HQ 0111477 - Vessel Repair; Entry No. C18-0014538-0; S/S ULTRAMAR V-96B; Casualty; Seaworthiness - United States International Trade Commision Rulings

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HQ 111477

July 16, 1991

VES-13-18-CO:R:P:C 111477 GEV

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations c/o Regional Commissioner
New Orleans, Louisiana 70130-2341

RE: Vessel Repair; Entry No. C18-0014538-0; S/S ULTRAMAR V-96B; Casualty; Seaworthiness

Dear Sir:

This is in response to your memorandum dated January 14, 1991, forwarding a petition for review of ruling 111015 GV. Our findings are set forth below.

FACTS:

The S/S ULTRAMAR is a U.S.-flag vessel owned by Bankers Trust Company, and operated by American Maritime Transport, Inc. (AMT). The subject vessel had foreign shipyard work performed in Palermo, Sicily, during the period of November 23-December 6, 1989. Subsequent to the completion of the work the vessel arrived in the United States at Tampa, Florida, on December 23, 1989. A vessel repair entry covering the work in question was apparently untimely filed on January 2, 1990 (we note that Box 25E on the CF 226 for the entry date is blank, however, the handwritten date of "1/2/90" appears in Box 18).

An application for relief, dated February 1, 1990, was filed requesting remission pursuant to 19 U.S.C. 1466(d)(1). The applicant states that on November 3, 1989, while the S/S ULTRAMAR was anchored and discharging cargo to a lightering vessel in Chittagong, Bangladesh, the M/V ADEL, for reasons unknown, struck the S/S ULTRAMAR with her bow making a deep indentation in the port side in way of the hold and ballast tanks 1 and 2, extending approximately 80 feet in length. The applicant states that, "After examination by the American Bureau of Shipping it was agreed that permanent repairs would be required before the vessel could return to oceangoing service. Because there were no adequate repair facilities in the area, temporary repairs only were accomplished by the crew in Chittagong. The ABS surveyor recommended that the vessel proceed in ballast to Malta for the
required permanent repairs prior to returning to the U.S. Pursuant to the recommendations of ABS, the vessel sailed to Palermo, Sicily (near Malta) where the required repairs were accomplished."

In support of their claim the applicant submitted the following: the vessel log of November 3, 1989 (Exhibit A(1)); the vessel log of November 4, 1989 (Exhibit A(2)): a fax from the Master dated November 3, 1989 (Exhibit B); a Note of Protest (Exhibit C); a U.S. Coast Guard Report of Accident (Exhibit D); an American Bureau of Shipping (ABS) letter dated November 20, 1989; ABS Report no. CI 1252 (Exhibit F(1)); ABS Report no. PL6963 (Exhibit F(2)); a picture of the repairs in progress (Exhibit F(3)); an affidavit of the Master (Exhibit G); a report from The Salvage Association (Exhibit H); and shipyard invoices.

In ruling 111015 GV, dated July 27, 1990, Customs denied the application for relief. In denying this request we noted that in regard to the applicant's claim that the repair facilities in Chittagong were inadequate for performing permanent repairs and therefore the vessel had to proceed in ballast to Palermo, several ports closer to Chittagong capable of performing the subject repairs (most notably Singapore) were bypassed in favor of sailing a much greater distance to Palermo. A question existed as to degrees of seaworthiness. We held that in the subject case, the voyage of the S/S ULTRAMAR from Chittagong (where temporary repairs were obtained) across the Indian Ocean, through the Suez Canal, and then halfway across the Mediterranean Sea was sufficient to demonstrate the subject vessel's seaworthiness so as to deny remission under section

In a petition dated September 27, 1990, counsel for AMT reiterated their claim for remission based on a casualty. Further in support of this claim the following additional documentation was submitted: excerpts from G. Gilmore & C. Black, The Law of Admiralty (2d ed. 1975) (Exhibit 3); 80 C.J.S. Shipping 36 (Exhibit 4); 70 Am. Jur. 2d 26 (Exhibit 5); an Opinion of the Attorney General dated January 29, 1923 (Exhibit 6); T.D. 39443 (Exhibit 7); a letter from the Assistant Vice President, ABS (Exhibit 8); and an affidavit from the Vice President of AMT (Exhibit 9). In response to a request for additional information from the New Orleans VRLU, counsel also submitted a letter from the Vice President, American Maritime Transport, Inc.

It should be noted that after Customs receipt of the petition and supporting documentation, and at the request of the petitioner, a meeting was held at Customs Headquarters on June 25, 1991, with the petitioner (i.e., the President of AMT who was the Vice President of Operations of AMT during the time of the repairs in question), petitioner's counsel, a witness for the
petitioner (i.e., the vessel's Chief Engineer during the time in question), the Chief, Carrier Rulings Branch, and an attorney with the Carrier Rulings Branch.

ISSUE:

Whether evidence is presented sufficient to prove that the foreign repairs performed on the vessel for which relief is sought, were necessary for its safety and seaworthiness thus warranting remission pursuant to 19 U.S.C. 1466(d)(1).

LAW AND ANALYSIS:

Title 19, United States Code, section 1466, provides in part for payment of an ad valorem duty of 50 percent of the cost of foreign repairs to vessels documented under the laws of the United States to engage in the foreign or coastwise trade, or vessels intended to engage in such trade. Section 1466(d)(1) provides that the Secretary of the Treasury is authorized to remit or refund such duties if the owner or master of the vessel was compelled by stress of weather or other casualty to put into such foreign port to make repairs to secure the safety and seaworthiness of the vessel to enable her to reach her port of destination.

It is noted that section 4.14(c)(3)(i), Customs Regulations (19 CFR 4.14(c)(3)(i)), provides that "port of destination" means such port in the United States. This point is not in dispute, however, it is an embellishment upon section 1466(d)(1) which sets forth the following three-part test which must be met in order to qualify for remission:

1. The establishment of a casualty occurrence.

2. The establishment of unsafe and unseaworthy conditions.

3. The inability to reach the port of destination without obtaining foreign repairs.

In addition, if the above requirements are satisfied by evidence, the remission is restricted to the cost of the minimal repairs necessary to enable the vessel to reach her port of destination. Repair costs beyond that minimal amount are not subject to remission. In the case under consideration, the evidence supports the claim that the subject vessel suffered a marine casualty. The extent of that casualty is, however, the critical issue upon which this case turns.

The petitioner maintains that the collision damage incurred by the subject vessel at Chittagong, Bangladesh, rendered it unseaworthy for crossing the Atlantic Ocean, however, after temporary repairs by the crew in Chittagong (it is contended that
the facilities in Chittagong were inadequate for performing permanent repairs), it was considered seaworthy to proceed in ballast across the Indian Ocean, through the Suez Canal, and halfway across the Mediterranean Sea where permanent repairs were performed in Palermo, Sicily.

Upon reviewing the record in its entirety, specifically the legal authorities cited, we are in accord with the position that seaworthiness is a relative term dependent upon a variety of factors including the condition of the vessel, the proposed voyage, seasonal changes, etc. We note, however, that to support their argument that the subject vessel was seaworthy for its Chittagong-Palermo voyage but not for a trans-Atlantic crossing, the petitioner relies heavily on the ABS documentation cited above. While this documentation appears indicative of the opinion of ABS on this matter, we note that the record nonetheless does not contain a "Certificate of Fitness to Proceed" referenced on both p. 1 of the ABS Vice President's letter (Exhibit 8) and p. 11 of the petition.

Again, the term "seaworthy" is admittedly relative. Whether a boat is seaworthy to traverse a pond, or a merchant vessel to voyage the northern Atlantic Ocean in mid-winter, are questions which involve disparate considerations. But as a practical matter questions of seaworthiness must often fall within limited factual circumstances which preclude such far-reaching speculations. We consider whether a particular ship with a particular mission is seaworthy in terms of accomplishing that mission and as to which recognized authorities exist that will aid us in making that determination. Our focus in issuing rulings must be toward narrowing questions rather than presenting or accepting the central issues in such a way as to preclude definable considerations.

To pursue the foregoing thought and try to decide the subject petition within the framework of definable criteria, it is appropriate to apply whatever formal, precedential guidelines that exist. This of course would include any applicable procedures. In this case, one existent procedure is squarely on point.

Pursuant to 2.01-15, U.S. Coast Guard (USCG) Regulations (46 CFR 2.01-15) a vessel may not proceed from one port to another for repairs unless prior authorization is obtained from the USCG Officer in Charge, Marine Inspection (OCMI) either through the issuance of a USCG "Permit to Proceed to Another Port for Repairs" (CG-948) or a CG-835 which would specify the restrictions on, and duration of, any voyage undertaken prior to obtaining permanent repairs. (see also 46 CFR 31.10-25 regarding tank vessels which provides, inter alia, that "No extensive repairs to the hull or machinery which affect the safety of a vessel shall be made without the knowledge of the Officer in

Charge, Marine Inspection.") Other than the USCG Report of Accident, the record contains no USCG documentation of any kind.

During the aforementioned June 25, 1991, meeting at Customs Headquarters, the President of AMT stated that he telephonically contacted the USCG about the incident, informed them of the ABS survey, and requested a USCG inspection prior to the vessel's departure from Chittagong. He further stated that the USCG telephonically informed him that it could not get a USCG inspector to the vessel for five days but would accept the ABS survey as a substitute for its own inspection. We reiterate that the record contains no writing to substantiate these claims. Furthermore, upon contacting the USCG Marine Inspection Offices in New York and Honolulu (both of which oversee foreign repairs to U.S. vessels) we have been informed that the USCG was not contacted by the petitioner regarding this matter until after permanent repairs were performed on the subject vessel in Palermo. Notwithstanding this apparent violation of the aforementioned USCG regulations, it is apparent that the USCG made no determination whatsoever as to the subject vessel's safety and seaworthiness before it proceeded from Chittagong to Palermo.

If counsel contends that the assertions of the ABS and a statement from an official of the firm that operates the vessel, are of equally probative value with an official USCG determination as to the vessel's fitness, we disagree, not only because federal regulations provide for evidence that permits an expeditious resolution of the question of seaworthiness but because mere assertions of interested parties have been substituted for that disinterested finding. The petitioner has not met a burden of proof that is provided for by federal regulations. The controlling agency that determines questions of fitness to proceed is the USCG which is not empowered to assign this responsibility to a private organization (i.e., the ABS, which is a surveying society the primary purpose of which is to determine whether, for insurance purposes, a vessel will remain in class). The USCG regulations, which have the force and effect of law, require a vessel operator to prove certain facts to the federal government; that was not done.

Accordingly, in the absence of any determination of the USCG regarding the subject vessel's safety and seaworthiness, and absent the evidence that would be adduced by the required USCG determination on the issue of seaworthiness, the petitioner has failed to substantiate its claim for remission under 1466(d)(1).

HOLDING:

The evidence presented is not sufficient to prove that the foreign repairs performed on the subject vessel for which relief is sought were necessary for its safety and seaworthiness therefore remission pursuant to 19 U.S.C. 1466(d)(1) is denied.

Accordingly, the petition is denied.

Sincerely,

Stuart P. Seidel

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