OT:RR:BSTC:CCR H300267 ASZ
William N. Myhre
K&L Gates LLP
1601 K Street, NW
Washington, DC 20006
RE: 46 U.S.C. § 55102; 19 C.F.R. § 4.80b(a); New and Different Product; Proposed Transportation of Sinter Feed.
Dear Mr. Myhre:
This is in response to your August 21, 2018, ruling request on behalf of your client, The Master’s Group, Inc. (“TMG”), 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 August 21, 2018 ruling request and your September 10, 2018, October 1, 2018, October 15, 2018, October 18, 2018, and November 1, 2018 e-mails to this office.
Your client, a broker processor in the raw materials, by-products and recycling business, facilitates transactions between customers and suppliers for a variety of metals, minerals, and other materials. In the present case, your client is facilitating a transaction between Stelco Inc. (“Stelco”) and ArcelorMittal USA (“ArcelorMittal”) for the processing of iron ore pellet chips and fines (“pellet chips”) into sinter feed.
ArcelorMittal requires sinter feed to support operations at its sinter plant facilities in Burns Harbor and Indiana Harbor, Indiana. Over the past two years, iron ore pellets were transported by non-coastwise-qualified vessels from [] to Stelco’s Lake Erie Works facilities in Nanticoke, Ontario, Canada, where the use and handling of the iron ore pellets in Stelco’s blast furnace results in the creation of iron ore pellet chips and fines. While in Canada, the Waterford Group will process the resulting pellet chips and fines into sinter feed through a crushing operation. Once processing is complete, non-coastwise-qualified vessels will transport the sinter feed to sinter plant facilities in Burns Harbor and Indiana Harbor, Indiana.
ISSUE
Whether the proposed processing operations would result in the creation of a “new and different product” within the meaning of 19 C.F.R. § 4.80b(a), such that the proposed transportation by non-coastwise-qualified vessels 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 Laboratories & Scientific Services Directorate (“LSSD”) as to whether the processing you describe results in a new and different product. The LSSD determined that the crushing of the chips and fines of the U.S. origin iron ore pellets to make iron ore sinter feed would constitute a "new and different product" of commerce. In doing so, the LSSD stated that:
Per the Kirk-Othmer Encyclopedia of Chemical Technology, Fifth Edition, it is noted that pelletized iron ore, sintered iron ore and sinter feed iron ore are all primary forms of crude iron ore used in steel manufacture. Prior to steel making[,] iron ore is beneficiated (i.e. the removal of most of the sand, clay and other impurities found as the mineral is taken out of the ground) and then ground to a consistent sieve size. However, once the ore is beneficiated and ground to an acceptable size, the powder is usually too fine to be used directly into the steel making process or other processes that use iron ore. In order to make the iron ore powder usable in most manufacturing processes, it must be agglomerated into different primary forms. These forms are usually pellets, sintered particles or briquettes. The type of agglomeration required is determined by the specific processing the iron ore will undergo. Some processes call for agglomeration in the form of pellets, some processes will call for the sintered form of agglomeration, and some processes will use the briquetted form of the iron ore.
In the instant case, the products are different shapes of agglomerated iron ore, both the iron ore pellets shipped from the United States and the iron ore sinter feed returned to the United States are recognized as ''primary forms of iron ore", in our opinion. These primary iron ores are produced in different forms to accommodate the different types of furnaces into which it is placed and the processes that the ore must undergo. In addition, the intermediate pellet chips and fines cannot be used in the processes where either iron ore pellets (e.g. chips and fines are too small) or iron ore sinter (e.g. chips and fines are either too large or irregularly shaped) are required. Accordingly, we believe the iron ore pellets and the sinter feed are different in shape and presentation rather than a difference in material.
Overall, we are of the opinion that […] crushing the chips and fines of the U.S. origin iron ore pellets to make iron ore sinter feed would constitute a “new and different product” of commerce.
Pursuant to 19 C.F.R. § 4.80b(a), and in adherence to the LSSD findings, we find that the proposed processing operations will result in a “new and different product.” Therefore, the proposed transportation is not considered coastwise transportation within the meaning of 46 U.S.C. § 55102.
We emphasize that our determination is based upon the information provided, is for purposes of 19 CFR § 4.80b(a) only, and is limited to finding that the subject products proposed to be transported from Canada to the United States for the purposes described above are considered “new and different products” within the meaning of 19 C.F.R. § 4.80b(a). Furthermore, our determination is limited to the subject products explicitly described in your ruling submission within the meaning of 19 C.F.R. § 4.80b(a).
HOLDING
Based on the information provided, the proposed processing operations would result in the creation of a new and different product within the meaning of 19 C.F.R. § 4.80b(a); therefore, the proposed transportation by a non-coastwise-qualified vessel would not 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