Import Administration
FTZ Staff Contact Information
last update: September 2002 
[Federal Register: October 11, 1996 (Volume 61, Number 199)]
[Rules and Regulations]
[Page 53305-53307]
From the Federal Register Online via GPO Access []


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,

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.

Secretary, Foreign-Trade Zones Board, room 3716, U.S. Department of
Commerce, Pennsylvania Avenue and 14th Street NW, Washington, DC 20230



    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.


    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
    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.


    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

    (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]