Foreign-Trade Zone 158-Tupelo, Mississippi; Notification of Proposed Production Activity; Bauhaus Furniture Group, LLC; H.M. Richards Company, Inc.; Lane Home Furniture; Morgan Fabrics Corporation (Upholstered Furniture)

The Greater Mississippi Foreign-Trade Zone, Inc., grantee of FTZ 158, submitted a notification of proposed production activity to the FTZ Board on behalf of Bauhaus Furniture Group, LLC (Bauhaus), H.M. Richards Company, Inc. (HMRI), Lane Home Furniture (Lane), and Morgan Fabrics Corporation (Morgan) within FTZ 158 in the greater Tupelo, Mississippi, area. The notification conforming to the requirements of the regulations of the FTZ Board (15 CFR 400.22) was received on June 17, 2016.

Bauhaus, HMRI, Lane, and Morgan currently have authority to conduct cut-and-sew activity using certain foreign micro-denier suede upholstery fabrics to produce upholstered furniture and related parts (upholstery cover sets) on a restricted basis (see B-29-2013, B-21-2013, B-28-2013, 78 FR 49254-49255, August 13, 2013; and, Board Order 1877, 78 FR 5773, January 28, 2013). The companies' authority allows for the production of upholstered furniture (chairs, seats, sofas, sleep sofas, and sectionals) with scopes of authority that only provide FTZ savings on a limited quantity of foreign origin, micro-denier suede upholstery fabric finished with a hot caustic soda solution process (i.e., authorized fabrics). All foreign upholstery fabrics other than micro-denier suede finished with a hot caustic soda solution process (i.e., unauthorized fabrics) used in Bauhaus, HMRI, Lane, and Morgan's production within FTZ 158 are subject to full customs duties.

The current request seeks to add certain polyurethane-type fabrics to the scope of authority. Pursuant to 15 CFR 400.14(b), additional FTZ authority would be limited to the specific foreign-status materials and components and specific finished products described in the submitted notification (as described below) and subsequently authorized by the FTZ Board.

Production under FTZ procedures could exempt Bauhaus, HMRI, Lane, and Morgan from customs duty payments on the foreign-status fabrics used in export production. On domestic sales, Bauhaus, HMRI, Lane, and Morgan would be able to apply the finished upholstery cover set (i.e., furniture part) or finished furniture duty rate (free) for the previously authorized fabrics and the additional fabrics (indicated below). Customs duties also could possibly be deferred or reduced on foreign-status production equipment.

The expanded scope of authority to admit foreign-status fabrics to FTZ 158 in nonprivileged foreign status (19 CFR 146.42) would only involve polyurethane fabrics backed with ground leather (5903.20.2500) and wet coagulation process 100 percent polyurethane coated fabrics (5903.20.2500), as detailed in the notification (duty rate: 7.5%). All other foreign, unauthorized upholstery fabrics used in the companies' production activity would continue to be admitted to the zone in domestic (duty paid) status.

Public comment is invited from interested parties. Submissions shall be addressed to the FTZ Board's Executive Secretary at the address below. The closing period for their receipt is August 9, 2016.

A copy of the notification will be available for public inspection at the Office of the Executive Secretary, Foreign-Trade Zones Board, Room 21013, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230-0002, and in the “Reading Room” section of the FTZ Board's Web site, which is accessible via www.trade.gov/ftz .

For further information, contact Elizabeth Whiteman at Elizabeth.Whiteman@trade.gov or (202) 482-0473.