OT:RR:CTF:ER H119195 CSO
Ms. Maria A. Gomez
Controller
Innovair Corporation
11490 N.W. 39th Street, Suite 102
Miami, Florida 33178
Re: Foreign Trade Zone; Environmental Protection Agency; HCFC-22: Restricted Merchandise; 19 U.S.C. § 81c
Dear Ms. Gomez:
This is in response to your request for a ruling that this office received on August 16, 2010. You asked whether your company may bring into “a foreign trade zone facility located in Doral, Florida, HCFC-22 (aka “R-22”) substances and air conditioning and refrigeration appliances containing HCFC-22 from a foreign state of origin, without repackaging, sorting, or otherwise changing their condition for the purpose of exportation to a second foreign state.” You also asked how “the current phase-out provisions in place regarding R-22 substances will affect” your transaction. You state that the “current phase-out provisions established in 1992 by an amendment to the Montreal Protocol requires the U.S. to reduce its consumption of R-22 by 90% below the U.S. baseline by January 1, 2015, and by 99.5% by January 1, 2020.”
FACTS:
Innovair is interested in importing into the Miami Free Trade Zone (Zone No. 32) HCFC-22 substance as well as air conditioning appliances containing HCFC-22. HCFC-22 is a substance that is regulated by the U.S. Environmental Protection Agency (EPA) as per 40 C.F.R. Part 82. Innovair states that ‘the importation of these products [HCFC-22 and appliances containing HCFC-22] is currently restricted or banned by EPA. . . .”
Innovair intends to place the HCFC-22 material and appliances containing HCFC-22 into the Foreign Trade Zone (FTZ) for storage until they are exported. Innovair does not intend to enter the merchandise into the stream of commerce of the United States and does not intend to repackage, sort or otherwise change the condition. The sole purpose of bringing the merchandise into the zone is to store it until it is exported to another country.
Additionally, as per a telephone conversation on September 23, 2010, with Ms. Maria Gomez, Innovair is interested in renting a facility within the zone for a variety of reasons one of which includes bringing the HCFC-22 products into the facility for storage and then exportation.
ISSUE:
Whether HCFC-22 and merchandise containing HCFC-22 that is regulated by the EPA may be brought into FTZ 32, the Miami Foreign Trade Zone.
LAW AND ANALYSIS:
Customs law governing FTZs allows merchandise into an FTZ including restricted merchandise and such merchandise is not subject to the customs laws of the United States. However, certain requirements must be met in order to allow restricted merchandise into an FTZ. Additionally, other government agencies’ requirements must also be satisfied.
Title 19 U.S.C. § 81c allows merchandise to be admitted into an FTZ. Merchandise admitted into an FTZ is not subject to the customs laws of the United States. Title 19 U.S.C. § 81c states that:
[f]oreign and domestic merchandise of every description, except such as is prohibited by law, may, without being subject to the customs laws of the United States, except as otherwise provided in this chapter, be brought into a zone and may be stored, sold, exhibited, broken up, repacked assembled, distributed, sorted, graded, cleaned, mixed with foreign or domestic merchandise, or otherwise manipulated, or be manufactured except as otherwise provided in this chapter, and be exported, destroyed, or sent into customs territory of the United States . . .
U.S. Customs and Border Protection (CBP) regulations that govern the operations of FTZs allow for certain merchandise to enter the FTZ as “zone-restricted status.” Zone restricted status is merchandise taken into an FTZ for the sole purpose of exportation, destruction or storage. See Title 19 C.F.R. § 146.44 (providing that “[m]erchandise taken into a zone for the sole purpose of exportation, destruction (except destruction of distilled spirits, wines, and fermented malt liquors), or storage will be given zone-restricted status on proper application”). Additionally, the Resolution and Order approving the Miami Foreign Trade Zone (Zone No. 32) does not provide for specific restrictions on products such as HCFC-22 going into the FTZ. See Greater Miami Foreign Trade Zone, Inc., Resolution and Order Approving Application for Permanent and Temporary Trade Zone Sites in Dade County, Florida 42 Fed. Reg. 46568 (September 16, 1977).
Here, Innovair is not entering the HCFC-22 product and merchandise into the stream of commerce of the United States. The stated purpose of bringing it into the FTZ is for storage until it is exported. As per 19 C.F.R. § 146.44, Innovair may place the HCFC-22 product and appliances into the FTZ after application with the port for zone-restricted status. Giving merchandise zone-restricted status requires an application on CBP Form 214. See 19 C.F.R. § 146.44(b). However, Innovair must also comply with EPA regulations and requirements governing HCFC-22.
Pursuant to 19 U.S.C. § 81c merchandise that is prohibited may not be brought into an FTZ; however, merchandise that has restrictions imposed by other agencies, may be brought into an FTZ if the applicable requirements are met. The EPA restricts the importation of bulk HCFC-22 and products containing HCFC-22. See 40 C.F.R. §§ 82.15(b)(1) and 82.16(c) (restricts the importation of class II controlled substances, including HCFC-22 or a blend containing, with certain exceptions); 82.304 and 82.306 (restricting the importation of pre-charged appliances and pre-charged appliance components containing HCFC-22 or a blend containing, with certain exceptions). For example, 40 C.F.R. 82.15(b)(1) states that HCFC-22 may not be imported for any purpose “no person may import class II controlled substances (other than transshipments, heels or used class II controlled substances) for which EPA has apportioned baseline production and consumption allowances, in excess of the quantity of unexpended consumption, ….” (emphasis added). Hence, EPA regulations do allow for the transshipments of HCFC-22.
Section 82.3 of EPA regulations defines “transshipment” as “the continuous shipment of a controlled substance, from a foreign state of origin through the United States or its territories, to a second foreign state of final destination, as long as the shipment does not enter into United States jurisdiction. A transshipment, as it moves through the United States or its territories, cannot be re-packaged, sorted or otherwise changed in condition.” The EPA regulations allow for HCFC-22 products to be transshipped but do not allow the merchandise to be “repackaged, sorted or otherwise changed in condition.” Therefore, Innovair may apply for the HCFC-22 product and appliances to be stored in the FTZ under “zone-restricted status” provided that it also satisfies the EPA requirements for treatment of these goods. We do not, however, reach any conclusion as to whether the HCFC-22 stored in an FTZ complies with EPA’s regulations on the treatment of HCFC-22. Innovair should consult with the EPA as to whether the storage and exportation from an FTZ satisfies the EPA requirements.
In HQ W231173 (March 24, 2006) we decided a similar case and held that merchandise that was regulated by the Department of Energy and was restricted from entering the territory of the United States, was allowed into an FTZ for the sole purpose of exportation. In HQ W231173 an importer wanted to import merchandise that was in violation of the Department of Energy SEER standards. The merchandise was restricted from entry but for the purpose of exportation or abandonment to the United States. However, because of the unique nature of FTZs, such merchandise is allowed into an FTZ for the sole purpose of exportation. We have a similar situation in the instant case. Innovair may apply for the HCFC-22 to be placed under zone-restricted status in the Miami Free Trade Zone (Zone No. 32) because the sole purpose of bringing the merchandise into the FTZ is for exportation.
HOLDING:
Based on the information provided we hold that Innovair may apply for the HCFC-22 product and appliances containing HCFC-22 that is regulated by the EPA to be placed in the Miami Free Trade Zone under zone-restricted status. We do not, however, reach any conclusion as to whether the HCFC-22 stored in an FTZ complies with EPA’s regulations on the treatment of HCFC-22. Innovair should consult with the EPA as to whether the storage and exportation from an FTZ satisfies the EPA requirements.
Please note that 19 CFR § 177.9(b)(1) provides that "[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based."
Sincerely,
Myles B. Harmon
Director
Commercial and Trade Facilitation Division