[Federal Register Volume 73, Number 90 (Thursday, May 8, 2008)]
[Notices]
[Pages 26077-26078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-10274]


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DEPARTMENT OF COMMERCE

Foreign-Trade Zones Board


Proposal for Available Alternative Site-Designation and 
Management Framework

Summary: The Foreign-Trade Zones (FTZ) Board is inviting public comment 
on a staff proposal to make available an alternative framework for 
participating grantees to designate and manage their general-purpose 
FTZ sites. A key result of this proposal, which stems from a series of 
regional and state-level discussions with FTZ grantees that began in 
April 2007, would be greater flexibility and predictability for a 
participating grantee to use administrative ``minor boundary 
modifications'' (MBMs) to modify FTZ sites. The greater flexibility 
would be made possible by participating grantees' increased focus on 
the FTZ sites needed for current or near-term zone activity, with a 
resulting improvement in the efficiency of FTZ oversight by government 
agencies. The availability of this alternative framework would affect 
only participating FTZ grantees and would occur within the existing 
statutory and regulatory context (including the role of the local CBP 
port director relative to any application for Board action or MBM 
request).

Background:

    Under the FTZ Act of 1934 (19 U.S.C. 81a-81u), the FTZ Board may 
authorize FTZ sites sponsored by local ``grantee'' organizations at 
locations within or adjacent to U.S. Customs and Border Protection 
(CBP) ports of entry. Under the FTZ Act and the FTZ Board's regulations 
(15 CFR Part 400), FTZ designation for a particular parcel or site may 
result either from an application for action by the FTZ Board or from a 
request for an administrative MBM action by the FTZ Board staff. The 
regulatory time frame for such FTZ Board actions is ten months versus a 
thirty-day time frame for administrative MBM actions, and there are 
significantly greater documentation requirements associated with 
applications for Board action than for requests for administrative 
action.
    The FTZ Act gives the FTZ Board broad authority and discretion. In 
this context, the Board's 1991 regulations delineate criteria for 
evaluation of applications for Board action and requests for 
administrative action to authorize FTZ designation for new parcels or 
sites. The applicable regulatory criteria are general in nature and the 
Board's existing approach (practice) for MBMs and FTZ designation for 
new parcels or sites pre-dates both the enormous growth in 
international trade of recent decades and the significant evolution in 
trade-related security and oversight responsibilities within government 
since 2001.
    Within the FTZ program itself, increased demand for rapid action 
regarding new FTZ parcels or sites is tied to an accelerated pace of 
decision-making among the types of businesses that constitute the 
ultimate users of the program. The program's ability to react to 
business needs in a timely manner is inextricably linked to the 
program's success in helping to retain or enhance U.S.-based activity. 
In this context, an alternative approach to MBMs and site management 
for grantees in need of greater flexibility and responsiveness can be 
important in fulfilling the FTZ program's purpose ``to expedite and 
encourage foreign commerce.''
    Proposal: The fundamental trade-off addressed in this proposal is 
greater flexibility and increased predictability for approval of FTZ 
sites through simple and rapid MBM actions in exchange for a grantee 
maximizing the linkage between designation of FTZ space and actual use 
of that space for FTZ activity (after ``activation'' by CBP). 
Maximizing this linkage can further other important program-related 
goals, including more efficient use of both FTZ Board and CBP 
resources.
    Although the proposed alternative framework could be available to 
new or existing grantees, the major benefit would likely be for 
existing grantees who seek to enhance their ability to respond to 
evolving FTZ-related needs in their communities. Under this proposal, 
existing or potential grantees would have the option of applying to 
establish or reorganize their FTZ by incorporating in an application 
for FTZ Board action elements from the following framework:
    1. The ``service area'' within which the grantee intends to be able 
to propose FTZ sites (e.g., specific counties, with documented support 
from new counties if the service area reflected a broader focus than 
the FTZ's current area served). The term ``service area'' applies a 
name to a concept which already exists in certain approved FTZ 
applications in which a grantee organization has named the localities 
it intends to serve. It should be noted that any service area would 
need to be consistent with the ``adjacency'' requirement of the FTZ 
Board's regulations (60 miles/90 minutes driving time from CBP Port of 
Entry boundaries).
    2. An initial limit of up to 2,000 acres of designated FTZ space 
within the service area. Given the proposal's focus on linking FTZ 
designation more closely to FTZ activity, the 2,000-acre limit reflects 
the FTZ Board's existing practice of limiting any FTZ grantee to 
activation of 2,000 acres (regardless of the overall size of the 
grantee's zone) unless further approval is obtained from the FTZ Board. 
Acreage within the 2,000-acre limit which had not been applied to 
specific designated sites would effectively be ``reserve'' acreage 
available for future FTZ designation for parcels or sites within the 
grantee's approved service area.
    3. Enhancement of the usefulness of the 2,000 available acres by 
emphasizing ``floating'' acreage within an individual site's boundaries 
(as has been the FTZ Board's practice with certain applications to 
date). For example, 100 acres of ``floating'' FTZ designation within 
the boundaries of a 700-acre port complex would mean that it would be 
possible to activate with CBP up to 100 acres of total space anywhere 
within that 700-acre complex.
    4. Mandatory designation of a primary ``anchor'' FTZ site able to 
attract multiple FTZ users. No ``sunset'' time limit (see below) would 
apply to the anchor site. The anchor site would generally be no more 
than 500 acres (which could be ``floating'' acres within larger site 
boundaries see above). A grantee's anchor site would be designated 
through the full application process for FTZ Board action.
    5. Possible designation of a limited number of ``magnet'' sites 
selected by the grantee often through local public processes for 
ability and readiness to attract multiple FTZ users. An individual 
magnet site would generally be limited to 200 ``floating'' acres. A 
magnet site could only be designated through an application for FTZ 
Board

[[Page 26078]]

action.
    6. Possible designation of ``user-driven'' sites to serve companies 
not located in an anchor or magnet site but which are ready to pursue 
conducting activity under FTZ procedures. In the general interest of 
maximizing the linkage between FTZ site designation and FTZ activity at 
the site, a user-driven site would be limited in the context of a 
larger industrial park or business district where other companies 
interested in FTZ procedures might be able to locate in the future to 
the area(s) required for the company(ies) ready to pursue conducting 
activity under FTZ procedures.
    7. Unlike anchor and magnet sites, user-driven sites could be 
designated through the current minor boundary modification (MBM) 
mechanism a rapid administrative action by the Board's staff in 
addition to through FTZ Board action. A simplification of the MBM 
process would result from elimination of the need to ``swap'' like 
amounts of acreage from existing sites as long as the total acreage for 
existing and proposed sites remained within the standard 2,000-acre 
limit.
    8. In addition to the one anchor site, general initial limits of 
five magnet sites and ten user-driven sites which could exist 
simultaneously for a single FTZ. Increases of the limits applicable to 
a specific grantee could be justified over a longer term based on FTZ 
activity at a significant percentage of the grantee's designated sites. 
A grantee's request for a permanent increase in its number of 
authorized sites would be a matter for consideration by the FTZ Board. 
Also, the special circumstances of regional (multi-county) FTZs could 
be taken into account by an alternative general initial limit for such 
zones of two magnet sites per county. (Other limits in the proposal 
would be unaffected by such an alternative initial limit on numbers of 
magnet sites for regional FTZs.)
    9. Consistent with current practice for many expansion 
applications, magnet sites and user-driven sites would be subject to 
``sunset'' time limits which would self-remove FTZ designation from a 
site if there had been no FTZ activity before the site's sunset date 
(generally five years from the date of the site's approval). Magnet 
sites and user-driven sites would also be subject to ongoing 
``recycling'' whereby FTZ activity at a site during the site's initial 
sunset period would serve to push back the sunset date by another five 
years (when the sunset test based on FTZ activity would again apply).
    It is important to note that the elements of the proposal support 
each other in furthering the goals of flexibility and focus for FTZ 
site designation (with important resulting resource- and efficiency-
related benefits for the government). As such, a framework 
incorporating these types of elements would incorporate the package of 
elements as an available alternative to the Board's current practice. 
FTZ grantees opting to manage their zones under the Board's current 
framework would be unaffected by this proposal. As is currently the 
case, MBM actions would be approved by the Board's staff while 
modifications to a zone's ``plan'' (e.g., increase in authorized FTZ 
acreage, modification to service area) would be matters for the FTZ 
Board's consideration.
    In addition, in order to help the FTZ Board evaluate the 
effectiveness and appropriateness of the alternative framework after 
actual experience with FTZ grantees, the FTZ staff would report to the 
Board on a periodic basis regarding the actual usage of the alternative 
framework. The staff's reporting regarding implementation of the 
framework at individual participating FTZs would result from staff-
initiated reviews and would not require any request or application from 
the grantee.
    Public comment on this proposal is invited from interested parties. 
We ask that parties fax a copy of their comments, addressed to the 
Board's Executive Secretary, to (202) 482-0002. We also ask that 
parties submit the original of their comments to the Board's Executive 
Secretary at the following address: U.S. Department of Commerce, Room 
2111, 1401 Constitution Ave. NW., Washington, DC 20230. The closing 
period for the receipt of public comments is July 7, 2008. Any 
questions about this request for comments may be directed to the FTZ 
Board staff at (202) 482-2862.

    Dated: May 2, 2008.
Andrew McGilvray,
Executive Secretary.
[FR Doc. E8-10274 Filed 5-7-08; 8:45 am]
BILLING CODE 3510-DS-S