[Federal Register Volume 61, Number 199 (Friday, October 11, 1996)]
[Rules and Regulations]
[Pages 53305-53307]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26215]



DEPARTMENT OF COMMERCE

Foreign-Trade Zones Board

15 CFR Part 400

[Docket No. 960912257-6257-01; Order No. 849]
RIN 0625-AA48


Lapse of Authority Provision; Inactive Foreign-Trade Zones

AGENCY: Foreign-Trade Zones Board, International Trade Administration, 
Commerce.

ACTION: Rule-related notice.

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SUMMARY: Upon review of Section 400.28(a)(5) of the regulations of the 
Foreign-Trade Zones Board (15 CFR Part 400) (the ``lapse provision'') 
and consideration of comments received in response to Federal Register 
notices given on April 1, 1996 (61 FR 14290) and on July 8, 1996 (61 FR 
35711), the Foreign-Trade Zones (FTZ) Board adopts the following 
interpretive guidelines and procedures in its implementation of the 
lapse provision.

EFFECTIVE DATE: October 11, 1996.

FOR FURTHER INFORMATION CONTACT: John J. Da Ponte, Jr., Executive 
Secretary, Foreign-Trade Zones Board, room 3716, U.S. Department of 
Commerce, Pennsylvania Avenue and 14th Street NW, Washington, DC 20230 
(202/482-2862).

SUPPLEMENTARY INFORMATION:

Background

    On October 8, 1991, the Foreign-Trade Zones Board amended its 
regulations to include, inter alia, a ``lapse provision'',

[[Page 53306]]

which provides for the lapse of authority for certain inactive foreign-
trade zones. See Final Rules: Foreign-Trade Zones Board, 56 Fed. Reg. 
50790 (1991); 15 CFR Sec. 400.28(a)(5). Grants of authority for 
foreign-trade zones and subzones issued prior to November 7, 1991, were 
expressly subject to the condition that activation occur within a 
reasonable time. The adoption of Section 400.28(a)(5) was intended to 
codify and define this proviso, which is needed in the interest of 
efficient program operation. The provision first goes into effect on 
November 8, 1996, for zones approved prior to November 8, 1991, and 
thereafter it will have a continuing effect for zones not activated 
within five years of approval.
    Comments from most of the zone grantees initially affected (some 15 
percent of approved projects) indicate that despite no actual shipments 
under FTZ procedures their FTZ projects were still an active part of 
state/local economic development programs and that they wish to take 
appropriate steps necessary to avoid losing FTZ authority. The 
guidelines and procedures being adopted take this into account, 
providing an alternative form of FTZ activation for projects that are 
actively offering FTZ services as well as a reinstatement period prior 
to termination of authority.

Classification

    This rulemaking action was determined to be not significant for 
purposes of Executive Order 12866. Because notice and comment are not 
required by 5 U.S.C. 553 or any other statute for these interpretative 
guidelines and procedures, a regulatory flexibility analysis is not 
required and was not prepared for purposes of the Regulatory 
Flexibility Act. This rulemaking involves information collection 
requirements which are cleared under OMB Control No. 0625-0139 and 
0625-0109 for purposes of the Paperwork Reduction Act.

Foreign-Trade Zones Board Interpretive Guidelines and Procedures 
(15 CFR Sec. 400.28(a)(5))

Activation Defined

    A zone grantee which will have reported in its annual report to the 
FTZ Board the receipt of shipments under FTZ procedures (and under 
Customs activation approval) at any time prior to November 8, 1996, and 
thereafter within five years of the issuance of the grant of authority 
for the zone or subzone, is deemed to have fulfilled the FTZ activation 
requirement.
    A zone project at which no shipments have been actually received 
under FTZ procedures, but which is active in offering FTZ services to 
the public, may alternatively fulfill the FTZ activation requirement 
by: (1) obtaining Customs activation approval under Section 146.6 of 
the Customs regulations (19 CFR Part 146) from the Customs Port 
Director for the area; (2) submitting a zone schedule to the Executive 
Secretary of the FTZ Board and to the Customs Port Director pursuant to 
Section 400.42(b) of the FTZ regulations; and, (3) notifying the 
Executive Secretary in writing upon the completion of (1) and (2) that 
the zone is open for business.
    The fulfillment of the requirements in either of the two preceding 
paragraphs constitutes ``FTZ activation'' for purposes of the ``lapse 
provision'' and it preserves active FTZ authority for all general-
purpose zone sites in a zone plan. Subzones are individually subject to 
the requirements.

Reinstatement Period

    During the 18-month period following a lapse of authority 
(``reinstatement period''), zone grantees may apply for reinstatement 
of FTZ authority for general-purpose zone sites and for individual 
subzones upon completion of the FTZ activation requirements during that 
period. Grantees should notify the Executive Secretary when steps are 
being taken to qualify for reinstatement.
    During the reinstatement period, the authority for the affected 
zone or subzone is considered lapsed, unless and until reinstatement 
occurs. Termination of authority would occur at the end of the 18-month 
reinstatement period for a zone or subzone not reinstated during the 
period (as noted below, under certain conditions, grantees may request 
that the processing of certain pending applications be continued during 
this period). Upon termination of authority, zones and subzones 
affected will be dropped from lists maintained by the FTZ Staff and 
published in the FTZ Board's annual report.

Guidelines

    1. A zone which had been in FTZ activation at any time and for any 
length of time within the applicable time frame (i.e., prior to the 
lapse date) is not affected by the lapse provision.
    2. The FTZ activation of any part of a general-purpose zone or a 
subzone will suffice to preserve FTZ authority for all of the general-
purpose sites of a zone project, but not for any particular subzone 
which has not been activated. Thus, each subzone is considered 
separately. (The lapse of authority for a subzone does not affect the 
basic authority of a zone grantee which has otherwise met the FTZ 
activation requirements.)
    3. The starting time for tolling whether a lapse of authority has 
occurred will be from the time of the original grant of authority for a 
zone project, and it will affect all general-purpose zone sites and 
subzones associated with the project, however recently approved. With 
regard to a zone project which meets the activation requirements but 
has inactive subzones, the starting time for tolling such subzones will 
be from the time of the original grant of authority for the subzone.
    4. Applications submitted to or pending with the FTZ Board or the 
FTZ Staff from any affected zone shall become inactive if zone 
authority lapses, but the processing of such applications may be 
resumed upon written request of a zone grantee made within 90 days of a 
lapse of authority if the site involved in the application is part of 
an activation plan. (New applications may be considered for acceptance 
for filing under the same conditions, except that applications for 
minor modifications to zone projects under Section 400.26(c) proposing 
changes that are part of an activation plan may be so considered up to 
60 days prior to the end of the reinstatement period.)
    5. FTZ activation of a general-purpose zone or subzone may be 
determined by the Board to extend to separate, but related, general-
purpose zones or subzones approved for the same grantee if the projects 
were approved in the same Board action or if the projects are 
significantly interrelated in terms of their administration as an 
element of state/regional/local economic development programs (in the 
case of subzones, if the sites are administered as a unit by the 
subzone company), providing that the Customs Port Director for the area 
concurs.


    (Note: The lapse provision is not intended to preclude the 
voluntary relinquishment of grants of authority which are inactive 
with no prospects for activation or reactivation.)

Review Procedure

    Beginning November 8, 1996, the FTZ Staff will conduct periodic 
reviews with regard to zone projects that appear to be affected by 
Section 400.28(a)(5). Information as to zones and subzones for which 
authority has lapsed or terminated will be provided to the U.S. Customs 
Service by the FTZ Staff.

[[Page 53307]]

Authority for Determinations/Decisions

    The Executive Secretary shall make determinations and decisions on 
matters relating to the lapse of authority provision, including FTZ 
activation and reinstatement. Appeals from such determinations and 
decisions may be made to the Board by affected zone grantees as 
provided for in Section 400.47 (15 CFR Part 400).

    By order of the Foreign-Trade Zones Board, Washington, D.C., 
this 7th day of October 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration, Alternate 
Chairman, Foreign-Trade Zones Board.
[FR Doc. 96-26215 Filed 10-10-96; 8:45 am]
BILLING CODE 3510-DS-P