46 U.S.C. § 55102; Continuity of Transportation; The Bermuda, 70 U.S. 514 (1865); 34 Op. Atty. Gen. 335 (1924)

HQ H040478 December 2, 2008 VES-3-OT:RR:BSTC:CCI H040478 Category: Carriers Constantine G. Papavizas, Esquire Winston and Strawn, LLP 1700 K Street, N.W. Washington, D.C. 2006-3817 Re: 46 U.S.C. § 55102; Continuity of Transportation; The Bermuda, 70 U.S. 514 (1865); 34 Op. Atty. Gen. 335 (1924) Dear Mr. Papavizas: This letter is in response to your October 2, 2008, ruling request regarding the coastwise transportation of the petroleum product described below by your client, BP Products North America, Inc. ("BPPNA"). Our decision follows. FACTS The following facts are from your October 2, 2008, letter, and the exhibits attached thereto, as well as your electronic mail of October 30th, November 10th, and November 18, 2008. In March 2008, a domestic company exported high density slurry from Houston, Texas to Rotterdam, The Netherlands for sale to BP Oil International Limited ("BP Oil"). Upon receipt, BP Oil subsequently sold the slurry to BP Nederland which then had the slurry blended with fuel oil for the purpose of creating bunker fuel oil to be sold in Rotterdam. On April 29, 2008, the Dutch government informed BP Oil that the slurry and any blend of such would be considered hazardous waste rather than bunker fuel oil. In addition, the Dutch government ordered BP Oil to dispose of the slurry and the slurry blend. As such, BP Oil has made arrangements to sell the slurry blend to BPPNA and transport it back to a different berth in Houston for reprocessing. ISSUE Whether the slurry described above which has been transported from Houston, Texas to Rotterdam, The Netherlands in a foreign-flag vessel, may be transported to a different berth in Houston from where it was laden without violating 19 U.S.C. § 55102. LAW and ANALYSIS The coastwise laws generally apply to points in the territorial sea, which is defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline. See 33 C.F.R. § 2.22(a)(2)(2008). The coastwise law pertaining to the transportation of merchandise, 46 U.S.C. § 55102, also known as the "Jones Act", provides in pertinent part, that the transportation of merchandise between points in the United States embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any vessel other than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States, i.e. a coastwise-qualified vessel, is prohibited. The plain meaning of the statute prohibits merchandise from being transported on a non-coastwise-qualified vessel between points in the United States. The words "either directly or via a foreign port" were inserted in the original statute (46 U.S.C. App. § 883) by the Congress in 1893. Congress, seeing how easily the protection to American shipping would be vitiated by a simple transshipment of the same cargo, inserted these words to prohibit such transshipments. The U.S. Customs and Border Protection ("CBP") Regulations promulgated under the authority of 46 U.S.C. § 55102 provide that a coastwise transportation of merchandise takes place when merchandise laden at a point embraced within the coastwise laws ("coastwise point") is unladen at another coastwise point, regardless of origin or ultimate destination. See 19 C.F.R. § 4.80b(a)(2008). In determining whether merchandise which is transported from one point in the United States, to a point in a foreign country, and then to another point in the United States is subject to the prohibition in section 55102 by virtue of being transported between coastwise points "via a foreign point," we have relied upon the holding of the Supreme Court in The Bermuda, 70 U.S. 514 (1865). In that decision, the Court held that "[a] transportation from one coastwise point to another remains continuous, so long as intent remains unchanged, no matter what stoppages or transshipments intervene." 70 U.S. at 553. The Court went on to reaffirm the longstanding rule that "[e]ven the landing of goods and payment of duties does not interrupt the continuity of the voyage of the cargo, unless there be an honest intention to bring them into the common stock of the country. If there be an intention, either formed at time of original shipment, or afterwards, to send the goods forward to an unlawful destination, the continuity of the voyage will not be broken, as to the cargo, by any transactions at the intermediate port. 70 U.S. at 554. The Attorney General of the United States relied upon The Bermuda in his consideration of the applicability of section 883 (55102) to certain transportation. In 34 Op. Atty. Gen. 335 (1924), the Attorney General considered the applicability of section 883 (55102) to the transportation of grain from Chicago or Milwaukee to a Canadian port in non-coastwise-qualified vessels. The grain was unladen into an elevator where it remained for an indefinite time until it was loaded into railroad cars for transportation by rail to points in New England. In some instances the grain had already been sold for delivery at an American port when it reached the Canadian port, while in other instances there was an existing intent to ship the grain to the Canadian elevator for storage in anticipation of demands for future deliveries for domestic consumption in Canada, for export abroad, or for sale and delivery in the United States. The Attorney General's opinion was requested as to whether the transportation of the grain in the manner described violated section 883 (55102). As to grain which had been consigned through the Canadian port to a point in the United States or which had been shipped with the intention that the grain should ultimately be shipped to a point in the United States, it was the Attorney General's opinion "that such transportation is without a doubt in violation of [section 883]." 34 Op. Atty. Gen. at 357. When there was no intent by the shipper to transship the grain to a United States port or place, it was the Attorney General's opinion that "only general rules of law may be laid down." Id. at 362. The general rule of law given by the Attorney General in this case was that "the intention of the shipper is the controlling factor." Id. at 363. The Attorney General also stated that: ". . . [W]hether the facts presented in any particular case come within such rules must be determined by the officer charged with the administration of that Act." Id. at 362. CBP is the agency charged with the administration of § 55102. We have issued a number of rulings on the applicability of § 55102 to the transportation of merchandise between coastwise points via a foreign port. See HQ 116616 (Feb. 27, 2006), HQ 116557 (Oct. 25, 2005), HQ 116533 (Sept. 8, 2005), (holding that continuity of transportation was broken when the merchandise failed foreign government inspection). In the foregoing rulings, we have held, as did the Supreme Court in The Bermuda, that an "honest intention to bring the goods [transported] into the common stock of the [intermediate foreign] country" is required to break the continuity of transportation between coastwise points via a foreign point. We have also held that when, at the time of shipment of merchandise from the United States to an intermediate foreign port, there existed the expectation that a substantial portion of the merchandise would not be consumed in the country of the foreign port, entry through the foreign country's customs and payment of duty is not considered to break the continuity of the transportation when any of the merchandise is transported onward to a second point in the United States. An affidavit dated September 23, 2008, provided by the Fuel Oil Trading Manager BP Oil states that it purchased slurry from its supplier for resale to BP Nederland on March 5, 2008. The foregoing affidavit is supported, in part, by the sales confirmation, dated March 5, 2008, between BP Oil and its supplier, which provides the slurry in question was to be delivered between March 17, 2008 and March 31, 2008 to the Vopak Europort, in Rotterdam, The Netherlands. The affidavit of the European ROU Manager Fuels, BP Nederland, also dated September 23, 2008, states that it purchased the slurry from BP Oil for a March 2008 delivery and blended it with Russian fuel oil. A letter addressed to BP Netherlands, dated April 29, 2008, from the VROM Inspectorate of The Netherlands states that it considers the subject merchandise hazardous waste and that it should be disposed of according to Dutch regulations. Upon a review of all of the relevant facts, we conclude that BPPNA has provided information and documentation which is adequate to establish that there was an intention on the part of the various involved parties for the subject merchandise to enter the commerce of The Netherlands. Therefore, we find that the continuity of transportation of the merchandise was broken by the classification of the merchandise as hazardous waste by the government of The Netherlands and its resultant disposal order. Accordingly, the use of a non-coastwise-qualified vessel for any portion of the transportation of the merchandise which failed inspection in The Netherlands back to other than the U.S. point of lading will not be a violation of 46 U.S.C. § 55102. HOLDING BPPNA has provided information and documentation which is adequate to establish that there was an intention on the part of the various involved parties for the subject merchandise to enter the commerce of The Netherlands. Therefore, we find that the continuity of transportation of the merchandise was broken by denial of entry by the government of The Netherlands. Accordingly, the use of a non-coastwise-qualified vessel for any portion of the transportation of the merchandise which failed inspection in The Netherlands back to other than the U.S. point of lading will not be a violation of 46 U.S.C. § 55102. Sincerely, Glen E. Vereb, Chief Cargo Security, Carriers and Immigration Branch