Coastwise transportation; 46 U.S.C. §§ 55102; 19 C.F.R. § 4.80b(a); storage vessel.

HQ H234656 November 5, 2012 VES-3-15 OT:RR:BSTC:CCR H234656 LLB Category: Carriers William N. Myhre, Esquire K&L Gates LLP 1601 K Street, N.W. Washington, D.C. 20006 RE: Coastwise transportation; 46 U.S.C. §§ 55102; 19 C.F.R. § 4.80b(a); storage vessel. Dear Mr. Myhre: This letter is in response to your October 24, 2012, ruling request on behalf of your client, [ ]. In your request, you inquire whether the use of a foreign-flagged vessel as a storage facility, as described below, would violate the coastwise laws. Our decision follows. FACTS The following facts are extracted from your October 24, 2012, ruling request. Your client proposes to use a stationary foreign-flagged storage vessel to supply liquefied petroleum gas (LPG) to a land-based facility. During this time period, the storage vessel will be replenished with foreign-laden LPG via pipeline from another foreign-flagged vessel that will be located at an adjacent pier. In the event the storage vessel needs to detach from the dock due to severe weather or other emergency, it will move away from the dock and then return to the same dock when the emergency concludes. ISSUE Whether the use of the foreign-flagged vessel to store liquefied petroleum gas, as described in the FACTS section above, is an engagement in the coastwise trade in violation of 46 U.S.C. § 55102 or 19 C.F.R. § 4.80b(a). LAW AND ANALYSIS Pursuant to 46 U.S.C. § 55102, in pertinent part: Except as otherwise provided in this chapter or chapter 121 of this title, 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 foreign port, unless the vessel— (1) is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and (2) has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement. Pursuant to 46 U.S.C. § 55102(a), "[m]"erchandise, includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material." As such, any cargo, regardless of its value or ownership, would be considered merchandise for the purpose of 46 U.S.C. § 55102. The Customs and Border Protection (CBP) regulations promulgated under the authority of 46 U.S.C. § 55102(a), provide in pertinent part: 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. 19 C.F.R. § 4.80b(a). With regard to the initial phase of the project, the transportation of LPG by the storage vessel from a foreign port to San Juan, Puerto Rico, there would be no violation of 46 U.S.C. § 55102, insofar as the LPG would not be transported between two points in the U.S. Subsequent, to its mooring in a stationary position, in the event of an emergency or severe weather, your client proposes to have the storage vessel move away from the dock and return to the same point at the original dock. In HQ 116007 (July 25, 2003), the ruling requester proposed loading butane onto a foreign-flagged storage vessel from its shore tanks at its refinery and then shifting to a lay berth or anchorage. Once the storage contract expired, the storage vessel would return to its original loading point at the same refinery and return the full cargo of butane to the shore tanks. CBP held that the use of the foreign-flagged storage vessel would not be an engagement in coastwise trade since the cargo was loaded and unloaded at the same coastwise point. See also HQ H024374 (Mar. 13, 2008) (holding oil loaded at a refinery which shifted to lay berth or anchorage and then returned to the same point at the refinery to unlade the oil did not violate 46 U.S.C. § 55102). Similarly, in the present case, should an emergency or severe whether arise, the LPG will be loaded at a coastwise point, transported to another point within territorial waters and then return to the same dock. Accordingly, such transportation would not violate 46 U.S.C. § 55102. HOLDING The use of the foreign-flagged vessel to store liquefied petroleum gas, as described in the FACTS section above, would not violate 46 U.S.C. § 55102 or 19 C.F.R. § 4.80b(a). Sincerely, George Frederick McCray Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Restricted Merchandise Branch Office of International Trade, Regulations & Rulings