[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. ----------------------------------------------------------------------- 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