13.7 New Bond Requirement

FOREIGN-TRADE ZONE ENFORCEMENT ACTIONS

13.1 General - There are ample means at CBP disposal to insure compliance with the laws and regulations it is responsible for administering. CBP will work with the trade through the informed compliance process to ensure that all laws and regulations dealing with foreign-trade zones are complied with prior to pursuing the enforced compliance approach. Enforcement measures range from simple warning notices to criminal sanctions with prison sentences. At the same time, CBP recognizes that zones provide an important service to the importing community and are deemed to operate to serve the convenience of commerce. CBP supervision and sanctions should therefore be fair and not unduly burdensome to Grantees, Operators, and Users in the lawful exercise of their trade, as well as effective in gaining compliance with the laws and regulations. Actions taken by Port Directors to correct violations of the laws and regulations should be commensurate with the seriousness of the violation. A heavier sanction should not be applied if a lighter one will achieve the purpose of gaining compliance. The enforcement actions in this Part are listed, generally, in increasing order of severity so as to deal with increasingly serious violations.

13.2 Warning Notices - It is CBP policy that when there is reason to believe minor nonmerchandise defaults can and will be promptly corrected upon simple notification of the Operator, the Port Director may issue an oral or written warning notice or hold an explanatory meeting with the Operator. Records shall be maintained by CBP of such notices and meetings, and they shall be followed up to see that the Operator has corrected the default. (See section 3.5 FTZM). If the Operator continues to be in noncompliance, one of the other actions in this Part shall be taken.

13.3 Assessment of Liquidated Damages - If a warning notice is not appropriate and a breach of the conditions of the Operator’s bond has occurred, CBPF 5955A, Notice of Penalty or Liquidated Damages Incurred and Demand for Payment, will usually be issued as described in Part 12 FTZM. However, if the Port Director has reason to believe the Operator is unable or unwilling to comply with the laws and regulations, other applicable provisions of this Part shall be followed in addition to the issuance of CBPF 5955A (19 CFR 146.81(a)).

13.4 Fines - In the case of a violation of the FTZ Act or any regulation under the FTZ Act by the Grantee or by any officer, agent, or employee thereof, the person responsible for or permitting any such violation, shall be subject to a fine of not more than $1,000. Each day during which a violation continues shall constitute a separate offense (19 U.S.C. §81s, 19 CFR 146.81(a)). Liquidated damages, where applicable, will be imposed in addition to the fine (19 CFR 146.81(a)). Fines assessed by the Port Director under this section shall be reviewed by the Assistant Commissioner, Office of International Trade, or his designee, Headquarters. Office of International Trade to determine whether further action against the Grantee or Operator, such as suspension of activation of the zone or recommendation for revocation of the zone grant, is warranted (19 CFR 146.81(b)). In addition, the Board has authority to impose fines for violations of the FTZ Act (15 CFR 400.11(a)(10)).