Board Order   Approval Date   Activation Date   Subzone #    Company   Location

  B.  Give summary reason as to why requested indefinite extension of authority is in the public interest.

  C.  Include, for each subzone, a letter from the company including an updated description of subzone operations and a detailed discussion of economic reasons as to why the action is in the public interest.

  D.  Indicate on behalf of the subzone(s) the scope of authority with respect to finished products to which extended NPF authority would apply (e.g., Standard Appendix C, approved in 2000).

II.  Company Letter

The company letter should request that the grantee submit an application for an extension of authority for the NPF option on the company’s behalf. The letter should include a discussion of its subzone operations conducted under FTZ procedures and a discussion of the economic factors of the public benefit argument supporting the extension.

A. Discussion should include:

1. A brief updated description of the refinery operations
   
   1. Employees (direct and contract)
   2. BPD (nominal rated capacity and actual average crude (or crude equivalent) throughput
   3. Primary products
      
      • List various fuel products, petrochemicals, and refinery by-products.
      • For each, indicate % of total production on a volume basis.
   4. Sourcing of refinery feedstock, indicate the following:
      
      • Foreign crude oil as % of total crude
      • Domestic crude oil as % of total crude
      • Total crude oil as % of total inputs
      • Identify non-crude foreign inputs (w/ HTSUS #) and for each indicate its % of total inputs
      • Identify non-crude domestic inputs and for each indicate its % of total inputs
      • Total foreign inputs (crude and other) as % of total inputs
   5. Exports (direct exports from SZ as a % of refinery production on a volume basis and estimate % of total petrochemical products exported by downstream customers)
   >
2. Statement as to type and level of production and relate to the scope of activity approved by the Board. (Refineries/petrochemical plants should state capacity as crude distillation BPD and standalone petchem plants should give capacity as crude equivalent distillation BPD.)
   
   1. The most recent Board action (cite Board Order No. of original) in (year), indicated ______ BPD crude distillation capacity. State whether production is within this range or to what extent it is above it. Note that the Board allows for standard or minor variances (e.g., 10%) above stated capacity.
   2. State the reason for any increase in BPD if you have indicated a different capacity, e.g. debottlenecking action, additional unit(s)
   3. Indicate any major FTZ expansions or modifications. Give the FTZ case number and the date approved.
3. Environmental compliance costs. To what extent do overall costs related to environmental compliance (as discussed in the original application) continue to affect the refinery.
4. Cost savings from zone procedures. Provide a reasonable range or estimate of the annual savings generated by zone procedures. Include any variable or factors which have an effect on the level of savings.
   
   1. Overall cost savings level
   2. Estimated breakdown
      
      • Duty exemption on exports (jet fuel, etc.)
      • Inverted tariff savings (include any refinery fuel entered duty-free)
      • Ad Valorem Tax exemption (if applicable)
      • Duty deferral
      • Customs fees savings
   3. Indicate how savings assist the subzone user in its international competitive 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).
5. Report on any ongoing discussions or agreements the company has made with local entities pertaining to inventory tax exemption.
6. Indicate the scope of authority with respect to finished products to which requested NPF authority would apply.
7. Describe, giving examples, what positive economic effects indicated in the previous application have occurred related to the use of FTZ procedures (with a particular emphasis on NPF authority). Explain how FTZ procedures have helped create or maintain economic activity that would otherwise have been done abroad, in terms of the following:
   
   1. employment
   2. refinery capacity retention/expansion
   3. exports (both direct and downstream)
   4. ability to compete with imports
   5. U.S. value-added (either as a percentage of gross sales or dollar value)
   6. environmental compliance costs
   7. investment in U.S. refining
8. Public benefit discussion. Discussion should indicate how FTZ procedures, particularly NPF authority, positively affect the international competitiveness of the oil refining industry as a whole, encouraging U.S. production and employment that might otherwise occur abroad. Discussion of the economic factors may refer to information on file with the Board but should address the items listed in #7 above. Include a discussion of possible negative effects of continued operation under FTZ procedures (or absence thereof). Specifically address whether FTZ status for oil refineries encourages imports of crude oil.

III.  Administrative Process

Extension of Authority vs. Removal of Time Limit

• Requests should be for an extension of authority rather than removal of time limit. The decision as to the time period for which authority will be extended will be made during the course of the review and will depend on the evidence and arguments presented.

Scope of Request

• The scope of the extension request may extend to all finished products that may be produced with NPF inputs previously authorized by the FTZ Board for oil refinery activity. See attached Standard Appendix (with 2002 HTSUS changes).
• Requests for modification of grant restrictions other than extension of NPF authority (Condition #3) will be considered as separate cases and they will not be included in the batch review.
• This will be an opportunity for these refineries to update their scopes of authority regarding BPD.

Timeline

• To ensure timely action, requests should be received and deemed complete by the Board by June 30, 2004, for consideration in the batch review for extension of NPF authority beyond September 30, 2005.
• Requests received later than June 30, 2004, or requests that are not complete will be processed separately.

Federal Register Notice

• Requests received by June 30, 2004, will be included in a single Federal Register notice with each grant modification request given a separate FTZ Docket number.

FTZ Staff
10/03