LIQ-15 RR:CR:DR
230019RDC
Jeanne M. Grasso, Esq.
Blank Rome LLP
600 New Hampshire Ave N.W.
Washington, D.C. 20037
Dear Ms. Grasso:
This is in response to your request dated June 13, 2003, on behalf of your client FDC Holdings, Inc. (“FDC”), for a ruling as to whether Bayou Chico is a port for purposes of the Harbor Maintenance Fee (“HMF”).
FACTS:
According to the submission, FDC owns and operates the Pensacola Marine Complex (“PSMC”) which is a marine waterfront facility along Bayou Chico in Pensacola, Florida. FDC states that:
“Bayou Chico is off the main (deep draft) channel of Escambia Bay, which leads to the Port of Pensacola. According to the Port of Pensacola’s Internet site, the Port of Pensacola is a 50-acre area located near the Pensacola Bay Bridge and does not include Bayou Chico . . . . The maximum depth of the Bayou Chico channel is 13.6 feet . . . and thus it is only deep enough to handle sea-going barges and small cargo vessels. The PSMC is approximately 2.5 miles to the southwest of the Port of Pensacola, and approximately 32 miles from the entrance of Bayou Chico to Escambia Bay.”
FDC states that according to the U.S. Army Corps of Engineers, (“USACE”), “Bayou Chico has been dredged only once since 1977” and that was in 1995 to remove sediment accumulated during a hurricane which made the channel unnavigable for boats in the local marinas.
It is FDC’s position that Bayou Chico is not a port for purposes of the Harbor Maintenance Fee because, “it is a private facility on an inland waterway more than two miles from the Port of Pensacola and thus is not part of the Port of Pensacola; [Chico Bayou] is not on the list of port subject to the HMF in the Customs regulations;” and because Bayou Chico has been dredged by the USACE only once since 1977 as described above. FDC advised that the PSMC “conducts and funds dredging in Bayou Chico as required, generally along its bulkhead,” with dredging permits from the USACE. Further, FDC argues that Bayou Chico is a commercial port with depths of less than 14 feet and such ports are not subject to the HMF. FDC also contends that “if a listed port is intended to cover an area greater than defined by the port’s boundaries, then such extended area has been noted in the regulations. There is no such notation for the Port of Pensacola.”
FDC has provided a map, specifically a coast survey of Pensacola Bay which was supplied by the Department of Commerce, National Oceanic and Atmospheric Administration, (“NOAA”), National Ocean Service. On the NOAA map FDC has marked the location of the PSMC facility on the eastern shore of Bayou Chico, to the north of the Barrancas Avenue bridge which crosses Chico Bayou at a southern point, close to where the mouth of the channel enters the bay. Two additional maps of the Pensacola Bay were supplied to us, one by the Port Director, Pensacola, and one by the U.S. Army Corps of Engineers (“ACE”). The ACE map describes Bayou Chico as a channel.
All the maps show Bayou Chico as a roughly Y-shaped body of water west of the city of Pensacola and extending northwest of Pensacola Bay. The mouth of the channel opens onto Pensacola Bay at the channel’s most southern point. On the map provided by the Port Director, the western boundary of the Pensacola city limit is shown as bisecting Bayou Chico, i.e., dividing the canal into two roughly equal parts, the eastern portion being within Pensacola City limits and the western portion outside the city limits. Hence, according to this map and confirmed by the a representative from Pensacola’s city planning board, the eastern shore of Bayou Chico, and hence PSMC, is within Pensacola city limits and the western shore is outside such limits.
ISSUES:
Is “port use” as described in § 24.24 at the Pensacola Marine Complex in Bayou Chico, Pensacola, Florida, subject to the Harbor Maintenance Fee?
LAW AND ANALYSIS:
The statutory authority for the Harbor Maintenance Fee is found in the Water Resources Development Act of 1986 (Public Law 99-662; 100 Stat. 4082, 4266; 26 U.S.C. 4461 et seq.) The Secretary of the Army is responsible for its administration. The purpose of the fee, as stated in the implementing Senate Finance Committee report, is to finance the statutory trust fund, the Harbor Maintenance Trust Fund (26 U.S.C. § 9505) that is used to make the Nation’s water transportation system more efficient. Under this statute, a fee is imposed for the use of a port, defined as any channel or harbor or component thereof in the United States which is not an inland waterway, is open to public navigation, and at which Federal funds have been used since 1977 for construction, maintenance, or operation. Harbor construction, operation and maintenance, under the Act is defined in terms of navigation projects involving dredging. Eligible operations and maintenance is limited to dredging and the disposal of dredged materials.
The Harbor Maintenance Fee, provided for at 26 U.S.C. §§ 4461, 4462, supplies federal funding for the maintenance of any channel or harbor in the United States which is not an inland waterway and is open to public navigation. Specifically, 26 § U.S.C. 4461(a) and (b), as amended by 11214 of the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508), provide for the assessment of a tax (i.e., HMF) on any port use in an amount equal to 0.125 percent of the value of the commercial cargo involved. The applicable regulatory authority promulgated by Customs pursuant to 26 U.S.C. § 4462(h) to implement the above statutory provisions is § 24.24, Customs Regulations (19 C.F.R. § 24.24). 19 C.F.R. § 24.24(a), Harbor Maintenance Fee, provides:
(a) Fee. Commercial cargo loaded on or unloaded from a commercial vessel is subject to a port use fee of 0.125 percent (.00125) of its value if the loading or unloading occurs at a port within the definition of this section, unless exempt under paragraph (c) of this section or one of the special rules in paragraph (d) of this section is applicable.
Port is defined in 19 C.F.R. § 24.24(b)(1) as
Port means any channel or harbor (or component thereof) in the customs territory of the United States which is not an inland waterway and is open to public navigation and at which Federal funds have been used since 1977 for construction, maintenance or operation. It does not include channels or harbors deauthorized by Federal law before 1985. A complete list of the ports subject to the harbor maintenance fee is set forth below: . . . Pensacola.
FDC contends that Bayou Chico is not a port as defined in 19 C.F.R. § 24.24(b)(1) and therefore “merchandise loaded or unloaded from commercial vessels at [FDC’s PSMC] facility on Bayou Chico is not subject to the HMF.” FDC concludes that because Bayou Chico is not listed in § 24.24(b)(1) and is not part of the Port of Pensacola which is included as a port subject to the HMF in 19 C.F.R. § 24.24(b)(1), Bayou Chico is not a port for purposes of the HMF. FDC is correct in that Bayou Chico is not included in the list of ports provided in the Customs Regulations. Therefore, it must be determined whether Bayou Chico is included as part of the Port of Pensacola which is listed as a port subject to the HMF.
In HRL 223593 (May 11, 1992), we determined that a company-owned dock located at Cherry Point, Washington, was not within the geographical boundaries of the Port of Bellingham. Bellingham was listed as being subject to the harbor maintenance fee, with a note included in section 24.24 defining the port of Bellingham as: "Bellingham includes all of Bellingham Bay and tributary waters north of Chuchanut Bay on the east, and Portage Island on the west." Because the Cherry Point is located miles west of the western boundary of Portage Island and miles north of Bellingham Bay, we held that Cherry Point was not within the boundaries of the Port of Bellingham. In HRL 229506 (May 24, 2002), we distinguished the facts in HRL 223593 from those presented in that case. In HRL 229506 we held that “insofar as Calvert Cliffs falls within the geographical boundary of the Chesapeake Bay, the merchandise unloaded there is subject to the HMF.” The ports in the Chesapeake Bay listed in § 24.24(b)(1), as being subject to the HMF, includes “all Maryland points on the Chesapeake Bay and its tributary waters except the Potomac River." According to the port area map, Calvert Cliffs was located on the Chesapeake Bay and therefore, we concluded, was within the geographical boundary outlined in § 24.24(b)(1).
In both of these cases, § 24.24(b)(1) contained information aside from simply listing the port’s name, which helped to explain the geographical boundary of the port at issue for HMF purposes. Therefore, the analysis in those cases was limited to whether the ports as described in the Customs’ Regulations included Cherry Point or Calvert Cliffs, respectively. Since § 24.24(b)(1) contains no additional explanation with regard to the Port of Pensacola the analysis here must differ from the cases described above.
FDC states, “according to the Port of Pensacola’s Internet site, the Port of Pensacola is a 50-acre area located near the Pensacola Bay Bridge and does not include Bayou Chico . . . .” Thus, FDC contends that the Port of Pensacola for purposes of the Harbor Maintenance Fee is limited to that geographic area controlled by the Pensacola Port Authority which was created by the Florida legislature, as shown on the Port of Pensacola’s web page. This web page describes the port’s facility as “approximately 50 acres” and furnished with various equipment and facilities for the handling of cargo and marine-related operations.
We reject the notion that Customs’ authority to collect the HMF, as created by Congress, is limited by the physical boundaries defined by Pensacola’s Port Authority, a Florida-state created entity. The definition of a port provided in § 24.24(b)(1) for purposes of the HMF includes “any channel or harbor or component thereof.” Bayou Chico can be characterized as a channel within the Port of Pensacola. There is no requirement that there exist any facilities whatsoever within that port or that the area be under the supervision of a port authority. Therefore, it is irrelevant to our analysis to consider the geographic limits of the Port of Pensacola as determined by the Pensacola Port Authority.
FDC also concludes that Chico Bayou is not part of the Port of Pensacola because “if a listed port is intended to cover an area greater than defined by the port’s boundaries, then such extended area has been noted in the regulations. There is no such notation for the Port of Pensacola.” FDC offers no support for its conclusion that “if a listed port is intended to cover an area greater than defined by the port’s boundaries, then such extended area has been noted in the regulations.” We are aware of no such requirement. Moreover, in reaching this conclusion, FDC presupposes that the Pensacola Port is defined for HMF purposes by the Port Authority of Pensacola’s facilities. We have already stated that this is not the case.
The boundaries of a Customs port of entry have been held to coincide with the territory within the corporate limits of the city designated as a Customs Port (See T.D. 85-163). Thus, the Customs Port of Pensacola’s boundaries are at least equal to the City of Pensacola’s boundaries. As stated above, the Pensacola city limit bisects Bayou Chico and PSMC, located on the eastern shore of the channel is within Pensacola city limits. Hence, at a minimum, PSMC is located within the Port of Pensacola’s geographic limits and activity there is subject to the HMF.
FDC also argues that Bayou Chico is a commercial port with depths of less than 14 feet and such ports are not subject to the HMF. It is true that T.D. 97-45 (April 17, 1995), includes the statement that “commercial ports with depths of less than 14 feet were not included on the list” of ports subject to the HMF provided in § 24.24. However, again FDC presupposes that Bayou Chico is a port, separate and distinct from the Port of Pensacola; it is not. Bayou Chico is a channel within the Port of Pensacola and thus “port use” as described in § 24.24 at Bayou Chico is subject to the HMF. FDC also states that Bayou Chico is only deep enough to handle sea-going barges and small cargo vessels. Since neither the statute or the Customs Regulations define “port” for the applicability of the HMF by the type of vehicle that uses the facility, we find this information irrelevant.
We are further convinced that, at a minimum, the PMSC is within the limits of the port of Pensacola because the USACE has in fact dredged Bayou Chico since 1977. (See 26 U.S.C. § 4462(a)(1)(B)). And in fact, the maintenance of Bayou Chico is an authorized project of the Army Corps of Engineers. That is, the maintenance of the footprint of the channel by the USACE was authorized by Congress with the River and Harbor Act of 1962 (87th Congress, 2nd Session (76 Stat. 1173), which provided in part as follows:
That the following works of improvement of rivers and harbors and other waterways for navigation, flood control, and other purposes are hereby adopted and authorized to be prosecuted under the direction of the Secretary of the Army and supervision of the Chief of Engineers, in accordance with the plans and subject to the conditions recommended by the Chief of Engineers in the respective reports hereinafter designated . . .
(River and Harbor Act of 1962, Pub. L. No. 87-874, 76 Stat. 1173, 1174 (1962) (partially codified at 33 U.S.C. § 426e-g (1988)). Hence, Bayou Chico is a Federally Authorized Navigational Channel and maintained by the U.S. Army Corps of Engineers. Moreover, according to the USACE, Mobile District, a hydrographic condition survey of Bayou Chico was prepared by the USACE in December 2002, in preparation for the future dredging of this channel. (A copy of this survey is available at www.sam.usace.army.mil/OPGE/Condition%20
Surveys/Florida/FL-DLdefault.htm).
Finally, the fact that PSMC performs routine dredging of Chico Bayou, generally along its bulkhead, is irrelevant to the application of the HMF. Businesses located along and using a waterway routinely dredge that waterway, especially the bulkhead, to make access to the shore possible for vessels. The USACE is only responsible for the footprint of the waterway.
HOLDING:
Any “port use” as described in § 24.24 at the Pensacola Marine Complex in Bayou Chico, Pensacola, Florida, is subject to the Harbor Maintenance Fee because the Pensacola Marine Complex in Bayou Chico is within the port limits of the Port of Pensacola, Florida.
Sincerely,
Myles Harmon, Director
Commercial Rulings Division