[Federal Register Volume 74, Number 176 (Monday, September 14, 2009)]
[Notices]
[Pages 46979-46984]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-22064]


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DEPARTMENT OF COMMERCE

Foreign-Trade Zones Board


Revised Proposal for Changes to the Format of Annual Reports 
Submitted to the Foreign-Trade Zones Board

    Summary: On May 15, 2009, the Foreign-Trade Zones (FTZ) Board 
published a notice seeking comments on proposed revisions to the format 
of annual reports that are submitted by grantees to the FTZ Board. 
Based on comments received, the FTZ Board has made further revisions to 
the proposed annual report format. The most significant revision is a 
proposed shift from reporting on a Federal fiscal year basis to 
reporting on a calendar-year basis. The Board is inviting public 
comment on the latest proposal. Comments and questions regarding the 
original proposal are summarized and addressed below by general topic. 
The revised format follows the discussion of the comments.

Summary of Comments Received

Comments on Terminology

    (1) One comment requested that the term ``inactive'' be removed 
from the report format and replaced with the terms ``never activated'' 
or ``deactivated''. The comment noted that this revision would 
harmonize the language in the report with that used by CBP. This change 
has been made.
    (2) Comments were also received on specific terminology in the 
section of the report for oil refinery operators. As a result, 
questions regarding indirect exports, tank storage capacity and 
shipments to affiliated plants have been modified.
    (3) One comment requested that clarification be added to the FTZ 
Board's Annual Report to Congress on the treatment of zone-to-zone 
transfers. That comment will be considered separately as the proposal 
below is specific to the information submitted to the Board by 
grantees.
    (4) A comment was received suggesting that part 1, Question 2 be 
modified to remove the phrase ``promotion and marketing'' and better 
reflect the full integration that should exist between the zone and 
local economic development plans. While it is noted that the zone 
should be incorporated into the overall economic development plan of a 
region, as written the question should provide the latitude that a 
grantee needs to include all efforts that have been taken regarding the 
zone.

Comments on Employment Numbers

    (1) One comment requested that employment numbers be collected for 
both approved and activated zone space. Currently, the annual report 
requests information on the number of full-time equivalent employees 
within activated FTZ sites. There are currently a significant number of 
approved zone sites where no FTZ related activity if occurring, as 
grantees have sought to include sites in their zone project where 
future zone activity may arise. Including employment numbers for 
companies located within those sites in a report on FTZ activity would 
increase the reporting burden on grantees while not providing an 
accurate reflection of the employment related to FTZ activity within a 
zone. For similar reasons, the movement of merchandise in approved zone 
sites that have no zone activity is not requested.
    (2) One comment included suggested criteria for calculating the 
employment numbers. The suggested criteria would essentially have 
defined employees as those engaged in zone activity with foreign status 
merchandise within the active zone operation. In many instances, 
however, companies will comingle domestic and foreign status 
merchandise within the zone, with employees handling either status of 
merchandise, and the percent of foreign and domestic merchandise 
changing throughout the year. As a result, calculating the suggested 
employment criteria could be overly burdensome for many operations. In 
addition, although a portion of the activity may involve domestic 
status merchandise, the FTZ savings could be impacting the viability of 
the facility as a whole, and as such, the employment related to the 
domestic status merchandise is then tied to the use of the zone. On 
balance, the current policy of requesting employment numbers for the 
active portions of the zone provides a number that is useful to the FTZ 
Board while not overly burdensome to zone users.
    (3) One comment also suggested that temporary and contract 
employees be reported on a full-time equivalent basis. This 
clarification on reporting employment numbers had been included in part 
1, and has now also been added to Part 2.

Comments on Value-Added

    (1) One comment suggested that the request for value-added activity 
in part 2 be broken down by each category of merchandise forwarded 
(exports, entries for consumption and zone-to-zone transfers). The 
revised annual report

[[Page 46980]]

format, as proposed, requests the total value-added in the zone for 
manufacturing/processing operations. Requiring a further breakdown 
would create an additional burden on zone operators, while not 
providing a significant benefit in terms of data that would be useful 
for oversight purposes. This proposed format maintains the request for 
the total value-added for the zone activity.
    (2) A question has also been added to part 2 for oil refinery 
operators requesting the total value-added for those zone operations. 
The questions on value-added also include a description of how the 
number should be calculated.

Comments on Scope

    (1) Two comments were received on the questions in part 2 that 
relate to the scope of authority approved by the FTZ Board. These 
questions are included in the annual report to ensure that zone 
operators with manufacturing/processing activity from the FTZ Board are 
aware of and assessing how the current activity relates to that 
approved by the Board. However, realizing that further clarification is 
needed generally on issues of the scope of authority, and that guidance 
and clarification on scope should occur more broadly, question 8 in 
part 2 for manufacturing/processing operators has been modified. The 
modifications should address the concerns raised while providing the 
FTZ Board with needed information to assist its monitoring of 
manufacturing and processing activity within zones. The questions in 
part 2 for oil refinery operators were taken from the current annual 
report guidelines for oil refinery subzones and were not changed in 
this revision.

Comments on the Reporting Period

    (1) Two comments noted that although the current annual report 
format is based on the Federal fiscal year, use of the fiscal year is 
not required in the FTZ Act or Regulations. In addition, the comments 
noted that moving to a calendar year reporting cycle would be 
consistent with other government agency requirements and reports. One 
comment noted that synchronizing the reporting cycle with other 
required reports would ease the reporting burden on zone operators by 
standardizing the values and timeframes for the submission of reports 
to the Federal government. Based on the comments received, the revised 
proposal below includes a shift from the Federal fiscal year to the 
calendar year. Under this revised format, the reporting cycle for the 
annual report would be January 1 to December 31 and the report from the 
grantee to the FTZ Board would be due April 30.

Comments on the Public Nature of the Annual Report

    (1) One comment included a request to have the data included in the 
annual report considered business proprietary. In the format proposed, 
the data for all warehouse and distribution operators within a zone 
project (in general-purpose sites and subzones) will be combined and 
reported as a single number in part 1. In addition, the names of the 
warehouse and distribution operators are not requested, so the data 
provided would not be linked to specific firms. In the case of 
manufacturing/processing operators, the data will be requested specific 
to each approved manufacturing/processing operation (whether in a 
general-purpose site or a subzone). Unlike the examples of CBP and 
Census that are cited in the comment and involve the mandatory 
reporting of data for all shipments into and out of the U.S., FTZ 
manufacturing and processing operations are approved through a public 
process when found to be in the public interest and the activity 
occurring within them must remain within the public interest. The FTZ 
Board has always made a practice of providing its report to Congress on 
the use of the program, which includes a summary of zone operations, as 
a public document. In addition, members of the trade community and 
grantee organizations depend on the information provided in the annual 
report for their own efforts to assess the impact of the program, and 
restricting such parties' access to the information would have a 
negative impact on those efforts. However, based on a recognition of 
concerns about the sensitivity of certain information, it will continue 
to be our practice to allow for the submission of rounded numbers in 
the movement of merchandise sections.

Comments on Potential Automation of the Annual Report Format

    (1) A comment was also received on the interaction between the 
proposed annual report format and the potential for future electronic 
submission of the report. The FTZ staff is currently in the initial 
phases of developing a Web-based submission system for the annual 
report. As that system is further developed and implemented, 
information and training will be made available to the public. The 
implementation of an electronic system will incorporate any changes 
that are ultimately made to the annual report format.
    The revised proposed annual report format is as follows:

Part 1: Zone Project Summary for January 1-December 31

    1. Was foreign-status merchandise stored within the zone under zone 
procedures during the year?
    If the answer is no, complete questions 2-3 below:
    2. Describe the promotion and marketing efforts that are being 
undertaken to provide local companies with information on using the 
zone.
    3. Has the zone ever been used for the admission and storage of 
zone status merchandise? If yes, indicate when.
    If the answer is yes, complete questions 4-12 of part 1 below for 
all warehouse and distribution operations within the general-purpose 
zone and any subzones. In addition, complete a separate part 2 
(Manufacturing/Processing GPZ and Subzone Operations) for each general-
purpose or subzone operation involved in manufacturing/processing.
    4. Provide a summary of the warehouse and distribution activity 
that occurred within the zone project. Specifically discuss any 
developments or trends in shipments or activity and any value added 
activity that occurred within active zone space.
    5. Discuss how the zone project contributes to the local economy 
and local economic development efforts, including the FTZ impact on 
local employment, port activity, industrial development, international 
trade and investment. If applicable, describe in what ways the zone has 
been used locally by the logistics industry and other companies to 
address supply chain issues.
    6. The general-purpose zone served------ zone users during the 
calendar year.
    The number employed by zone users within activated general-purpose 
zone areas was------persons.
    Employment figures should include both direct and contract persons. 
For part time workers, please report a full time equivalent (e.g., 60 
contract employees working for 6 months would equal a full time 
equivalent of 30 workers).
    7. Activity Summary
    Provide a list of general-purpose zone sites and indicate the 
number of acres that are activated at each site. Also indicate if the 
site is subject to a time or sunset limit.
    Provide a list of approved subzones and indicate the activation 
status of each subzone. If the subzone is active, provide the 
employment (includes direct and contract, reported on a full

[[Page 46981]]

time equivalent basis)) for the subzone. If the subzone has never been 
active, indicate if it has lapsed.
    8. Movement of Merchandise
    This section should include the movement of merchandise for all 
general-purpose and subzone operations that did not require FTZ Board 
manufacturing/processing authority. (There is a separate section below 
where manufacturing/processing operations that occurred within the 
general-purpose zone or any subzone will be reported individually.)
    Zone reports should reflect only activity within activated portions 
of zones/subzones. Foreign and domestic merchandise handled within 
activated FTZ areas should be reported.

      Merchandise in the Zone at Beginning and End of Calendar Year
------------------------------------------------------------------------
                                  Beginning value         End value
------------------------------------------------------------------------
Domestic Status...............  $                    $
Foreign Status................  ...................  ...................
    Total.....................  $                    $
Merchandise Received                   Value
    Domestic Status...........  $
    Foreign Status............  ...................
From Other U.S. FTZ's:
    Domestic Status...........  ...................
    Foreign Status............  ...................
        Total.................  $
Merchandise Forwarded                  Value
    To The U.S. Market........  $
    To Foreign Countries        ...................
     (Exports).
    To Other U.S. FTZ's.......  ...................
        Total.................  $
Merchandise Destroyed.........  $
------------------------------------------------------------------------

    Explanation of Discrepancies:
    a. Does Beginning Inventory + Total Merchandise Received - Total 
Merchandise Forwarded - Merchandise Destroyed = Ending Inventory? If 
not, explain.
    b. Is the level of Merchandise Received this year significantly 
different from the previous year? If yes, explain.
    c. Is the Ending Inventory from the previous year equal to the 
Beginning Inventory for this year?
    9. Main Categories of Foreign Status Merchandise Received (Top 
Five)

----------------------------------------------------------------------------------------------------------------
               Category                                   Value                      Main countries of origin
----------------------------------------------------------------------------------------------------------------
--------------------------------------  $--------------------...................  ------------------------------
 -----------                                                                       -------------------
--------------------------------------   --------------------...................  ------------------------------
 -----------                                                                       -------------------
--------------------------------------   --------------------...................  ------------------------------
 -----------                                                                       -------------------
--------------------------------------   --------------------...................  ------------------------------
 -----------                                                                       -------------------
--------------------------------------   --------------------...................  ------------------------------
 -----------                                                                       -------------------
    Total.............................  $--------------------
----------------------------------------------------------------------------------------------------------------

    10. Foreign Status Merchandise Received:

Nonprivileged Foreign $.
Privileged Foreign $----------.

    11. Customs duties collected on merchandise entered from the zone 
during the calendar year amounted to $----------.
    12. (Optional) Attachment field: You may attach any photographs of 
the zone or any information you feel may be useful.

Part 2: Manufacturing/Processing GPZ and Subzone Operators for January 
1-December 31

    A separate part 2, questions 2-18 should be included for each 
manufacturing/processing operation that occurred within the general-
purpose zone or any subzone. This reporting of manufacturing/processing 
applies to any activity requiring FTZ Board approval under the Board's 
regulations (15 CFR part 400). (Note that any oil refinery operations 
should use the oil refinery-specific part 2 that follows this section.)
    Zone reports should reflect only activity within activated portions 
of zones/subzones. Foreign and domestic merchandise handled within 
activated FTZ areas should be reported.
    1. The grantee shall provide a list of each FTZ Board approved 
manufacturing/processing operation within the general-purpose zone or 
subzones, and indicate whether or not activity was conducted under zone 
procedures at each operation during the calendar year. Note that 
separate information for questions 2-18 below is required for each 
active manufacturing/processing operation.
    2. Site/Subzone Number.
    3. Company Name.
    4. Activated Acres.
    5. Briefly describe the activity at the subzone/GPZ operation that 
is occurring under zone procedures. Have there been any changes to the 
activity or facilities within the past year?
    6. Employment within the FTZ operation (includes direct and 
contract, reported on a full time equivalent basis).
    7. Provide the current year's level of production ---------- and 
the level of production approved by the FTZ Board ----------.
    8. Is the current activity consistent with the plan that was 
presented to and approved by the FTZ Board? Explain how the activity is 
consistent.
    9. Provide an estimate for the value-added activity that takes 
place under zone procedures (labor, profit, overhead, etc.). One way to 
estimate value-added is: Value of Sales from Plant minus Value of 
merchandise Received at Plant. Value-added should not be included in

[[Page 46982]]

the Movement of Merchandise figures below.
    10. Explain the extent to which FTZ status has helped your facility 
compete with plants abroad (this includes competition with other 
company facilities located abroad to expand or maintain product lines 
in the U.S.).
    11. Provide the percent of total production that is directly or 
indirectly exported ------%. The indirect exports to be reported are 
shipments that are entered for consumption prior to subsequent re-
exportation or shipments to a customer or related facility that are 
later exported (whenever known). You may rely on estimates for indirect 
exports but it is important that each operator do its best to account 
for all export activity that is supported by their FTZ operation.
    12. If the manufacturing activity is subject to restriction, list 
the restriction(s) and describe the method of compliance.
    13. Movement of Merchandise

      Merchandise in the Zone at Beginning and End of Calendar Year
------------------------------------------------------------------------
                                  Beginning value         End value
------------------------------------------------------------------------
Domestic Status...............  $                    $
Foreign Status................  ...................  ...................
    Total.....................  $                    $
Merchandise Received                   Value
    Domestic Status...........  $                    ...................
    Foreign Status............  ...................  ...................
From Other U.S. FTZ's:
    Domestic Status...........  ...................  ...................
    Foreign Status............  ...................  ...................
        Total.................  $                    ...................
Merchandise Forwarded                  Value
    To The U.S. Market........  $                    ...................
    To Foreign Countries        ...................  ...................
     (Exports).
    To Other U.S. FTZ's.......  ...................  ...................
        Total.................  $                    ...................
Merchandise Destroyed.........  $
------------------------------------------------------------------------

    Explanation of Discrepancies:
    a. Does Beginning Inventory + Total Merchandise Received - Total 
Merchandise Forwarded - Merchandise Destroyed = Ending Inventory? If 
not, explain.
    b. Is the level of Merchandise Received this year significantly 
different from the previous year? If yes, explain.
    c. Is the Ending Inventory from the previous year equal to the 
Beginning Inventory for this year?
    14. Main Categories of Foreign Status Merchandise Received (Top 
Five)

----------------------------------------------------------------------------------------------------------------
               Category                                   Value                      Main countries of origin
----------------------------------------------------------------------------------------------------------------
--------------------------------------  $--------------------...................  ------------------------------
 -----------                                                                       -------------------
--------------------------------------   --------------------...................  ------------------------------
 -----------                                                                       -------------------
--------------------------------------   --------------------...................  ------------------------------
 -----------                                                                       -------------------
--------------------------------------   --------------------...................  ------------------------------
 -----------                                                                       -------------------
--------------------------------------   --------------------...................  ------------------------------
 -----------                                                                       -------------------
    Total.............................  $--------------------                     ..............................
----------------------------------------------------------------------------------------------------------------

    15. Main Categories of Merchandise Forwarded (Top Five)

------------------------------------------------------------------------
              Category                               Value
------------------------------------------------------------------------
$------------------                    ------------------
------------------                     ------------------
------------------                     ------------------
------------------                     ------------------
------------------                     ------------------
    Total...........................  $------------------
------------------------------------------------------------------------

    16. Foreign Status Merchandise Received:

Nonprivileged Foreign $ .
Privileged Foreign $.

    17. Customs duties collected on merchandise entered into U.S. 
Customs territory from the operation during the calendar year amounted 
to $ ----------.
    18. (Optional) Attachment field: You may attach any photographs of 
the operation or any information you feel may be useful.

Part 2 for Oil Refinery Operators for January 1-December 31

    Zone reports should reflect only activity within activated portions 
of zones/subzones. Foreign and domestic merchandise handled within 
activated FTZ areas should be reported.
    1. The grantee shall provide a list of each FTZ Board approved oil 
refinery operation within the general-purpose zone or subzones, and 
indicate whether or not activity was conducted under zone procedures at 
the subzone or GPZ site during the calendar year. Note that separate 
information for questions 2-36 below is required for each active oil 
refinery operator.
    2. Site/Subzone Number.
    3. Company Name.
    4. Activated Acres.
    5. Activation Date.
    6. Total number of tanks/storage capacity in barrels.
    7. Employment--direct and indirect (including contract employees), 
reported on a full time equivalent basis.
    8. List primary non-crude receipts on an average daily basis.
    9. What percent of the primary non-crude receipts are sourced from 
abroad?
    10. List primary non-NPF attributed products (fuels, lubricants, 
etc.).
    11. The primary non-NPF attributed products account for ------% of 
total output.
    12. Provide a description of types of customers for non-NPF 
products shipped from the refinery. In describing customers, do not 
provide customer names or specific customer information. We are seeking 
general information

[[Page 46983]]

about general types or categories of customers by industry and/or by 
use.
    13. Identify exports by product and volume.
    14. List primary products produced from NPF attributed feedstocks.
    15. NPF attributed products account for ------ % of total output.
    16. Provide a description of types of customers for petrochemical 
products.
    17. Indicate approximate percentage of total shipments from the 
refinery that are to affiliated plants.
    18. Provide the percent of total production that is directly or 
indirectly exported ------ %. The indirect exports to be reported are 
shipments that are entered for consumption prior to subsequent re-
exportation or shipments to a customer or related facility that are 
later exported (whenever known). You may rely on estimates for indirect 
exports but it is important that each operator do its best to account 
for all export activity that is supported by their FTZ operation.
    19. Current rated crude distillation capacity (BPD).
    20. Volume of total crude oil receipts on an average daily basis 
(BPD).
    21. Volume of foreign crude oil receipts on an average daily basis 
(BPD).
    22. Estimated percentage of foreign crude receipts under 25 degrees 
API.
    23. Provide the number and date of the most recent Board Order.
    24. What capacity (BPD or BPD equivalent) was approved by the Board 
in the above order?
    Grants of authority are approved for a given level of activity. In 
the case of oil refineries, the levels of activity are stated in terms 
of current rated crude distillation capacity. A plant may increase its 
capacity, but the level of approved zone activity for the plant remains 
at the level approved under the refinery's current Board Order. 
Significant increases in activity above Board-approved levels require 
an expanded authorization.
    25. Is the refinery operating within the approved scope of 
authority? Explain.
    26. Indicate how zone savings assist the company in its 
international competitiveness efforts (e.g., reduce operating costs, 
improve margins, help make exports more competitive, maintain or 
increase refinery capacity through processing unit upgrades or 
additions at U.S. refinery versus foreign refinery in a global 
industry).
    In describing how FTZ status has affected the refinery, please give 
examples and anecdotal information that you feel relevant. We recognize 
that FTZ status may be only a contributing factor.
    27. Current estimate of annual zone duty savings.
    28. Provide an estimate for the value-added activity that takes 
place under zone procedures (labor, profit, overhead, etc.). One way to 
estimate value-added is: Value of Sales from Plant minus Value of 
merchandise Received at Plant. Value-added should not be included in 
the Movement of Merchandise figures below.
    29. Describe public-type benefits (both direct and indirect) to the 
local and national economy. Please give specific examples. As it 
applies to your plant, you may describe with any or all of the 
following:
    a. Affected domestic production employment and refinery capacity.
    b. Helped to offset environmental compliance costs.
    c. Helped to preserve U.S. refining capacity.
    d. Contributed to increased investment in U.S. refining.
    In describing industry impact, information may be presented to the 
FTZ Board on a company-wide or industry-wide basis (rather than from 
individual refineries). In this manner the accumulated impact of all of 
a company's facilities or the use of zone procedures in the industry as 
a whole may be discussed rather than on an individual basis.
    30. If the operation is subject to restriction, please describe 
method of compliance.
    31. Movement of Merchandise

      Merchandise in the Zone at Beginning and End of Calendar Year
------------------------------------------------------------------------
                                  Beginning value         End value
------------------------------------------------------------------------
Domestic Status...............  $                    $
Foreign Status................  ...................  ...................
    Total.....................  $                    $
Merchandise Received:                  Value
    Domestic Status...........  $                    $
    Foreign Status............  ...................  ...................
From Other U.S. FTZ's:
    Domestic Status...........  ...................
    Foreign Status............  ...................
        Total.................  $                    $
Merchandise Forwarded:                 Value
    To The U.S. Market........  $
    To Foreign Countries        ...................
     (Exports).
    To Other U.S. FTZ's.......  ...................
        Total.................  $                    $
Merchandise Destroyed.........  $
------------------------------------------------------------------------

    Explanation of Discrepancies:
    a. Does Beginning Inventory + Total Merchandise Received - Total 
Merchandise Forwarded - Merchandise Destroyed = Ending Inventory? If 
not, explain.
    b. Is the level of Merchandise Received this year significantly 
different from the previous year? If yes, explain.
    c. Is the Ending Inventory from the previous year equal to the 
Beginning Inventory for this year?
    32. Main Categories of Foreign Status Merchandise Received (Top 
Five)

----------------------------------------------------------------------------------------------------------------
               Category                                 Value                       Main countries of origin
----------------------------------------------------------------------------------------------------------------
-------------------------------------  $ --------------------.................  --------------------------------
 -------------                                                                   -----------------
-------------------------------------   --------------------..................  --------------------------------
 -------------                                                                   -----------------

[[Page 46984]]

 
-------------------------------------   --------------------..................  --------------------------------
 -------------                                                                   -----------------
-------------------------------------   --------------------..................  --------------------------------
 -------------                                                                   -----------------
-------------------------------------   --------------------..................  --------------------------------
 -------------                                                                   -----------------
    Total............................  $--------------------
----------------------------------------------------------------------------------------------------------------

    33. Main Categories of Merchandise Forwarded (Top Five)

 
------------------------------------------------------------------------
              Category                               Value
------------------------------------------------------------------------
------------------                    $ ------------------
------------------                     ------------------
------------------                     ------------------
------------------                     ------------------
------------------                     ------------------
    Total...........................  $------------------
------------------------------------------------------------------------

    34. Foreign Status Merchandise Received:

Nonprivileged Foreign $.
Privileged Foreign $.

    35. Customs duties collected on merchandise entered into U.S. 
Customs territory from the operation during the year amounted to $----
----------------.
    36. (Optional) Attachment field: You may attach any photographs of 
the operation or any information you feel may be useful.
    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 or e-mail comments to 
<a href="/cdn-cgi/l/email-protection#53352729133a27327d373c307d343c25"><span class="__cf_email__" data-cfemail="1771636d577e63763973787439707861">[email protected]</span></a>. 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 October 16, 2009. Any questions about this proposal should 
be directed to Elizabeth Whiteman at <a href="/cdn-cgi/l/email-protection#286d444152494a4d5c40777f40415c4d45494668415c49064c474b064f475e"><span class="__cf_email__" data-cfemail="02476e6b78636067766a5d556a6b76676f636c426b76632c666d612c656d74">[email protected]</span></a> or 
(202) 482-0473.

    Dated: September 3, 2009.
Andrew McGilvray,
Executive Secretary.
[FR Doc. E9-22064 Filed 9-11-09; 8:45 am]
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