without action. However, BIS will maintain a copy of the RWA letter.


    § 715.4 Deadlines for submitting UDOC declarations, No Changes Authorization Forms, Change in Inspection Status Forms, and amendments.

    Declarations, No Changes Authorization Forms, Change in Inspection Status Forms, and amendments required under this part must be postmarked by the appropriate dates identified in supplement no. 3 to this part 715 of the CWCR. Required documents under this part include:


    (a) Annual Declaration on Past Activities (UDOC production during the previous calendar year);


    (b) No Changes Authorization Form (may be completed and submitted to BIS when there are no changes to any information in your plant site’s previously submitted annual declaration on past activities, except the certifying official and the dates signed and submitted); and


    (c) Change in Inspection Status Form – May be completed and submitted to BIS if your plant site is currently subject to inspection, pursuant to § 715.1(d)(1) of the CWCR, and you anticipate that the production of UDOCs at your plant site during the current calendar year will remain below the inspection threshold level indicated therein (i.e., 200 metric tons aggregate); and


    (d) Amended declaration.


    [71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14408, Mar. 28, 2007]


    Supplement No. 1 to Part 715 – Definition of an Unscheduled Discrete Organic Chemical

    Unscheduled discrete organic chemical means any chemical: (1) 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; and (2) that is not contained in the Schedules of Chemicals (see Supplements No. 1 to parts 712 through 714 of the CWCR). Unscheduled discrete organic chemicals subject to declaration under this part are those produced by synthesis that are isolated for use or sale as a specific end-product.



    Note:

    Carbon oxides consist of chemical compounds that contain only the elements carbon and oxygen and have the chemical formula CXOy, where x and y denote integers. The two most common carbon oxides are carbon monoxide (CO) and carbon dioxide (CO2). Carbon sulfides consist of chemical compounds that contain only the elements carbon and sulfur, and have the chemical formula CaSb, where a and b denote integers. The most common carbon sulfide is carbon disulfide (CS2). Metal carbonates consist of chemical compounds that contain a metal (i.e., the Group I Alkalis, Groups II Alkaline Earths, the Transition Metals, or the elements aluminum, gallium, indium, thallium, tin, lead, bismuth or polonium), and the elements carbon and oxygen. Metal carbonates have the chemical formula Md(CO3)e, where d and e denote integers and M represents a metal. Common metal carbonates are sodium carbonate (Na2CO3) and calcium carbonate (CaCO3). In addition, metal carbides or other compounds consisting of only a metal, as described in this Note, and carbon (e.g., calcium carbide (CaC2)), are exempt from declaration requirements (see § 715.1(a)(2)(ii)(D) of the CWCR).


    Supplement No. 2 to Part 715 – Examples of Unscheduled Discrete Organic Chemicals (UDOCs) and UDOC Production

    (1) Examples of UDOCs not subject to declaration include:


    (i) UDOCs produced coincidentally as by-products that are not isolated for use or sale as a specific end product, and are routed to, or escape from, the waste stream of a stack, incinerator, or waste treatment system or any other waste stream;


    (ii) UDOCs, contained in mixtures, which are produced coincidentally and not isolated for use or sale as a specific end-product;


    (iii) UDOCs produced by recycling (i.e., involving one of the processes listed in paragraph (3) of this supplement) of previously declared UDOCs;


    (iv) UDOCs produced by the mixing (i.e., the process of combining or blending into one mass) of previously declared UDOCs; and


    (v) UDOCs that are intermediates and that are used in a single or multi-step process to produce another declared UDOC.


    (2) Examples of UDOCs that you must declare under part 715 of the CWCR include, but are not limited to, the following, unless they are not isolated for use or sale as a specific end product:


    (i) Acetophenone (CAS #98-86-2);


    (ii) 6-Chloro-2-methyl aniline (CAS #87-63-8);


    (iii) 2-Amino-3-hydroxybenzoic acid (CAS #548-93-6); and


    (iv) Acetone (CAS #67-64-1).


    (3) Examples of activities that are not considered “production by synthesis” under part 715 of the CWCR, which means the end products resulting from such activities would not be declared under part 715, are as follows:


    (i) Fermentation;


    (ii) Extraction;


    (iii) Purification;


    (iv) Distillation; and


    (v) Filtration.


    Supplement No. 3 to Part 715 – Deadlines for Submission of Declarations, No Changes Authorization Forms, Amendments for Unscheduled Discrete Organic Chemical (UDOC) Facilities, and Change in Inspection Status Forms

    Declarations
    Applicable forms
    Due dates
    Annual Declaration on Past Activities (previous calendar year)

    Declared plant site.
    Certification, UDOC, A (as appropriate), B (optional)February 28 of the year following any calendar year in which the production by synthesis of UDOCs exceeded the applicable declaration threshold in § 715.1(a)(1) of the CWCR.*
    No Changes Authorization Form (declaration required, but no changes to data contained in previously submitted annual declaration on past activities – previous calendar year)

    Declared plant site
    No Changes Authorization FormFebruary 28 of the year following any calendar year in which the production by synthesis of UDOCs exceeded the applicable declaration threshold in § 715.1(a)(1) of the CWCR.
    Amended Declaration:Certification, UDOC, A (as appropriate), B (optional)
    – Declaration information – 15 calendar days after change in information.
    – Company information – 30 calendar days after change in information.
    – Post-inspection letter – 45 calendar days after receipt of letter.
    Change in Inspection Status Form (applies only if your plant site is currently subject to inspection, pursuant to § 715.1(d)(1) of the CWCR, and you anticipate that the production by synthesis of UDOCs at your plant site during the current calendar year will remain below the inspection threshold level specified therein)Change in Inspection Status FormDecember 15th of any calendar year in which the production by synthesis of UDOCs is anticipated to be below the inspection threshold level specified in § 715.1(d)(1) of the CWCR.*

    * You may submit the Annual Declaration on Past Activities (ADPA) described in § 715.1(b)(1), instead of the Change in Inspection Status Form, if you anticipate that UDOC production at your plant site during the current calendar year will be below the inspection threshold level specified in § 715.1(d)(1), but you expect your plant site to remain subject to the UDOC declaration requirements in § 715.1(a)(1). In this case, the due date for the Annual Declaration on Past Activities will be December 15th of the current calendar year, instead of February 28th of the next calendar year.


    [72 FR 14408, Mar. 28, 2007]


    PART 716 – INITIAL AND ROUTINE INSPECTIONS OF DECLARED FACILITIES


    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.

    § 716.1 General information on the conduct of initial and routine inspections.

    This part provides general information about the conduct of initial and routine inspections of declared facilities subject to inspection under CWC Verification Annex Part VI(E), Part VII(B), Part VIII(B) and Part IX(B). See part 717 of the CWCR for provisions concerning challenge inspections.


    (a) Overview. Each State Party to the CWC, including the United States, has agreed to allow certain inspections of declared facilities by inspection teams employed by the Organization for the Prohibition of Chemical Weapons (OPCW) to ensure that activities are consistent with obligations under the Convention. BIS is responsible for leading, hosting and escorting inspections of all facilities subject to the provisions of the CWCR (see § 710.2 of the CWCR).


    (b) Declared facilities subject to initial and routine inspections – (1) Schedule 1 facilities. (i) Your declared facility is subject to inspection if it produced in excess of 100 grams aggregate of Schedule 1 chemicals in the previous calendar year or anticipates producing in excess of 100 grams aggregate of Schedule 1 chemicals during the next calendar year.


    (ii) If you are a new Schedule 1 production facility pursuant to § 712.4 of the CWCR, your facility is subject to an initial inspection within 200 days of submitting an initial declaration.



    Note to § 716.1(b)(1):

    All Schedule 1 facilities submitting a declaration are subject to inspection.


    (2) Schedule 2 plant sites – (i) Inspection thresholds for Schedule 2 plant sites. Your declared plant site is subject to inspection if at least one plant on your plant site produced, processed or consumed, in any of the three previous calendar years, or you anticipate that at least one plant on your plant site will produce, process or consume in the next calendar year, any Schedule 2 chemical in excess of the following:


    (A) 10 kg of chemical BZ: 3-Quinuclidinyl benzilate (see Schedule 2, Part A, paragraph 3 in supplement no. 1 to part 713 of the CWCR);


    (B) 1 metric ton of chemical PFIB: 1,1,3,3,3-Pentafluoro-2(trifluoromethyl)-1-propene or any chemical belonging to the Amiton family (see Schedule 2, Part A, paragraphs 1 and 2 in supplement no. 1 to part 713 of the CWCR); or


    (C) 10 metric tons of any chemical listed in Schedule 2, Part B (see supplement no. 1 to part 713 of the CWCR).


    (ii) Initial inspection for new Schedule 2 plant sites. Your declared plant site is subject to an initial inspection within the first year after submitting a declaration, if at least one plant on your plant site produced, processed or consumed in any of the three previous years, or you anticipate that at least one plant on your plant site will produce, process or consume in the next calendar year, any Schedule 2 chemical in excess of the threshold quantities set forth in paragraphs (b)(2)(i)(A) through (C) of this section.



    Note to § 716.1(b)(2):

    The applicable inspection threshold for Schedule 2 plant sites is ten times higher than the applicable declaration threshold. Only declared plant sites, comprising at least one declared plant that exceeds the applicable inspection threshold, are subject to inspection.


    (3) Schedule 3 plant sites. Your declared plant site is subject to inspection if the declared plants on your plant site produced during the previous calendar year, or you anticipate they will produce in the next calendar year, in excess of 200 metric tons aggregate of any Schedule 3 chemical.



    Note to § 716.1(b)(3):

    The methodology for determining a declarable and inspectable plant site is different. A Schedule 3 plant site that submits a declaration is subject to inspection only if the aggregate production of a Schedule 3 chemical at all declared plants on the plant site exceeds 200 metric tons.


    (4) Unscheduled discrete organic chemical plant sites. Your declared plant site is subject to inspection if it produced by synthesis more than 200 metric tons aggregate of unscheduled discrete organic chemicals (UDOC) during the previous calendar year.



    Note 1 to § 716.1(b)(4):

    You must include amounts of unscheduled discrete organic chemicals containing phosphorus, sulfur or fluorine in the calculation of your plant site’s aggregate production of unscheduled discrete organic chemicals.



    Note 2 to § 716.1(b)(4):

    All UDOC plant sites that submit a declaration based on § 715.1(a)(1)(i) of the CWCR are subject to a routine inspection.



    Note 3 to paragraph (b)(4):

    Any UDOC plant site that is eligible, in accordance with § 715.1(d)(2) of the CWCR, to submit a Change in Inspection Status Form or an Annual Declaration on Past Activities by December 15th of the current calendar year (i.e., a plant site that will be below the inspection threshold level indicated in paragraph (b)(4) of this section during the current calendar year), but that fails to do so, will remain subject to inspection through at least the 90-day period at the beginning of the next calendar year.


    (c) Responsibilities of the Department of Commerce. As the host and escort for the international Inspection Team for all inspections of facilities subject to the provisions of the CWCR under this part, BIS will:


    (1) Lead on-site inspections;


    (2) Provide Host Team notification to the facility of an impending inspection;


    (3) Take appropriate action to obtain an administrative warrant in the event the facility does not consent to the inspection;


    (4) Dispatch an advance team to the vicinity of the site to provide administrative and logistical support for the impending inspection and, upon request, to assist the facility with inspection preparation;


    (5) Escort the Inspection Team on-site throughout the inspection process;


    (6) Assist the Inspection Team with verification activities;


    (7) Negotiate the development of a site-specific facility agreement, if appropriate (see § 716.6); and


    (8) Ensure that an inspection adheres to the Convention, the Act and any warrant issued thereunder, and a site-specific facility agreement, if concluded.


    [71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14409, Mar. 28, 2007]


    § 716.2 Purposes and types of inspections of declared facilities.

    (a) Schedule 1 facilities – (1) Purposes of inspections. The aim of inspections of Schedule 1 facilities is to verify that:


    (i) The facility is not used to produce any Schedule 1 chemical, except for the declared Schedule 1 chemicals;


    (ii) The quantities of Schedule 1 chemicals produced, processed or consumed are correctly declared and consistent with needs for the declared purpose; and


    (iii) The Schedule 1 chemical is not diverted or used for purposes other than those declared.


    (2) Types of inspections – (i) Initial inspections. (A) During initial inspections of declared Schedule 1 facilities, in addition to the verification activities listed in paragraph (a)(1) of this section, the Host Team and the Inspection Team will draft site-specific facility agreements (see § 716.6 of the CWCR) for the conduct of routine inspections.


    (B) For new Schedule 1 production facilities declared pursuant to § 712.4 of the CWCR, the U.S. National Authority, in coordination with BIS, will conclude a facility agreement with the OPCW before the facility begins producing above 100 grams aggregate of Schedule 1 chemicals.


    (ii) Routine inspections. During routine inspections of declared Schedule 1 facilities, the verification activities listed in paragraph (a)(1) of this section will be carried out pursuant to site-specific facility agreements (see § 716.6 of the CWCR) developed during the initial inspections and concluded between the U.S. Government and the OPCW pursuant to the Convention.


    (b) Schedule 2 plant sites – (1) Purposes of inspections. (i) The general aim of inspections of declared Schedule 2 plant sites is to verify that activities are in accordance with obligations under the Convention and consistent with the information provided in declarations. Particular aims of inspections of declared Schedule 2 plant sites are to verify:


    (A) The absence of any Schedule 1 chemical, especially its production, except in accordance with the provisions of the Convention;


    (B) Consistency with declarations of production, processing or consumption of Schedule 2 chemicals; and


    (C) Non-diversion of Schedule 2 chemicals for activities prohibited under the Convention.


    (ii) During initial inspections, Inspection Teams shall collect information to determine the frequency and intensity of subsequent inspections by assessing the risk to the object and purpose of the Convention posed by the relevant chemicals, the characteristics of the plant site and the nature of the activities carried out there. The Inspection Team will take the following criteria into account, inter alia:


    (A) The toxicity of the scheduled chemicals and of the end-products produced with them, if any;


    (B) The quantity of the scheduled chemicals typically stored at the inspected site;


    (C) The quantity of feedstock chemicals for the scheduled chemicals typically stored at the inspected site;


    (D) The production capacity of the Schedule 2 plants; and


    (E) The capability and convertibility for initiating production, storage and filling of toxic chemicals at the inspected site.


    (2) Types of inspections – (i) Initial inspections. During initial inspections of declared Schedule 2 plant sites, in addition to the verification activities listed in paragraph (b)(1) of this section, the Host Team and the Inspection Team will generally draft site-specific facility agreements for the conduct of routine inspections (see § 716.6 of the CWCR).


    (ii) Routine inspections. During routine inspections of declared Schedule 2 plant sites, the verification activities listed in paragraph (b)(1) of this section will be carried out pursuant to any appropriate site-specific facility agreements developed during the initial inspections (see § 716.6 of the CWCR), and concluded between the U.S. Government and the OPCW pursuant to the Convention and the Act.


    (c) Schedule 3 plant sites – (1) Purposes of inspections. The general aim of inspections of declared Schedule 3 plant sites is to verify that activities are consistent with the information provided in declarations. The particular aim of inspections is to verify the absence of any Schedule 1 chemical, especially its production, except in accordance with the Convention.


    (2) Routine inspections. During routine inspections of declared Schedule 3 plant sites, in addition to the verification activities listed in paragraph (c)(1) of this section, the Host Team and the Inspection Team may draft site-specific facility agreements for the conduct of subsequent routine inspections (see § 716.6 of the CWCR). Although the Convention does not require facility agreements for declared Schedule 3 plant sites, the owner, operator, occupant or agent in charge of a plant site may request one. The Host Team will not seek a facility agreement if the owner, operator, occupant or agent in charge of the plant site does not request one. Subsequent routine inspections will be carried out pursuant to site-specific facility agreements, if applicable.


    (d) Unscheduled discrete organic chemical plant sites – (1) Purposes of inspections. The general aim of inspections of declared UDOC plant sites is to verify that activities are consistent with the information provided in declarations. The particular aim of inspections is to verify the absence of any Schedule 1 chemical, especially its production, except in accordance with the Convention.


    (2) Routine inspections. During routine inspections of declared UDOC plant sites, in addition to the verification activities listed in paragraph (d)(1) of this section, the Host Team and the Inspection Team may develop draft site-specific facility agreements for the conduct of subsequent routine inspections (see § 716.6 of the CWCR). Although the Convention does not require facility agreements for declared UDOC plant sites, the owner, operator, occupant or agent in charge of a plant site may request one. The Host Team will not seek a facility agreement if the owner, operator, occupant or agent in charge of the plant site does not request one. Subsequent routine inspections will be carried out pursuant to site-specific facility agreements, if applicable.


    § 716.3 Consent to inspections; warrants for inspections.

    (a) The owner, operator, occupant or agent in charge of a facility may consent to an initial or routine inspection. The individual giving consent on behalf of the facility represents that he or she has the authority to make this decision for the facility.


    (b) In instances where consent is not provided by the owner, operator, occupant or agent in charge for an initial or routine inspection, BIS will seek administrative warrants as provided by the Act.


    § 716.4 Scope and conduct of inspections.

    (a) General. Each inspection shall be limited to the purposes described in § 716.2 of the CWCR and shall be conducted in the least intrusive manner, consistent with the effective and timely accomplishment of its purpose as provided in the Convention.


    (b) Scope – (1) Description of inspections. During inspections, the Inspection Team:


    (i) Will receive a pre-inspection briefing from facility representatives;


    (ii) Will visually inspect the facilities or plants producing scheduled chemicals or UDOCs, which may include storage areas, feed lines, reaction vessels and ancillary equipment, control equipment, associated laboratories, first aid or medical sections, and waste and effluent handling areas, as necessary to accomplish their inspection;


    (iii) May visually inspect other parts or areas of the plant site to clarify an ambiguity that has arisen during the inspection;


    (iv) May take photographs or conduct formal interviews of facility personnel;


    (v) May examine relevant records; and


    (vi) May take samples as provided by the Convention, the Act and consistent with the requirements set forth by the Director of the United States National Authority, at 22 CFR part 103, and the facility agreement, if applicable.


    (2) Scope of consent. When an owner, operator, occupant, or agent in charge of a facility consents to an initial or routine inspection, he or she is consenting to provide access to the Inspection Team and Host Team to any area of the facility, any item located on the facility, interviews with facility personnel, and any records necessary for the Inspection Team to complete its mission pursuant to paragraph (a) of this section, except for information subject to export control under ITAR (22 CFR parts 120 through 130) (see paragraph (b)(3) of this section). When consent is granted for an inspection, the owner, operator, occupant, or agent in charge agrees to provide the same degree of access provided for under section 305 of the Act. The determination of whether the Inspection Team’s request to inspect any area, building, item or record is reasonable is the responsibility of the Host Team Leader.


    (3) ITAR-controlled technology. ITAR-controlled technology shall not be divulged to the Inspection Team without U.S. Government authorization (such technology includes, but is not limited to technical data related to Schedule 1 chemicals or Schedule 2 chemicals identified in Note 2 to Supplement No. 1 to Part 712 or Note 1 to Supplement No. 1 to Part 713, respectively, of the CWCR; also see 22 CFR Section 121.1, i.e., the United States Munitions List). Facilities being inspected are responsible for the identification of ITAR-controlled technology to the BIS Host Team, if known.


    (c) Pre-inspection briefing. Upon arrival of the Inspection Team and Host Team at the inspection site and before commencement of the inspection, facility representatives will provide the Inspection Team and Host Team with a pre-inspection briefing on the facility, the activities carried out there, safety measures, and administrative and logistical arrangements necessary for the inspection, which may be aided with the use of maps and other documentation as deemed appropriate by the facility. The time spent for the briefing will be limited to the minimum necessary and may not exceed three hours.


    (1) The pre-inspection briefing will address:


    (i) Facility health and safety issues and requirements, and associated alarm systems;


    (ii) Declared facility activities, business and manufacturing operations;


    (iii) Physical layout;


    (iv) Delimitation of declared facility;


    (v) Scheduled chemicals on the facility (declared and undeclared);


    (vi) Block flow diagram or simplified process flow diagram;


    (vii) Plants and units specific to declared operations;


    (viii) Administrative and logistic information; and


    (ix) Data declaration updates/revisions.


    (2) The pre-inspection briefing may also address, inter alia:


    (i) Introduction of key facility personnel;


    (ii) Management, organization and history;


    (iii) Confidential business information concerns;


    (iv) Types and location of records/documents;


    (v) Draft facility agreement, if applicable; and


    (vi) Proposed inspection plan.


    (d) Visual plant inspection. The Inspection Team may visually inspect the declared plant or facility and other areas or parts of the plant site as agreed by the Host Team Leader after consulting with the facility representative.


    (e) Records review. (1) The facility must provide the Inspection Team with access to all supporting materials and documentation used by the facility to prepare declarations and to otherwise comply with the requirements of the CWCR. These supporting materials and documentation shall include records related to activities that have taken place at the facility since the beginning of the previous calendar year, regardless of whether or not the facility has submitted its current year Annual Declaration on Past Activities to BIS at the time of the inspection. The facility shall also make available for inspection all records associated with the movement into, around, and from the facility of declared chemicals and their feedstock or any product chemicals formed from such chemicals and feedstock. All supporting materials and documentation subject to the requirements of this paragraph (e) must be retained by the facility in accordance with the requirements of § 721.2 of the CWCR. The facility also must permit access to and copying of these records, upon request by BIS or any other agency of competent jurisdiction, in accordance with the requirements of § 721.1 of the CWCR.


    (2) The facility must provide access to these supporting materials and documentation in appropriate formats (e.g., paper copies, electronic remote access by computer, microfilm, or microfiche), through the U.S. Government Host Team to Inspection Teams, during the inspection period or as otherwise agreed upon by the Inspection Team and Host Team Leader.


    (3) The facility must provide the Inspection Team with appropriate accommodations in which to review these supporting materials and documentation.


    (4) If a facility does not have access to supporting materials and documentation for activities that took place under previous ownership, because such records were not transferred to the current owner of the facility by the previous owner (e.g., as part of the contract involving the sale of the facility), the previous owner must make such records available to the Host Team for provision to the Inspection Team in accordance with section 305 of the Act. However, the current owner of a facility, upon receiving notification of an inspection (see § 716.5 of the CWCR), is responsible for informing BIS if the previous owner did not transfer records for activities that took place under the previous ownership – this will allow BIS to contact the previous owner of the facility, to arrange for access to such records, if BIS deems them relevant to the inspection activities.


    (f) Effect of facility agreements. Routine inspections at facilities for which the United States has concluded a facility agreement with the OPCW will be conducted in accordance with the facility agreement. The existence of a facility agreement does not in any way limit the right of the owner, operator, occupant, or agent in charge of the facility to withhold consent to an inspection request.


    (g) Hours of inspections. Consistent with the provisions of the Convention, the Host Team will ensure, to the extent possible, that each inspection is commenced, conducted, and concluded during ordinary working hours, but no inspection shall be prohibited or otherwise disrupted from commencing, continuing or concluding during other hours.


    (h) Health and safety regulations and requirements. In carrying out their activities, the Inspection Team and Host Team shall observe federal, state, and local health and safety regulations and health and safety requirements established at the inspection site, including those for the protection of controlled environments within a facility and for personal safety. Such health and safety regulations and requirements will be set forth in, but will not necessarily be limited to, the facility agreement, if applicable.


    (i) Preliminary findings. Upon completion of an inspection, the Inspection Team will meet with the Host Team and facility personnel to review the written preliminary findings of the Inspection Team and to clarify ambiguities. The Host Team will discuss the preliminary findings with the facility, and the Host Team Leader will take into consideration the facility’s input when providing official comments on the preliminary findings to the Inspection Team. This meeting will be completed not later than 24 hours after the completion of the inspection.


    [71 FR 24929, Apr. 27, 2006, as amended at 72 FR 14409, Mar. 28, 2007]


    § 716.5 Notification, duration and frequency of inspections.

    (a) Inspection notification – (1)(i) Content of notice. Inspections of facilities may be made only upon issuance of written notice by the United States National Authority (USNA) to the owner and to the operator, occupant or agent in charge of the premises to be inspected. BIS will also provide a separate inspection notification to the inspection point of contact identified in declarations submitted by the facility. If the United States is unable to provide actual written notice to the owner and to the operator, occupant or agent in charge, BIS (or the Federal Bureau of Investigation, if BIS is unable) may post notice prominently at the facility to be inspected. The notice shall include all appropriate information provided by the OPCW to the USNA concerning:


    (A) The type of inspection;


    (B) The basis for the selection of the facility or location for the type of inspection sought;


    (C) The time and date that the inspection will begin and the period covered by the inspection; and


    (D) The names and titles of the Inspection Team members.


    (ii) Consent to inspection. In addition to appropriate information provided by the OPCW in its notification to the USNA, BIS’s inspection notification will request that the facility indicate whether it will consent to an inspection, and will state whether an advance team is available to assist the site in preparation for the inspection. If an advance team is available, facilities that request advance team assistance are not required to reimburse the U.S. Government for costs associated with these activities. If a facility does not agree to provide consent to an inspection within four hours of receipt of the inspection notification, BIS will seek an administrative warrant. The current owner of a facility, upon receiving notification of an inspection, is also responsible for informing BIS if the previous owner did not transfer (to the current owner) records for activities that took place under the previous ownership (see § 716.4(e) of the CWCR) – this will allow BIS to contact the previous owner of the facility, to arrange for access to such records, if BIS deems them relevant to the inspection activities.


    (iii) The following table sets forth the notification procedures for inspection:


    Table to § 716.5(a)(1)

    Activity
    Agency action
    Facility action
    (A) OPCW notification inspection(1) U.S. National Authority transmits actual written notice and inspection authorization to the owner and operator, occupant, or agent in charge via facsimile within 6 hoursAcknowledges receipt of facsimile.
    (2) Upon notification from the U.S. National Authority, BIS immediately transmits inspection notification via facsimile to the inspection point of contract to ascertain whether the facility (i) grants consent and (ii) requests assistance in preparing for the inspection. In absence of consent within four hours of facility receipt, BIS intends to seek an administrative warrant(A) Indicated whether it grants consent.

    (B) May request advance team support. No requirement for reimbursement of U.S. Government’s services.
    (B) Preparation for inspection(1) BIS advance team generally arrives in the vicinity of the facility to be inspected 1-2 days after OPCW notification for logistical and administrative preparationsIf advance team support is provided, facility works with the advance team on inspection-related issues.
    (2) If records for activities that took place under the previous ownership of the facility are deemed relevant to the inspection, BIS will contact the previous owner of the facility to arrange for access to any such records required under the CWCR that have not been transferred to the current ownerThe current owner of the facility must inform BIS if the previous owner of the facility did not transfer (to the current owner) records for activities that took place under the previous ownership.

    (2) Timing of notice – (i) Schedule 1 facilities. For declared Schedule 1 facilities, the Technical Secretariat will notify the USNA of an initial inspection not less than 72 hours prior to arrival of the Inspection Team in the United States, and will notify the USNA of a routine inspection not less than 24 hours prior to arrival of the Inspection Team in the United States. The USNA will provide written notice to the owner and to the operator, occupant or agent in charge of the premises within six hours of receiving notification from the OPCW Technical Secretariat or as soon as possible thereafter. BIS will provide Host Team notice to the inspection point of contact of the facility as soon as possible after the OPCW notifies the USNA of the inspection.


    (ii) Schedule 2 plant sites. For declared Schedule 2 plant sites, the Technical Secretariat will notify the USNA of an initial or routine inspection not less than 48 hours prior to arrival of the Inspection Team at the plant site to be inspected. The USNA will provide written notice to the owner and to the operator, occupant or agent in charge of the premises within six hours of receiving notification from the OPCW Technical Secretariat or as soon as possible thereafter. BIS will provide Host Team notice to the inspection point of contact at the plant site as soon as possible after the OPCW notifies the USNA of the inspection.


    (iii) Schedule 3 and UDOC plant sites. For declared Schedule 3 and UDOC plant sites, the Technical Secretariat will notify the USNA of a routine inspection not less than 120 hours prior to arrival of the Inspection Team at the plant site to be inspected. The USNA will provide written notice to the owner and to the operator, occupant or agent in charge of the premises within six hours of receiving notification from the OPCW Technical Secretariat or as soon as possible thereafter. BIS will provide Host Team notice to the inspection point of contact of the plant site as soon as possible after the OPCW notifies the USNA of the inspection.


    (b) Period of inspections – (1) Schedule 1 facilities. For a declared Schedule 1 facility, the Convention does not specify a maximum duration for an initial inspection. The estimated period of routine inspections will be as stated in the facility agreement, unless extended by agreement between the Inspection Team and the Host Team Leader, and will be based on the risk to the object and purpose of the Convention posed by the quantities of chemicals produced, the characteristics of the facility and the nature of the activities carried out there. The Host Team Leader will consult with the inspected facility on any request for extension of an inspection prior to making an agreement with the Inspection Team. Activities involving the pre-inspection briefing and preliminary findings are in addition to inspection activities. See § 716.4(c) and (i) of the CWCR for a description of these activities.


    (2) Schedule 2 plant sites. For declared Schedule 2 plant sites, the maximum duration of initial and routine inspections shall be 96 hours, unless extended by agreement between the Inspection Team and the Host Team Leader. The Host Team Leader will consult with the inspected plant site on any request for extension of an inspection prior to making an agreement with the Inspection Team. Activities involving the pre-inspection briefing and preliminary findings are in addition to inspection activities. See § 716.4(c) and (i) of the CWCR for a description of these activities.


    (3) Schedule 3 and UDOC plant sites. For declared Schedule 3 or UDOC plant sites, the maximum duration of routine inspections shall be 24 hours, unless extended by agreement between the Inspection Team and the Host Team Leader. The Host Team Leader will consult with the inspected plant site on any request for extension of an inspection prior to making an agreement with the Inspection Team. Activities involving the pre-inspection briefing and preliminary findings are in addition to inspection activities. See § 716.4(c) and (i) of the CWCR for a description of these activities.


    (c) Frequency of inspections. The frequency of inspections is as follows:


    (1) Schedule 1 facilities. As provided by the Convention, the frequency of inspections at declared Schedule 1 facilities is determined by the OPCW based on the risk to the object and purpose of the Convention posed by the quantities of chemicals produced, the characteristics of the facility and the nature of the activities carried out at the facility. The frequency of inspections will be stated in the facility agreement.


    (2) Schedule 2 plant sites. As provided by the Convention and the Act, the maximum number of inspections at declared Schedule 2 plant sites is two per calendar year per plant site. The OPCW will determine the frequency of routine inspections for each declared Schedule 2 plant site based on the Inspection Team’s assessment of the risk to the object and purpose of the Convention posed by the relevant chemicals, the characteristics of the plant site, and the nature of the activities carried out there. The frequency of inspections will be stated in the facility agreement, if applicable.


    (3) Schedule 3 plant sites. As provided by the Convention, no declared Schedule 3 plant site may receive more than two inspections per calendar year and the combined number of inspections of Schedule 3 and UDOC plant sites in the United States may not exceed 20 per calendar year.


    (4) UDOC plant sites. As provided by the Convention, no declared UDOC plant site may receive more than two inspections per calendar year and the combined number of inspections of Schedule 3 and UDOC plant sites in the United States may not exceed 20 per calendar year.


    § 716.6 Facility agreements.

    (a) Description and requirements. A facility agreement is a site-specific agreement between the U.S. Government and the OPCW. Its purpose is to define procedures for inspections of a specific declared facility that is subject to inspection because of the type or amount of chemicals it produces, processes or consumes.


    (1) Schedule 1 facilities. The Convention requires that facility agreements be concluded between the United States and the OPCW for all declared Schedule 1 facilities. For new Schedule 1 production facilities declared pursuant to § 712.4 of the CWCR, the USNA, in coordination with the Department of Commerce, will conclude a facility agreement with the OPCW before the facility begins producing above 100 grams aggregate of Schedule 1 chemicals.


    (2) Schedule 2 plant sites. The USNA will ensure that such facility agreements are concluded with the OPCW unless the owner, operator, occupant or agent in charge of the plant site and the OPCW Technical Secretariat agree that such a facility agreement is not necessary.


    (3) Schedule 3 and UDOC plant sites. If the owner, operator, occupant or agent in charge of a declared Schedule 3 or UDOC plant site requests a facility agreement, the USNA will ensure that a facility agreement for such a plant site is concluded with the OPCW.


    (b) Notification; negotiation of draft and final facility agreements; and conclusion of facility agreements. Prior to the development of a facility agreement, BIS shall notify the owner, operator, occupant, or agent in charge of the facility, and if the owner, operator, occupant or agent in charge so requests, the notified person may participate in preparations with BIS representatives for the negotiation of such an agreement. During the initial or routine inspection of a declared facility, the Inspection Team and the Host Team will negotiate a draft facility agreement or amendment to a facility agreement. To the maximum extent practicable consistent with the Convention, the owner and the operator, occupant or agent in charge of the facility may observe facility agreement negotiations between the U.S. Government and OPCW. As a general rule, BIS will consult with the affected facility on the contents of the agreements and take the facility’s views into consideration during negotiations. BIS will participate in the negotiation of, and approve, all final facility agreements with the OPCW. Facilities will be notified of and have the right to observe final facility agreement negotiations between the United States and the OPCW to the maximum extent practicable, consistent with the Convention. Prior to the conclusion of a final facility agreement, the affected facility will have an opportunity to comment on the facility agreement. BIS will give consideration to such comments prior to approving final facility agreements with the OPCW. The USNA shall ensure that facility agreements for Schedule 1, Schedule 2, Schedule 3 and UDOC facilities are concluded, as appropriate, with the OPCW in coordination with BIS.


    (c) [Reserved]


    (d) Further information. For further information about facility agreements, please write or call: Treaty Compliance Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 4515, 14th Street and Pennsylvania Avenue, NW., Washington, DC 20230, Telephone: (202) 482-1001.


    [71 FR 24929, Apr. 27, 2006, as amended at 73 FR 78183, Dec. 22, 2008]


    § 716.7 Samples.

    The owner, operator, occupant or agent in charge of a facility must provide a sample as provided for in the Convention and the Act and consistent with requirements set forth by the Director of the United States National Authority in 22 CFR part 103. Analysis will be restricted to verifying the absence of undeclared scheduled chemicals, unless otherwise agreed after consultation with the facility representative.


    § 716.8 On-site monitoring of Schedule 1 facilities.

    Declared Schedule 1 facilities are subject to verification by monitoring with on-site instruments as provided by the Convention. For facilities subject to the CWCR, however, such monitoring is not anticipated. The U.S. Government will ensure that any monitoring that may be requested by the OPCW is carried out pursuant to the Convention and U.S. law.


    § 716.9 Report of inspection-related costs.

    Pursuant to section 309(b)(5) of the Act, any facility that has undergone any inspections pursuant to the CWCR during a given calendar year must report to BIS within 90 days of an inspection on its total costs related to that inspection. Although not required, such reports should identify categories of costs separately if possible, such as personnel costs (production-line, administrative, legal), costs of producing records, and costs associated with shutting down chemical production or processing during inspections, if applicable. This information should be reported to BIS on company letterhead at the address given in § 716.6(d) of the CWCR, with the following notation: “Attn: Report of inspection-related costs.”


    § 716.10 Post-inspection activities.

    BIS will forward a copy of the final inspection report to the inspected facility for their review upon receipt from the OPCW. Facilities may submit comments on the final inspection report to BIS, within the time-frame specified by BIS (i.e., at least 7 working days from receipt of the report), and BIS will consider them, to the extent possible, when commenting on the final report. BIS will also send facilities a post-inspection letter detailing the issues that require follow-up action, e.g., amended declaration requirement (see §§ 712.7(