VES-01-OT:RR:BSTC:CCR H265791 KLQ
Matthew J. Thomas
Blank Rome, LLP
Watergate, 600 New Hampshire Avenue, N.W.
Washington, D.C. 20037
RE: 46 U.S.C. § 55102; 19 C.F.R. § 4.80b(a); New and Different Product; Proposed Transportation of Processed Condensate; [ ]; Foreign-Origin Crude Oil.
Dear Mr. Thomas:
This is in response to your June 10, 2015, ruling request on behalf of your client, [ ], in which you request a ruling determining whether the proposed transportation by a non-coastwise-qualified vessel would constitute a violation of 46 U.S.C. § 55102. Our decision follows.
FACTS
The following facts are from your ruling request, dated June 10, 2015 and email to this office dated July 21, 2015. On or about [ ], your client proposes to transport processed condensate by non-coastwise-qualified vessel from [ ], a United States (“U.S.”) coastwise point, to a facility in a foreign place, [ ]. While in [ ], a foreign place, the processed condensate will be added to foreign-origin crude oil in an onshore tank and blended. On or about [ ], a non-coastwise-qualified vessel will transport the crude oil to [ ], a second U.S. coastwise point. Your client provided this office with its import and export specifications for these transportations.
ISSUE
Whether based on the import and export specifications provided, the proposed blending operations would result in the creation of a “new and different product” within the meaning of 19 C.F.R. § 4.80(b)a, such that the proposed transportation by a non-coastwise-qualified vessel would not be in violation of 46 U.S.C. § 55102.
LAW AND ANALYSIS
Pursuant to 46 U.S.C. § 55102, a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel has a coastwise endorsement.
(emphasis added).
Under 19 C.F.R. § 4.80b(a):
A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point, regardless of the origin or ultimate destination of the merchandise. However, merchandise is not transported coastwise if at an intermediate port or place other than a coastwise point (that is at a foreign port or place, or at a port or place in a territory or possession of the United States not subject to the coastwise laws), it is manufactured or processed into a new and different product, and the new and different product thereafter is transported to a coastwise point.
(emphasis added).
We have sought and received advice from the LSSD as to whether the processing you describe results in a new and different product. The LSSD determined that while there are slight differences between the processed condensate transported from [ ], the first U.S. coastwise point, and the crude oil transported to [ ], the second U.S. coastwise point, both products are crude oil. In fact, the entire “blending” operation consists of placing a crude oil product from the United States in a tank with another crude oil product, which results in a third crude oil product that closely resembles the first two crude oil products.
Pursuant to 19 C.F.R. § 4.80b(a), and in adherence to the LSSD findings, the proposed transportation would be in violation of 46 U.S.C. § 55102 because a non-coastwise-qualified vessel would transport the same product from [ ], the first U.S. coastwise point, to
[ ], the second U.S. coastwise point, via [ ], a foreign place.
HOLDING
Based on the import and export specifications provided, the proposed blending operations would not result in the creation of a new and different product within the meaning of 19 C.F.R § 4.80(b)a; therefore, the proposed transportation by a non-coastwise-qualified vessel would be a violation of 46 U.S.C. § 55102.
Sincerely,
Lisa L. Burley
Chief/Supervisory Attorney-Advisor
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations and Rulings
U.S. Customs and Border Protection