46 U.S.C. § 55102; 19 C.F.R. §4.80b; Continuity of Transportation; Coastwise Transportation.

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H295239 September 4, 2018 VES-3-02-OT:RR:BSTC:CCR H295239 ASZ CATEGORY: Carriers Mr. J. Michael Cavanaugh Holland & Knight 800 17th Street NW, Suite 1100 Washington, D.C. 20006 RE: 46 U.S.C. § 55102; 19 C.F.R. §4.80b; Continuity of Transportation; Coastwise Transportation. Dear Mr. Cavanaugh: This letter is in response to your correspondence dated March 9, 2018, on behalf of your client, [], in which you inquire about whether your client’s use of a non-coastwise-qualified vessel to transport merchandise between United States (“U.S.”) coastwise points would constitute a violation of the U.S. coastwise laws. Our decision follows. FACTS The following facts are from your ruling request, supporting documents, and e-mails to this office dated April 19, 2018, May 3, 2018, May 7, 2018, May 9, 2018, May 11, 2018, and July 6, 2018. On [] 2016, the [], a foreign-flag vessel, carried a [] shipment of 9,000.626 metric tons of Number 1 Northern Spring Wheat to Italy. The bill of lading indicates that subject wheat shipment was to be shipped to the Port of [] Italy and intended for delivery to the consignee, []. According to the BioProfile Testing Laboratories’ Certificate of Analysis and the Department of Agriculture’s Submitted Sample Inspection, your client had the subject wheat tested for vomitoxin at the time the wheat was loaded in [] in the United States. Vomitoxin is a chemical that results from fungus growth on wheat. The results of the tests showed vomitoxin contamination at a rate between .48 and .90 parts per million (ppm). When the subject wheat arrived in Italy on [] 2016, Italian officials conducted testing and found levels of vomitoxin at 1.676 ppm. Based on the results, the Italian Ministry of Health deemed the subject wheat unsuitable for importation into Italy due to chemical contamination. Your client placed the subject wheat in a storage facility at the Italian port and fumigated the wheat twice. You state that the Italian government will not allow your client to “turn” the wheat (a stirring process which prevents deterioration while in storage) nor retest its vomitoxin levels. As a result, your client seeks to return the subject wheat to a United States [] port using a foreign-flag vessel. ISSUE Whether the transportation of the subject wheat from [], a coastwise point, to a United States [] port, a point other than the point of lading, constitutes a violation of the coastwise laws. LAW AND ANALYSIS Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise qualified.” 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. 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. Customs and Border Protection (“CBP”) Regulation 19 C.F.R. § 4.80b(a) provides in relevant 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. In The Bermuda, 70 U.S. 514, 553 (1865), 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. 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. CBP has consistently held that a break in the continuity of transportation occurs if there is honest intent to introduce merchandise into the common stock of another country. CBP has also consistently held that it would not be a violation of the coastwise laws for a foreign flag vessel to transport merchandise between U.S. coastwise points when there has been a break in the continuity of transportation. CBP has held that certain documentation constitutes acceptable proof that merchandise was intended to be entered into the common stock of a country. For instance, in HQ H032036 (July 10, 2008), CBP stated, Such acceptable evidence includes, but is not limited to: shipping manifests; foreign country customs and duties receipts; lists containing names of purchasers of merchandise from said vessels indicating type and quantity of such merchandise; auction notices or similar publication documentation evidencing the fact that such goods will be offered on the foreign country’s market; and an affidavit from a foreign purchaser testifying that the goods are indeed intended to be introduced into the common stock of that country. In HQ H114310 (July 13, 2010), corn transported from Louisiana to Venezuela was rejected entry by Venezuelan authorities upon discovering that the cargo was wet and humid. The requestor proposed to transport the rejected corn to a point in the United States other than the point of lading. The requestor argued that the continuity of transportation had been broken; therefore, the transportation of the corn to a second coastwise point would not constitute a violation of the coastwise laws. In support of its argument, the requestor provided ample documentation evidencing the intent of all parties to enter the corn into the common stock of Venezuela. CBP found that all parties had intended to enter the corn into the common stock of Venezuela and that the Venezuelan authorities’ rejection of the corn broke the continuity of transportation. CBP held that if the vessel transported the rejected corn to a U.S. coastwise point, other than the point of lading, that transportation would not be in violation of the coastwise laws. Similarly, in HQ 116518 (Aug. 9, 2005), corn seed that was shipped to Japan was rejected by the Japanese government after testing revealed the presence of a trait known as Bt10, which was not approved for importation into Japan. We held that the continuity of transportation was broken when the merchandise failed foreign government inspection. See also HQ 116616 (Feb. 27, 2006), HQ 116557 (Oct. 25, 2005), and HQ 116533 (Sept. 8, 2005). In the instant case, the requestor has supplied a berth term bill of lading, a United States Department of Agriculture (USDA) Official Grain Weight Certificate, a USDA Official Export Inspection Certificate, a Certificate of Origin, a Certificate of Analysis from BioProfile Testing Labs LLC, a USDA Submitted Sample Inspection, a purchase and sale confirmation, test results for vomitoxin from the Italian government, documentation from the Italian government showing denial of entry, the sales contract between the buyer and seller, copies of Italian customers’ purchases of the wheat, and an Identity Preserved Declaration from the storage company in Italy. These documents corroborate the facts and support the position that there was intent on the part of all parties to introduce the merchandise into the common stock of Italy. The documentation also supports the position that the Italian government rejected the merchandise due to the level of vomitoxin present in the subject wheat upon arrival in Italy, which was tested to be within an acceptable range when the subject wheat was laden in the United States. Therefore, but for the change in vomitoxin level in the subject wheat, the merchandise would have been unladed in Italy. Upon a review of all of the relevant facts, we conclude that the requestor has provided information and documentation evidencing an intent to enter the merchandise into the common stock of Italy. Therefore, we find that the continuity of transportation of the merchandise was broken by the refusal of entry of the merchandise by the Italian government. Therefore, it would not be a violation of the coastwise laws for the vessel to transport the subject wheat to a U.S. [] port, a point other than the point of lading. HOLDING The transportation of the subject wheat from [], a coastwise point, to a United States [] port, a point other than the point of lading, does not constitute a violation of the coastwise laws. 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