Sec. 146.82  Suspension.

    (a) For cause. The port director may suspend for cause the activated 
status of a zone or zone site, or the privilege to admit, manufacture, 
manipulate, exhibit, destroy, transfer or remove merchandise at a zone 
or zone site for a period not to exceed 90 days. Upon order of the Board 
the suspension may be continued. If appropriate, the suspension may be 
limited to an individual user or users and not to the zone or zone site 
as a whole, or may be limited to a particular activity of an operator or 
user, such as suspension of the privilege to admit merchandise or the 
privilege to manufacture. An action to suspend will be taken in 
accordance with the procedure in paragraph (b) of this section if:
    (1) The approval of the application to activate the zone was 
obtained through fraud or the misstatement of a material fact;
    (2) The operator neglects or refuses to obey any proper order of a 
Customs officer or any Customs order, rule, or regulation relating to 
the operation or administration of a zone;
    (3) The operator, or any officer of a corporation which has been 
granted the right to operate a zone, is convicted of or has commited 
acts which would constitute a felony, or misdemeanor involving theft, 
smuggling, or a theft-connected crime. Any change in the employment 
status of the corporate officer (e.g., discharge, resignation, demotion, 
or promotion) prior to conviction of a felony or prior to conviction of 
a misdemeanor involving theft, smuggling, or a theft-connected crime, 
resulting from acts committed while a corporate officer, will not 
preclude application of this provision;
    (4) The operator fails to furnish a current list of names, 
addresses, or other information as required by Sec. 146.7;
    (5) The operator does not provide a secure facility or properly 
safeguard merchandise within a zone;
    (6)  [Reserved]
    (7) The operator, or any officer, agent, or employee of the 
operator, discloses to an unauthorized person proprietary information 
contained on a Customs form or in the inventory control and 
recordkeeping system; or
    (8) The inventory control and recordkeeping system is impaired to 
the point where the identity of merchandise in zone status has been lost 
and cannot be reestablished without a suspension of zone operations.
    (b) Procedure--(1) Notice. The port director may, at any time, serve 
notice, in writing, upon an operator to show cause why its right to 
continue operation of a zone should not be suspended or why an 
individual user or activities of an individual user should not be 
suspended, as provided for in paragraph (a) of this section. The notice 
will advise the operator of the grounds for the proposed action and will 
afford the operator an opportunity to respond, in writing, within 15 
days after receipt of the notice. Thereafter, the port director shall 
consider the allegations and any response made by the operator and issue 
a decision, unless the operator requests a hearing in the matter.
    (2) Hearing. If the operator requests a hearing, it will be held 
before a hearing officer designated by the Commissioner of Customs or 
his designee within 30 days following the operator's request. The 
operator may be represented by

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counsel at the hearing, and any evidence and testimony of witnesses in 
the proceeding, including substantiation of the allegations and the 
response thereto, will be presented. The right of cross-examination will 
be available to both parties. A stenographic record of the proceeding 
will be made and a copy will be delivered to the operator. At the 
conclusion of the hearing, the hearing officer shall transmit promptly 
all papers and the stenographic record of the hearing to the Assistant 
Commissioner, Office of Field Operations, or designee, together with a 
recommendation for final action.
    (3) Decision of Assistant Commissioner. Within 10 calendar days 
after delivery to the operator of a copy of the stenographic record of 
the hearing, the operator may submit to the Assistant Commissioner, 
Office of Field Operations, or designee, in writing any additional views 
or arguments. The Assistant Commissioner, Office of Field Operations, or 
designee, shall then render a written decision stating his reasons 
therefor. That decision will be served on the operator and will be 
considered the final Customs administrative action in the case.
    (4) Grantee. If the grantee of the zone is not the operator, a copy 
of the notice to show cause will be served upon the grantee. The 
grantee, as a party-in-interest, may join the operator in any 
proceedings under this section.

[T.D. 86-16, 51 FR 5049, Feb. 11, 1986, as amended by T.D. 88-63, 53 FR 
40220, Oct. 14, 1988; T.D. 95-99, 60 FR 62733, Dec. 7, 1995]