GUIDELINES FOR THE LAPSE PROVISION, FTZ ACTIVATION
AND REINSTATEMENT *



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 CBP 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 requirement.

  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 CBP activation approval under Section 146.6 of the CBP regulations (19 CFR Part 146) from the CBP Port Director for the area;
(2) submitting a zone schedule to the Executive Secretary of the FTZ Board and to the CBP Port Director pursuant to Section 400.44(a) 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.

GUIDELINES

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 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 concurs.


* This guideline is based on FTZ Board Order 849, published in the Federal Register on October 11, 1996 (Volume 61, Number 199) [Rules and Regulations] [Page 53305-53307]

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