04-26974. Requests for Extension of Authority (Crude Oil Refineries/Petrochemical Complexes)

Requests have been submitted to the Foreign-Trade Zones Board (the Board) by the following grantees, pursuant to § 400.32(b)(1) of the Board's regulations, for a time extension of their authority to elect non-privileged foreign status (NPF) on crude oil used in the production of certain petrochemical feedstocks and refinery by-products at the crude oil refineries/petrochemical complexes of the companies listed below. The requests were formally filed on November 30, 2004.

The FTZ Board has authorized 81 refineries/petrochemical complexes to conduct crude oil/petrochemical product refining activity under FTZ procedures. Fifty-eight of these subzones were approved with an indefinite extension of NPF status on August 24, 2000 (Board Order 1116, 65 FR 52696, 8/30/2000). Such authority involves full access to FTZ procedures for export activity and, with regard to products sold in the U.S., the option to choose NPF status (NPF option) for certain petrochemical feedstocks and refinery by-products. The extension case involved a comprehensive assessment of zone use by the 58 refineries considering their economic and regulatory circumstances. Since then, twelve new refinery subzones have been approved with indefinite NPF authority.

The five refinery/petrochemical subzones listed below were not included in the August 2000 action because their cases were pending during that review and they received approval subject to the following restrictions:

1. Foreign status (19 CFR 146.41, 146.42) products consumed as fuel for the refinery shall be subject to the applicable duty rate.

2. Privileged foreign status (19 CFR 146.41) shall be elected on all foreign merchandise admitted to the subzone, except that non-privileged foreign (NPF) status (19 CFR 146.42) may be elected on refinery inputs covered under HTSUS Subheadings 2709.00.10, 2709.00.20, 2710.11.25, 2710.11.45, 2710.19.05, 2710.19.10, 2710.19.45, 2710.91.00, 2710.99.05, 2710.99.10, 2710.99.16, 2710.99.21 and 2710.99.45 which are used in the production of:

—certain petrochemical feedstocks and refinery by-products;

—products for export;

—and, products eligible for entry under HTSUS Subheadings 9808.00.30 and 9808.00.40 (U.S. Government purchases).

3. The authority with regard to the NPF option is initially granted until September 30, 2005, subject to extension.

The zone grantees on behalf of the refining/petrochemical facilities listed below are now requesting that the authority for the NPF option (Condition 3) be extended.

The refineries/petrochemical complexes produce fuels and petrochemical feedstocks from crude oil and other inputs, such as naphtha and natural gas condensate. Fuel products include gasoline, jet fuel, distillates, residual fuels, and motor fuel blendstocks. Petrochemical feedstocks and refinery by-products produced under zone procedures (NPF option) have included: benzene, toluene, xylene, naphthalene, natural gas —liquified & gaseous, ethane, propane, butane, ethylene, propylene, butylene, butadiene, paraffin waxes & petroleum jelly, carbon black oil, petroleum coke, asphalt, sulfur, sulfuric acid, cumene, pseudocumene, n-pentane and isopentane, isoprene, dicyclopentadiene, styrene, other aromatic hydrocarbon mixtures, mixtures of hydrocarbons not elsewhere specified, and certain other saturated and unsaturated acyclic and cyclic hydrocarbons. (Although the refining/petrochemical plants vary in their petroleum product slate, the review would generally include the full range of products listed above for all refineries.)

Zone procedures exempt the refineries from Customs duty payments on the foreign products used in exports. On domestic sales, the NPF option allows the companies to choose the Customs duty rates that apply to certain petrochemical feedstocks and refinery by-products (HTSUS duty rates for most of these products are zero) by admitting incoming foreign crude oil and natural gas condensate in non-privileged foreign status. Such petrochemicals and by-products account for about 25 to 30 percent of refinery activity, on average. The duty rates on inputs range from 5.25¢/barrel to 10.5¢/barrel. Duties on inputs used to make fuel products (motor gasoline, jet fuel, blendstocks), which constitute some 70 to 75 percent of production, will continue to be dutiable at the crude oil rate. The applications indicate that the continuation of authority to elect non-privileged foreign status will contribute to the refineries' international competitiveness.

Board order	Subzone	Company	Location	Docket No.
Grantee: Port of Long Beach, California
1050	50G	Shell Oil Products U.S.	Los Angeles, CA	Doc. 54(1)-04
Grantee: Port of Corpus Christi Authority
1086	122N	Equistar Chemicals, LP	Nueces Co., TX	Doc. 54(2)-04
Grantee: Port of Freeport, Texas
1087	149F	Equistar Chemicals, LP	Brazoria Co., TX	Doc. 54(3)-04
1088	149G	Dow Chemical Company	Brazoria Co., TX	Doc. 54(3)-04
Grantee: Board of Harbor Commissioners of the City of Los Angeles
1032	202C	ConocoPhillips Company	Los Angeles, CA	Fov. 54(5)-04

In accordance with the Board's regulations, a member of the FTZ Staff has been designated examiner to investigate the requests and report to the Board.

Public comment on these proposals is invited from interested parties. Submissions (original and 3 copies) shall be addressed to the Board's Executive Secretary at one of the following addresses:

1. Submissions Via Express/Package Delivery Services: Foreign-Trade-Zones Board, U.S. Department of Commerce, Franklin Court Building—Suite 4100W, 1099 14th St. NW., Washington, DC 20005; or

2. Submissions Via the U.S. Postal Service: Foreign-Trade-Zones Board, U.S. Department of Commerce, FCB—Suite 4100W, 1401 Constitution Ave. NW., Washington, DC 20230.

The closing period for their receipt is February 7, 2005. Rebuttal comments in response to material submitted during the foregoing period may be submitted during the subsequent 15-day period (to February 22, 2005).

Copies of the requests will be available for public inspection at the Office of the Foreign-Trade Zones Board's Executive Secretary at address Number 1 listed above.

Dated: December 2, 2004.

Dennis Puccinelli,

Executive Secretary.