ENT-1-03 CO:R:C:E 223306 C
Andrea Grant, Esq.
Verner, Liipfert, Bernard, McPherson and Hand
901 15th Street, N.W.
Suite 700
Washington, D.C. 20005-2301
RE: Your letter of January 31, 1991, concerning 19 CFR
151.42(a)(2) - ullage taking for measurement of petroleum; TD 80-
142; TD 87-39
Dear Ms. Grant:
This responds to the referenced letter, wherein you
requested an interpretation of section 151.42(a)(2) of the
Customs Regulations, pertaining to the taking of ullages for
reporting purposes only in circumstances where the methods
specified in section 151.42(a)(1) are unavailable or inadequate.
We have reviewed your submissions and our response follows.
Briefly, we set forth the proposed scenario as follows: A
tanker containing No. 6 fuel oil will arrive at Stapleton
Anchorage, where a quantity of fuel oil will be lightered for
transport into New York harbor for entry. The quantity of fuel
oil on the tanker will be measured prior to and following the
lightering. The tanker will proceed to Central Hudson Gas &
Electric's dock at Rosten. Upon arrival there, the quantity will
be measured again. Because the No. 6 fuel oil on the tanker does
not have the proper specifications to be used at the utility's
facility, your client proposes to load No. 2 fuel oil onto the
tanker to be blended with the No. 6 fuel oil while still on the
tanker. The No. 2 fuel oil will be loaded onto the tanker from a
barge positioned along side the tanker by a line-blending
procedure. This blending will produce a fuel oil with the
desired specifications which can then be offloaded into the shore
tanks. The quantity of No. 2 fuel oil on the barge will be
measured prior to line-blending.
Your client proposes that Customs employ ullage taking for
reporting purposes, rather than the customary shore tank gauging
method that is specified in section 151.42(a)(1)(a)(ii). This
proposal is based on the assertion that shore tank gauging is
inadequate in the circumstances and that ullage taking therefore
is an acceptable method for measurement. Apparently, there is a
question as to whether or not this assertion is correct.
In Treasury Decision (TD) 80-142, the regulations regarding
petroleum measurement were modified. (See T.D. 80-142, 14 Cust.
Bull. 274.) Prior to the TD, the regulation specified six
methods that could be freely employed by the district director to
control the unlading and measurement of petroleum (section
151.42(a) - (f)). One of these methods was the taking of ullages
(section 151.42(f)). After the amendment, these specified
methods were reduced to four (section 151.42(a)(1)(i) - (iv))
(three in the current regulation), and ullage taking was deleted.
Ullage taking was removed to section 151.42(a)(2) where it
resides in the current regulation. There, the district director
is authorized to employ ullage taking as a means of measurement
for reporting purposes only where the specified methods (in
151.41(a)(1)) are either unavailable or inadequate.
Ullage taking was removed to section 151.42(a)(2) because
Customs decided - prompted by public comment solicited during the
amendment process - that it was not a sufficiently reliable
method for reporting purposes. Nonetheless, Customs felt that it
was accurate enough to be used where other methods could not be.
In addition, it was retained in the regulation to be used in
every case as an indication of the accuracy of the quantity
manifested and shore metering and tank gauge calibrations. (See
Id. at 283.)
It appears that ullage taking was removed from the list of
methods specified in section 151.42(a)(1), and placed in section
151.42(a)(2), so that Customs could gain stricter control of its
use. The authority to employ it, however, remains with the
district director. In the pre-amendment regulation, the district
director could authorize any of the methods specified in the
regulation based on "local conditions." While there is no such
guidance for authorizing use of ullage taking in the post-
amendment regulation (section 151.42(a)(2)), we believe that the
district director is still expected to consider local conditions
in making a determination. Now, however, the determination to be
made is whether or not the other methods, in this case shore tank
gauging, are either unavailable or inadequate.
We are inclined to believe that the circumstances set forth
in this case - that the utility does not have shore tanks with
the capacity to blend No. 6 fuel oil with No. 2 fuel oil and that
the proposal is designed to address a need that could affect the
public safety - are legitimate "local conditions" that can be
considered by the district director in making a determination.
We are disinclined to go further than this because we feel that
interpreting section 151.42(a)(2) to rigidly limit the
authorization of ullage taking to only situations where, for
example, the benefit is to Customs or employment of other methods
is literally impossible is to impose too much of a restriction on
the district director who should properly consider local
circumstances and problems. On the other hand, there is a
legitimate question as to how lenient Customs should be in
permitting ullage taking for reporting purposes under section
151.42(a)(2). Ultimately, it involves a judgment call by the
district director.
We believe that implementation of section 151.42(a)(2)
should be governed by district directors and operational
considerations, rather than by a legal ruling or limiting
interpretation fashioned by the Office of Regulations and
Rulings. The substance of our response is that the decision is
up to district directors, but factors such as those raised in the
instant case are appropriately considered by the district
director as he/she weighs "local conditions" against Customs need
to record accurate measurements and to administer the program.
Regarding your interpretation of section 151.42(b)(3) and
(4), we agree that the amendment of section 151.42(b) as
published in T.D. 87-39, which changed the word "shall" to "may,"
was intended to provide Customs with the flexibility to determine
when Customs officers will perform or witness ullaging or
gauging. (See T.D. 87-39, 21 Cust. Bull. 58, 77.)
If you have any further questions or require further
assistance, please contact this office. (566-5856).
Sincerely,
William G. Rosoff
Chief
Entry Rulings Branch