Federal Register / Vol. 73, No. 177 / Thursday, September 11, 2008 / Notices 52817 

free). Components and materials 

sourced from abroad (representing 50–

65% of the value of the finished 

product) include: Synthetic filament 

tow, artificial filament tow, polyester 

fibers, polypropylene fibers and rayon 

fibers (HTSUS duty rate ranges from 4.3 

to 7.5%). 

FTZ procedures would exempt 

Cellusuede from customs duty 

payments on the foreign components 

used in export production. The 

company anticipates that 10–20 percent 

of the plant’s shipments will be 

exported. On its domestic sales, 

Cellusuede could choose the duty-free 

rate during customs entry procedures 

that applies to finished flock for the 

foreign inputs noted above. The request 

indicates that the savings from FTZ 

procedures would help improve the 

plant’s international competitiveness. 

In accordance with the Board’s 

regulations, Elizabeth Whiteman of the 

FTZ staff is designated examiner to 

investigate the application and report to 

the Board. 

Public comment is invited from 

interested parties. Submissions (original 

and 3 copies) shall be addressed to the 

Board’s Executive Secretary at the 

address below. The closing period for 

their receipt is November 10, 2008. 

Rebuttal comments in response to 

material submitted during the foregoing 

period may be submitted during the 

subsequent 15-day period to November 

25, 2008. 

A copy of the application and 

accompanying exhibits will be available 

for public inspection at each of the 

following locations: 

U.S. Department of Commerce Export 

Assistance Center, 605 Fulton Ave., 

Suite E103, Rockford, IL 61103. 

Office of the Executive Secretary, 

Foreign-Trade Zones Board, U.S. 

Department of Commerce, Room 

2111, 1401 Constitution Ave., NW., 

Washington, DC 20230. 

FOR FURTHER INFORMATION CONTACT: 

Elizabeth Whiteman at 

Elizabeth_Whiteman@ita.doc.gov or 

(202) 482–0473. 

Dated: September 3, 2008. 

Andrew McGilvray, 

Executive Secretary. 

[FR Doc. E8–21231 Filed 9–10–08; 8:45 am] 

BILLING CODE 3510–DS–P 

DEPARTMENT OF COMMERCE 

Foreign-Trade Zones Board 

Revised Proposal for Available 

Alternative Site-Designation and 

-Management Framework 

SUMMARY: Based on comments received 

in response to the May 8, 2008, notice 

(73 FR 26077–26078), the Foreign-Trade 

Zones (FTZ) Board staff is making a 

number of revisions to its proposal to 

make available an alternative framework 

(for grantees that choose to participate) 

to designate and manage their generalpurpose FTZ sites. Comments on the 

May proposal were overwhelmingly 

supportive overall with regard to 

making such a framework available to 

grantees on an optional basis. However, 

comments also raised a number of 

important questions and concerns. 

In response, we have made some 

significant revisions to the proposal. 

Key revisions are allowance for a special 

transitional phase for each grantee 

applying to transfer to the alternative 

framework, elimination of a general 

initial limit on the number of ‘‘usagedriven’’ (formerly ‘‘user-driven’’) sites, 

elimination of the concept of an 

‘‘anchor’’ site, and flexibility on the 

duration of the sunset limits for 

‘‘magnet’’ sites—with five years 

established as a minimum rather than a 

fixed standard—so that the FTZ Board 

may take specific circumstances into 

account. 

Comments and questions are 

summarized and addressed below by 

general topic. The revised proposal is 

delineated after the discussion of the 

comments/questions. 

Comments Received 

Comments on Overall Framework and 

Application Process 

(1) One commenter suggested that, 

recognizing that a number of FTZ 

grantees currently have more FTZ sites 

and/or acreage than envisioned under 

the standard numbers associated with 

the proposed alternative sitedesignation and -management 

framework (‘‘alternative framework’’), 

the FTZ Board could require 

participating grantees to submit a plan 

in advance of an application to 

restructure the grantee’s zone project 

outlining the process and standards to 

be used in assessing which of the 

grantee’s existing sites to propose for 

continued FTZ status. 

(2) One commenter stated that a 

grantee seeking to use the alternative 

framework would be changing its zone 

plan, which could only be 

accomplished through application to 

and approval by the FTZ Board. 

However, designating existing sites as 

Anchor or magnet sites should be at the 

grantees’ discretion. Further, requiring 

grantees to recompile economic data to 

resubstantiate the designation of already 

approved sites would tend to be timeconsuming while yielding little benefit. 

(3) More than one commenter 

suggested a transitional period that 

would allow grantees whose numbers of 

existing sites exceed the envisioned 

standard limitations the opportunity to 

exceed those standard limitations if they 

believe it is desirable to do so for an 

initial period, with a sunset provision 

for all affected sites helping to ‘‘weed 

out’’ unused or unneeded zone sites at 

the end of the initial period. 

(4) One commenter indicated that the 

FTZ Board should provide an appeals 

process for any existing property owners 

that may be ‘‘detrimentally impacted’’

by a grantee’s decisionmaking process 

regarding whether to retain FTZ 

designation at currently designated 

sites. The framework should also 

address issues of concurrence needed 

from property owners that may not 

necessarily agree to have zone status 

removed. 

(5) One commenter stated that it is 

important that the process be managed 

as a flexible framework rather than as a 

set of rigid requirements. The final 

framework should set general standards 

but specific grants of authority should 

be based on grantee requests and the 

FTZ Board’s assessment of applications. 

It would be incumbent on grantees to 

demonstrate the need to diverge from 

the established general standards. 

(6) One commenter stated that, for 

states where local inventory taxes can 

be a possible issue for approval of new 

sites, the FTZ Board should require 

evidence of taxing authority 

concurrence as part of the designation 

process. However, for existing FTZ sites 

being considered as part of the 

reframing of a zone project under the 

new framework, no new taxing 

authority approvals should be required. 

Also, if under the new framework FTZ 

designation is removed from a site 

either at the grantee’s discretion or via 

a sunset mechanism, a taxing authority 

approval previously in place for the site 

should ‘‘remain in place’’ in the event 

of a future request for redesignation of 

the site as magnet or user-driven. 

(7) One commenter suggested that the 

FTZ Board allow a grantee to benefit 

from some of the proposal’s benefits 

(‘‘floating acreage,’’ simplified process 

for minor boundary modifications) 

within a 2,000-acre limitation but based 

on the grantee’s own zone-site 

management plan, which the FTZ Board 


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could determine was an acceptable 

alternative to the model delineated in 

the alternative site management 

proposal. 

Response on Overall Framework and 

Application Process 

Reframing the ‘‘plan’’ for a general 

purpose zone project under the 

alternative framework would inherently 

involve application to the FTZ Board 

(including the procedural requirement 

for technical comments from CBP 

pursuant to 15 CFR 400.27(d)(1)) so that 

the Board could evaluate and possibly 

approve the proposal for a new plan for 

the zone. For existing FTZs with 

disparities between their levels of 

designated sites and acreage relative to 

their sites and acreage where FTZ 

activity is being conducted, we agree 

with the comments suggesting 

allowance for a transitional phase 

between a grantee’s existing structure 

and a future structure consistent with 

the goals of the alternative framework. 

As a result, the revised proposal 

outlined below specifically incorporates 

a mechanism for an optional, one-time 

transitional phase for a participating 

grantee. 

We also agree with comments 

indicating that applying rigid standards 

would be counterproductive. The 

proposal has been revised to eliminate 

any numeric limit or goal for usagedriven (formerly user-driven) sites. The 

revised proposal also reflects that a 

request for designation for a usagedriven site would be explicitly linked to 

the specific entity(ies) which will be 

conducting FTZ activity at the site (or 

for which such activity will be 

conducted). As such, the designation of 

a usage-driven site—and continuation of 

that designation—would be directly tied 

to the specific entity(ies) associated 

with the request. Further, the revised 

proposal emphasizes a general goal of 

no more than six magnet sites per zone 

while recognizing the special 

circumstances that may exist with 

regard to certain zones (such as regional, 

multi-county projects). The revised 

proposal explicitly allows for a range of 

situations while also emphasizing the 

type of justification that would be 

needed for a larger number of magnet 

sites. 

Regarding grantee decisionmaking 

standards and appeals of such 

decisions, we agree that any grantee 

making a decision about whether to 

retain existing sites should apply 

uniform neutral standards in making 

that determination. A standard element 

of processing any application for Board 

action is a Federal Register notice with 

a public comment period. The notice 

and comment process provides 

appropriate procedural safeguards 

regarding any application for Board 

action. Also, as noted above, any 

grantee’s use of the proposed alternative 

framework would be the result of an 

application to the FTZ Board to 

‘‘reorganize’’ the zone. The FTZ Staff 

would aim to minimize the burden on 

the applicant (particularly regarding the 

type of economic data which had been 

part of a justification which had 

previously been submitted to the 

Board). 

Finally, regarding documentation for 

concurrence of local taxing entities in 

states with inventory taxes, the Board 

would be able to evaluate on a case-bycase basis pre-existing documentation 

for sites newly proposed for designation 

whose previous FTZ designation had 

lapsed. 

Comments on ‘‘Service Area’’ Concept 

(8) One commenter, while agreeing 

with the concept of a ‘‘service area’’

(geographic area within which the 

grantee intends to be able to propose 

FTZ sites), noted that more than one 

grantee might present the same 

geographic location as part of their 

service areas and states that a grantee 

must satisfy the ‘‘convenience of 

commerce’’ (19 U.S.C. 81b(b)) for any 

portion of its service area that overlaps 

another grantee’s service area. The same 

commenter raised a number of questions 

regarding service areas: Will there be a 

process to continue overlaps in service 

areas? Will the Board determine the 

service area for each grantee and, if so, 

would there be an appeals process? 

Would the establishment of service 

areas require the transfer of existing 

sites from one grantee to another? Must 

a grantee’s subzones be within the 

boundaries of the service area associated 

with that grantee? 

(9) One commenter stated that, in 

implementing the concept of a zone’s 

service area, there is no need to change 

existing FTZ ‘‘projects’’ from one port of 

entry affiliation to another where ports 

of entry overlap and each has its own 

FTZ grantee. 

Response on ‘‘Service Area’’ Concept 

The complexity of the FTZ Board’s 

evaluation of a grantee’s proposed 

service area may vary depending on the 

proposal and the region to which the 

proposal relates. Some regions have 

multiple existing grantees serving a 

single Customs and Border Protection 

(CBP) port of entry (POE) and the 

limitations of the areas those grantees 

seek to serve may not have been defined 

to date. (It should be noted that some 

regions with multiple grantees serving a 

POE may have the basic framework in 

place to define service areas through the 

plans previously presented to the FTZ 

Board, some of which may have tended 

to focus on a single county within a 

broader region served by the POE.) In 

instances where there is disagreement 

over proposed service area(s) serving a 

POE, the FTZ Board would need to 

evaluate the history of the zone(s) at 

issue (particularly as such history 

relates to the ‘‘convenience of 

commerce’’ clause of section 81b(b) of 

the FTZ Act). The FTZ Board will be 

able to evaluate such issues on a caseby-case basis. 

It is also important to recognize that 

the primary purpose of defining a 

service area is to put in place a zone 

‘‘plan’’ that would clearly be compatible 

with subsequent requests for minor 

boundary modifications (MBMs) within 

the service area. As such, if a POE area 

is already served by multiple grantees 

with some overlap of communities 

served, defining a service area for 

grantee ‘‘A’’ would not inherently have 

an impact on an existing site of grantee 

‘‘B’’ that happens to fall within the 

newly defined service area of grantee 

‘‘A.’’ Also, approval of a service area for 

one grantee does not necessarily 

preclude another grantee in the POE 

from proposing a new FTZ site in the 

first grantee’s approved service area 

based on evidence that the first grantee 

‘‘will not adequately serve the 

convenience of commerce’’ (19 U.S.C. 

81b(b)). In fact, the service areas could 

conceivably overlap although the FTZ 

Board would need to examine the 

public interest implications of such a 

situation, including burden on the 

resources of government agencies 

involved in administration and 

oversight related to the FTZ program. 

A key additional point is that a 

service area could only be defined 

through an application for FTZ Board 

action. Action by the FTZ Board would 

establish the service area, and the Board 

would retain its existing discretion to 

determine whether to approve an 

application in its entirety and whether 

restrictions or limitations might be 

required. In this context, presentation of 

a proposed service area in an 

application does not guarantee approval 

of the exact service area by the Board 

(particularly if controversy has arisen 

regarding the proposed service area 

during the processing of the 

application). In instances where any 

party may wish to object to the service 

area proposed by a grantee in an 

application to the Board, the standard 

Federal Register notice and public 

comment procedures for applications to 

the Board will ensure that all 


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perspectives can be presented for 

consideration. 

Finally, the proposal at issue here 

relates to a grantee’s management of its 

general-purpose FTZ. As such, subzones 

are not a subject of any element of the 

proposal (service area, standard overall 

acreage limit, etc.) and, in any case, 

already are subject to regulations 

addressing issues of geography and 

sponsorship (see 15 CFR 400.22(d)(2)). 

Comments on 2,000 Acre Limit and 

‘‘Floating’’ Acreage 

(10) More than one commenter 

indicated that the proposed initial limit 

of 2,000 acres of designated FTZ space 

for a participating grantee appears 

reasonable in light of the concept of 

‘‘floating acreage’’ also described in the 

proposal, but that the proposal would 

likely fail without the flexibility 

associated with the floating acreage. The 

same commenters state that the 

proposed general initial limitations of 

500 floating acres at an anchor site and 

200 floating acres at a magnet site seem 

reasonable as long as the grantee is able 

to request an increase in the amount of 

floating acreage designated at a given 

site based on actual FTZ activity at the 

site. 

(11) Two commenters indicated that 

the proposed 2,000-acre limit per zone 

could cause confusion for some 

property owners of sites within a zone 

that currently exceeds 2,000 designated 

acres. Clarification should be provided 

regarding the availability of user-driven 

designation so that existing land owners 

(public and private) can understand 

how removal of designation now does 

not preclude them from getting FTZ 

designation on a usage-driven basis in 

the future. 

(12) One commenter was concerned 

that the proposed 2,000-acre limitation 

would be too restrictive for a grantee 

whose existing site approaches 2,000 

acres in size. 

(13) One commenter asked whether 

acreage for subzones was included in 

the proposed 2,000-acre limit. 

Responses on 2,000 Acre Limit and 

‘‘Floating’’ Acreage 

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. It is 

important to emphasize that the concept 

of ‘‘floating’’ acreage significantly 

enhances the usefulness of the 2,000 

acres. Given that major portions of large 

sites tend to remain unactivated, actual 

facilities encompassing significantly 

more than 2,000 acres could be served 

effectively by 2,000 floating acres. (For 

example, 500 floating acres within a 

4,000 acre airport complex would 

enable activation of up to 500 acres 

anywhere within the complex.) 

Comments on ‘‘Anchor’’ Site Concept 

(14) One commenter maintains that, 

where an existing site is to be proposed 

as an ‘‘Anchor’’ site, the grantee should 

be able to accomplish ‘‘Anchor’’

designation through a letter to the FTZ 

Board staff rather than a full application 

to the FTZ Board. 

Response on ‘‘Anchor’’ Site Concept 

Based on factors described elsewhere 

in this notice, the revised proposal no 

longer includes the concept of an 

anchor site. Flexibility introduced into 

the revised concept for a magnet site 

enables magnet designation to cover a 

broader range of needs. At the same 

time, the proposal is simplified by 

having two categories of sites rather 

than three. 

Comments on ‘‘Magnet’’ Site Concept 

(15) More than one commenter 

maintained that, where an existing site 

is to be proposed as a magnet site, the 

grantee should be able to accomplish 

magnet designation through a letter to 

the FTZ Board staff rather than a full 

application to the FTZ Board. 

Response on ‘‘Magnet’’ Site Concept 

The designation of magnet sites is 

intended to be part of the reframing of 

a zone’s plan through application to the 

FTZ Board. As such, magnet designation 

cannot be accomplished through 

administrative action by the FTZ Board 

staff. However, there is real merit to 

commenters’ point that burden should 

be minimized for a grantee seeking to 

propose existing sites as magnet sites. 

Minimizing burden in that manner will 

be a goal for any guidelines to be issued 

by the Board staff for applications to 

reorganize zones using the alternative 

framework. Further, as noted above, 

such guidelines would aim to minimize 

any need to present new economic data 

for existing sites. 

Comments on ‘‘User-Driven’’ Site 

Concept 

(16) One commenter recommended 

changing the nomenclature of ‘‘userdriven’’ sites to ‘‘usage-driven’’ sites to 

reflect that designation of certain sites 

may be driven by the needs of an 

‘‘operator’’ (15 CFR 400.2(s)) rather than 

a ‘‘user’’ (15 CFR 400.2(v)). 

(17) One commenter recommended 

changing the nomenclature of ‘‘userdriven’’ sites to ‘‘operator/user-driven’’

to reflect the possible use of such sites 

by third-party operators. 

Response on ‘‘User-Driven’’ Site 

Concept 

The term ‘‘user-driven’’

unintentionally gave the impression of 

limiting such sites to situations driven 

by the needs of a zone ‘‘user’’ (as 

defined in 15 CFR 400.2(v)). In this 

revised proposal, we have adopted the 

recommended nomenclature ‘‘usagedriven’’ (which will be used throughout 

the remainder of this notice). Usagedriven sites would be designated for the 

physical area(s) required for 

company(ies) conducting FTZ activity 

or ready to pursue conducting FTZ 

activity. 

Comments on Numbers of Sites 

(18) Several commenters questioned 

the need to have general limits on the 

numbers of magnet and user-driven 

sites. 

(19) One commenter stated that a 

grantee should have the flexibility to 

determine appropriate numbers of 

magnet and user-driven sites for its zone 

project without limits on the numbers of 

such sites as long as the grantee’s zone 

project remained within the overall 

2,000 acre limit. 

(20) One commenter indicates that for 

regional FTZ projects that span more 

than one county, of which multiple 

examples exist in the FTZ program, 

each county should be able to have an 

‘‘Anchor’’ site. 

(21) Two commenters indicated that 

the concept should be amended to allow 

for designation of one anchor site per 

city or county participating in the zone 

project. 

(22) One commenter indicated that 

limitations on numbers of sites and on 

acreage for a type of site may be 

appropriate for many zones but 

inappropriate for some regionally 

focused zones. Also, the number of 

counties participating in a zone may be 

a good point of reference in many 

instances. However, counties can vary 

significantly in size, population and 

business activity, so counties may not 

be an appropriate point of reference in 

all cases. 

(23) One commenter indicated that it 

sees no reasonable or fair limits to the 

number of FTZ sites, whether magnet or 

user-driven. 

Response on Numbers of Sites 

In addition to elimination of the 

concept of an ‘‘anchor’’ site, the 

proposal has been revised in several 

significant ways regarding numbers of 

sites. First, there is no longer a 

suggested initial limit on the number of 


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proposed usage-driven sites per FTZ. 

For magnet sites, the revised proposal 

describes a general goal of no more than 

six magnet sites per zone over the long 

term. However, the revised proposal 

also makes clear that the goal is not a 

fixed standard. There is explicit 

recognition that flexibility may be 

needed for zone projects with structures 

that could potentially justify larger 

numbers of magnet sites. Further, the 

newly proposed option for a transitional 

phase for any participating grantee 

incorporates initial flexibility on 

numbers of sites. 

At the same time, it is important to 

recognize that the alternative framework 

delineated in the proposal is, 

fundamentally, about significantly 

enhanced flexibility in marketing and 

managing a zone project. The increased 

flexibility for the grantee is explicitly 

linked to other elements, including a 

need for greater focus that makes such 

flexibility possible. The proposal also 

reflects the reality expressed by many 

grantees of the great difficulty in 

prospectively placing FTZ designation 

where it may be needed in the future. 

The proposal looks to enable a grantee 

to move beyond repeated (often 

unsuccessful) attempts at prospective 

FTZ designation by recognizing that the 

primary mechanism for a participating 

grantee to serve new needs would be 

usage-driven minor boundary 

modifications (MBMs) within the 

service area, with a lesser role for longterm efforts to attract FTZ use to specific 

pre-designated magnet sites. 

Concentrating FTZ designation where it 

is actually used will also yield 

important benefits for the government in 

terms of oversight burden and other 

resource-related considerations. 

One factor to bear in mind regarding 

the revised proposal’s goal of no more 

than six magnet sites per grantee is that 

sites which begin their FTZ designation 

as magnet may ultimately prove 

appropriate to be shifted to usage-driven 

designation. For example, an industrial 

park newly designated as a magnet site 

may, after a number of years, be fully 

occupied but only have one active FTZ 

user and no other occupants that 

envision a short- to medium-term need 

for FTZ services. At the same time, the 

grantee may determine that it is 

desirable to propose a new industrial 

park as a magnet site. In that context, 

one option for a grantee to consider is 

redesignating the active FTZ portion of 

the older industrial park as a usagedriven site while seeking magnet 

designation for the new industrial park. 

Consideration of this type of option 

would be particularly appropriate if the 

grantee already had six magnet sites, 

and the FTZ Board could examine the 

number of distinct activated operations 

within each existing magnet site when 

evaluating a request for additional 

magnet sites beyond the goal of no more 

than six. This reflects that a grantee’s 

participation in the alternative 

framework will make rapid MBM action 

available for any unanticipated FTZrelated need within the service area 

(including, when warranted, to bring 

usage-driven FTZ designation to any 

parcel that may have previously had 

zone designation). 

Comments on Sunset Limits 

(24) One commenter stated that it is 

reasonable for magnet and user-driven 

sites to be subject to ‘‘sunset’’ limits 

whereby FTZ designation ‘‘selfremoves’’ at the end of a five-year sunset 

period if no FTZ activity has occurred 

but added that differing standards 

should apply to magnet versus userdriven sites. Specifically, the 

commenter indicates that magnet sites 

should be subject to a sunset/removal 

standard based on ‘‘activation’’ (19 CFR 

146.1(b)) whereas user-driven sites 

should be subject to a stricter sunset/ 

removal standard based on the 

admission of foreign non-duty paid 

material into the zone site for a bona 

fide customs purpose. 

(25) One commenter expressed 

concerns that sunset limits may be 

counterproductive by inhibiting 

investment in FTZ sites by property 

owners, adding that the time frames 

needed for zoning, infrastructure, 

construction, as well as activation of a 

finished facility by CBP, can make a 

five-year sunset period unrealistically 

short. 

Response on Sunset Limits 

Based on comments received, this 

revised proposal envisions a five-year 

period as the minimum sunset limit for 

magnet sites and allows flexibility in the 

FTZ Board’s evaluation of evidence so 

that a longer sunset period for a specific 

magnet site could be approved where 

appropriate based on the circumstances. 

For usage-driven sites, the proposed 

five-year sunset limit is unaltered since 

the first proposal and reflects the nature 

of usage-driven sites. The ability to 

designate a usage-driven site within a 

grantee’s service area via simple and 

rapid MBM action should also enable 

the grantee to address needs for new 

FTZ designation in situations where 

activation for a specific operator or user 

could not be accomplished during a 

site’s initial sunset period. 

With regard to the standard to be 

applied in the application of sunset 

limits, this revised proposal adopts 

standards suggested in comments. 

Specifically, FTZ designation will selfremove from a magnet site unless the 

site is activated by CBP prior to the 

specific site’s sunset deadline. For a 

usage-driven site, FTZ designation will 

self-remove unless there has been prior 

to the sunset deadline the admission 

into the site of foreign non-duty paid 

material for a bona fide customs 

purpose. These standards also apply to 

the periodic reapplication of the sunset 

test for a site under the ‘‘recycling’’

concept. 

Comment on Site Numbering 

(26) One commenter stressed that the 

FTZ Board should coordinate with 

various other Federal agencies to ensure 

compatibility of any site numbering in 

automated systems and across agencies. 

The same commenter indicated that the 

Board should issue guidance on the 

potential need for grantees to amend 

zone schedules (15 CFR 400.42(b)) and 

agreements with third parties if the 

Board renumbers zone sites. 

Response on Site Numbering 

The commenter is correct in 

highlighting the importance of the FTZ 

Board coordinating any site numbering 

or re-numbering with key government 

agencies. For any such numbering/renumbering, the FTZ Board staff can also 

issue guidance where needed for 

affected grantees and third parties. 

Comment on Tracking of Sites 

(27) One commenter indicated that 

increased complexity of site tracking 

associated with a grantee’s participation 

in the optional framework means that 

the Board should require such a grantee 

to post to the FTZ Board’s Web site 

regularly updated site and activation 

plans. 

Response on Tracking of Sites 

The tracking of sites, including 

designation and sunset, will be critical 

to the successful functioning of the 

alternative framework. For any 

implementation of the alternative 

framework, the FTZ Board staff would 

coordinate availability and use of an 

effective, publicly available tracking 

mechanism. 

Comment on Procedures for Minor 

Boundary Modifications 

(28) One commenter suggests 

enhancing the process for minor 

boundary modifications (MBMs) within 

the site management framework by 

allowing a grantee to request from the 

Customs and Border Protection port 

director a ‘‘Zone time approval’’ that 

would give the Grantee blanket CBP 


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concurrence for any user-driven sites 

the grantee might propose based on 

certain conditions. 

Response on Procedures for Minor 

Boundary Modifications 

The process for local CBP evaluation 

and possible concurrence for proposed 

MBMs often involves an examination of 

the specific activity and entities 

involved. Variation in activities, users, 

etc., can have a significant impact on 

the ultimate burden imposed on CBP 

resources. In this context, the current 

request-by-request consideration by CBP 

will be maintained for MBMs under the 

revised proposal. 

Revised Proposal 

The fundamental trade-off addressed 

in this proposal continues to be greater 

flexibility and increased predictability 

for approval of FTZ sites through simple 

and rapid minor boundary modification 

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). The major benefit 

would likely be for existing FTZ 

grantees, which would have the option 

of applying to 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 

general-purpose 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). A grantee’s proposed 

service area would need to be consistent 

with enabling legislation and the 

grantee organization’s charter. The FTZ 

Board’s evaluation of a proposed service 

area could potentially involve 

examination of issues related to the 

‘‘convenience of commerce’’ (19 U.S.C. 

81b(b)) in regions served by more than 

one FTZ grantee. 

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. Designation of a limited number of 

‘‘magnet’’ sites selected by the grantee—

often as a result of local public 

processes—for ability and readiness to 

attract multiple FTZ uses. An individual 

magnet site would generally be 

proposed with no more than 200 

‘‘floating’’ acres, although a larger 

number of proposed acres for a magnet 

site could be justified based on factors 

such as the nature of the site (e.g., a 

major harbor facility) or a specific type 

of projected FTZ activity that would 

tend to require an unusually large 

number of acres in simultaneous 

‘‘activated’’ status at the specific site. A 

magnet site could only be designated 

through an application for FTZ Board 

action. 

5. Possible designation of ‘‘usagedriven’’ sites to serve companies which 

are not located in a 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 usagedriven 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) 

specifically identified as ready to 

pursue conducting FTZ activity at the 

site. 

6. Unlike magnet sites, usage-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. (It should be noted that usagedriven MBM actions could conceivably 

be used to designate additional acreage 

where needed at magnet site locations.) 

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. Requests for MBM actions would 

continue to require concurrence from 

the appropriate CBP port director. 

7. No specific limit on the number of 

usage-driven sites. However, it should 

be noted that such usage-driven sites are 

by definition focused on only the 

specific physical area(s) required for 

company(ies) conducting FTZ activity 

or ready to pursue conducting FTZ 

activity. Therefore, with regard to 

numbers of usage-driven sites, the 

definition of such sites and the standard 

sunset limits (and recycling) described 

below inherently function to limit 

usage-driven sites on an ongoing basis 

to the number of specific areas required 

for activity by (or on behalf of) FTZ 

users. 

8. Regarding numbers of magnet sites, 

the framework would reflect a general 

goal—after any transition period, as 

outlined below—of focusing each FTZ 

on six or fewer simultaneously existing 

magnet sites. Special circumstances of 

regional (multi-county) FTZs could be 

taken into account based on factors 

which could justify a larger number of 

magnet sites (e.g., population size, level 

of trade-related activity). Also, a grantee 

seeking over a longer term to justify to 

the FTZ Board proposed authority for a 

larger number of magnet sites could 

provide evidence of multi-user FTZ 

activity—as reflected in the grantee’s 

annual reports to the FTZ Board—at a 

significant percentage of the grantee’s 

already designated magnet sites. (It 

should be noted that a grantee with an 

approved magnet site where only a 

single user activates over time will be 

able to consider requesting usage-driven 

designation for the active portion of that 

magnet site, thereby helping to retain 

focus and enabling the grantee to 

consider whether a different site would 

be more appropriate for magnet 

designation while remaining consistent 

with the goal outlined above for total 

number of magnet sites.) 

9. Magnet sites and usage-driven sites 

would be subject to ‘‘sunset’’ time limits 

which would self-remove FTZ 

designation from a site not used for FTZ 

purposes before the site’s sunset date. 

For magnet sites, the default sunset 

period would be five years with sunset 

based on whether a site had been 

activated by CBP. However, the FTZ 

Board could take a range of factors into 

account in determining the appropriate 

sunset period for a given site (e.g., 

nature of the site, public ownership of 

the site). For a usage-driven site, the 


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52822 Federal Register / Vol. 73, No. 177 / Thursday, September 11, 2008 / Notices 

sunset limit would require within five 

years of approval admission into the site 

of foreign non-duty paid material for a 

bona fide customs purpose. Experience 

in administering the framework could 

also reveal a need to adjust practice for 

usage-driven sites to implement 

intermediate benchmarks (such as 

progress towards activation) rather than 

a single deadline date at the end of a 

five-year period. 

10. Magnet sites and usage-driven 

sites would also be subject to ongoing 

‘‘recycling’’ whereby activation 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 would again apply). Finally, 

if all of a grantee’s sites were due to 

sunset based on lack of activation, the 

grantee would need to apply to the FTZ 

Board at least 12 months in advance of 

the ultimate sunset termination to 

request designation of at least one site 

for the period beyond the sunset of the 

previously approved sites. 

11. An optional five-year transitional 

phase would be available for grantees of 

zones with existing configurations that 

differ from the general parameters 

envisioned in the proposal. For the 

optional transitional phase, an 

individual grantee could apply to 

reorganize its zone and request 

continued FTZ designation for existing 

sites that the grantee determines warrant 

further opportunity to demonstrate a 

need for FTZ status. For the transition 

period, there would be no specific goal 

in terms of numbers of existing sites 

which could be proposed for magnet 

designation. However, sites proposed 

for a zone’s transitional phase would 

need to comply with the framework’s 

limit of 2,000 floating acres within the 

zone’s site (see further discussion 

below). 

12. For the transitional phase for a 

particular zone, the grantee would have 

the option of requesting usage-driven 

designation for any site where a single 

entity is conducting (or ready to 

conduct) FTZ activity. For sites that the 

grantee believes are better suited to a 

magnet (multi-user) role, the grantee 

could request magnet designation. Any 

usage-driven sites would have the 

standard five-year sunset period for 

such sites. The FTZ Board would 

establish sunset limits for individual 

magnet sites based on the facts of the 

case (particularly as they pertain to each 

site). For the transition phase, the 

default sunset limit for magnet sites 

would be five years but the FTZ Board 

would be able to establish longer sunset 

limits for specific sites if warranted by 

the facts and circumstances present. 

13. The five-year transition period for 

a specific grantee would begin with 

approval of the grantee’s reorganization 

application by the FTZ Board. During 

the final year of the transition period, 

the FTZ Board staff would initiate a 

review of all of the zone’s sites for 

which the sunset limits align with the 

end of the transition period. The staff 

review would examine whether each of 

those sites had been activated during 

the transition period and, for activated 

sites, the specific FTZ activity which 

had taken place (including the 

operator(s)/user(s) for each site). The 

staff review of a zone’s transition period 

would result in a report noting any sites 

subject to the review which had 

remained unactivated during the period 

(for which FTZ designation would selfremove at the end of the period). The 

staff report would also make 

preliminary recommendations regarding 

magnet or usage-driven designation 

going forward for sites activated during 

the period. The FTZ Board staff would 

provide its preliminary 

recommendations to the zone’s grantee 

and allow a period of 30 days for the 

grantee to provide any response to the 

staff’s recommendations. After the end 

of the 30-day period, the staff would 

create a final report taking into account 

any response from the grantee regarding 

the preliminary recommendations. 

Where appropriate, the Board’s 

Executive Secretary would be able to 

take action on a recommended 

transition of a site from magnet to usagedriven designation via the minor 

boundary modification process. 

14. The transitional phase for any 

zone would be limited by the defining 

2,000 acre limit inherent in the 

proposed framework. In this context, if 

existing sites which a grantee wishes to 

propose for a transitional phase 

cumulatively exceed 2,000 acres in their 

current configuration, the grantee would 

need to determine the amount of 

‘‘floating’’ acreage to propose within the 

boundaries of each such existing site. 

(For example, if an existing site is the 

340-acre Acme Industrial Park, the 

grantee could propose 200 floating acres 

within the 340-acre Acme Industrial 

Park.) A grantee might opt for a simple 

mechanism to apportion a certain total 

amount of floating acreage among sites 

it is proposing for the transitional phase 

(after making allowance for the amount 

of acreage the grantee determines it 

needs to keep in reserve for possible 

future minor boundary modifications; a 

grantee retaining a minimum of 200 

acres in reserve is advisable). 

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 include 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, minor 

boundary modification actions would be 

approved by the Board’s staff while 

modifications to a zone’s ‘‘plan’’ (e.g., 

increase in authorized FTZ acreage, 

modifications 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 October 

31, 2008. Any questions about this 

request for comments may be directed to 

the FTZ Board staff at (202) 482–2862. 

Dated: September 8, 2008. 

Andrew McGilvray, 

Executive Secretary. 

[FR Doc. E8–21232 Filed 9–10–08; 8:45 am] 

BILLING CODE 3510–DS–P 

DEPARTMENT OF COMMERCE 

Bureau of Industry and Security 

Action Affecting Export Privileges; 

Ralph Michel 

Ralph Michel, 41 Rosewood Drive, 

Easton, CT 06612, U.S., Respondent; 

Order 

On November 12, 2003, having 

approved the terms of a settlement 


rmajette on PRODPC74 with NOTICES