[Federal Register: July 8, 1996 (Volume 61, Number 131)]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
DEPARTMENT OF COMMERCE
AGENCY: Foreign-Trade Zones Board, International Trade Administration,
ACTION: Second notice.
SUMMARY: The information that follows is provided as a follow-up to the
notice published on April 1, 1996 (61 FR 14290) regarding
Sec. 400.28(a)(5) (``lapse provision'') of the regulations of the
Foreign-Trade Zones (FTZ) Board (15 CFR Part 400), which goes into
effect on November 8, 1996, for certain inactive foreign-trade zones.
Based upon an FTZ staff survey and contacts with zone grantees, it
appears that some 40 of 210 existing FTZ projects could be initially
affected by the lapse provision. In addition, it appears some 50
subzones (out of some 350) could be individually affected
notwithstanding the fact that the general-purpose zone with which they
are affiliated would not be affected. Since the last notice, 7 projects
have taken action to meet the activation requirements, and over 50
percent of the remaining grantees affected are doing so.
This second notice is published to give interested parties a
further opportunity to comment on the interpretive guidelines and
procedures that are being considered by the Board to implement
Sec. 400.28(a)(5). As indicated below, certain changes are being
considered after review of the comments received following the first
EFFECTIVE DATES: As indicated in the first notice, the lapse provision
first goes into effect for zones approved prior to November 8, 1991,
which have not been activated at any time in the past and will not have
been activated by November 8, 1996. Thereafter it will have a
continuing effect that requires activation within 5 years of approval.
The information relating to activation remains essentially as
stated in the first notice. 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 in the
past prior to November 8, 1996, and thereafter within the applicable
time frame, is deemed to have fulfilled the FTZ activation requirement
with regard to its general-purpose zone sites, and for any subzones for
which shipments have been reported. The grantees of zones so activated
after the last annual report period are requested to notify the
Executive Secretary with supporting information if they have not yet
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 fulfill the activation requirement as follows: (1)
obtain Customs activation approval under Sec. 146.6 of the Customs
regulations (19 CFR Part 146) from the Customs Port Director (formerly,
District Director) for the area; and, (2) submit a zone schedule to the
Executive Secretary of the FTZ Board and to the Customs Port Director
pursuant to Sec. 400.42(b) of the FTZ regulations. It is completion of
both these requirements that constitutes ``FTZ activation''.
As indicated in the first notice, zone grantees having no shipments
to report and who are completing the requirements to avert a lapse of
authority under Sec. 400.28(a)(5), shall notify the Executive Secretary
in writing upon completion of the requirements, stating the extent to
which the zone is open for business. The Executive Secretary will then,
upon review, acknowledge in writing whether FTZ activation has occurred
subject to FTZ Board approval of the procedures outlined in this
As indicated in the first notice, beginning November 8, 1996, and
thereafter on October 1 of each Federal fiscal year, the FTZ Staff will
conduct periodic reviews with regard to zone projects that appear to be
affected by Sec. 400.28(a)(5). Lists will be maintained by the FTZ
staff of those zones for which authority has lapsed as well as those
for which authority has terminated (after the reinstatement period),
and the U.S. Customs Service will be kept advised.
Upon review of the comments received in response to the first
the FTZ Staff is considering a recommendation to the FTZ Board which
would provide for an 18-month period (instead of 12 months) for
possible reinstatement of lapsed grants of authority. This would allow
zone grantees to apply for reinstatement of FTZ authority for their
general-purpose zone sites, and for subzones on an individual basis, if
the FTZ activation requirements are met within 18 months of a lapse of
authority. 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 and any associated subzones is considered lapsed, but termination
of authority would not occur until the end of the reinstatement period.
During the reinstatement period, the processing of any pending
application(s) from the zone project involved will be halted; but, a
grantee may request that processing be continued with regard to
applications that are related to FTZ activation.
Interpretive guidelines 1-3 below remain the same, as published in
the first notice, but guideline 4 has been revised.
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 each subzone is considered
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, as
well as applications submitted to or pending with the FTZ Board or the
4. The FTZ activation of a general-purpose zone or subzone may be
determined 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 so 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 Directors involved concur.
Authority for Determinations/Decisions
The Executive Secretary would have authority to make determinations
and decisions on matters relating to the lapse of authority provision,
including FTZ activation and reinstatement. Appeals from such
determinations and decisions could be made to the Board by affected
zone grantees as provided for in Sec. 400.47 (15 CFR Part 400).
Comments Invited: Further comments are invited in writing until
August 7, 1996, from grantees and interested parties as to any of the
information, procedures or guidelines outlined in this notice. They
should be addressed to: Executive Secretary, Foreign-Trade Zones Board,
U.S. Department of Commerce, Room 3716, 14th & Pennsylvania Avenue,
NW., Washington, DC 20230.
FOR FURTHER INFORMATION CONTACT: FTZ Staff--Claudia Hausler (202) 482-
2862; U.S. Customs--Marcus Sircus (202) 927-6894.
Dated: June 28, 1996.
John J. Da Ponte, Jr.,
[FR Doc. 96-17281 Filed 7-5-96; 8:45 am]