HQ 0112061 - Vessel Repair Entry No. C20-0029780-7; S/S ROBERT E. LEE V-59; Casualty; Seaworthiness - United States International Trade Commision Rulings

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HQ 112061

June 10, 1992

VES-13-18-CO:R:IT:C 112061 GEV

CATEGORY: CARRIER

Deputy Assistant Regional Commissioner
Commercial Operations Division
423 Canal Street
New Orleans, Louisiana 70130-2341

RE: Vessel Repair Entry No. C20-0029780-7; S/S ROBERT E. LEE V-59; Casualty; Seaworthiness

Dear Sir:

This is in response to your memorandum dated December 16, 1991, forwarding a petition for review of ruling 111758. Our ruling on this matter is set forth below.

FACTS:

The S/S ROBERT E. LEE is a U.S.-flag vessel operated by Waterman Steamship Corporation of New Orleans, Louisiana. The subject vessel had foreign shipyard work performed in Suez, Egypt, and Valletta, Malta. Subsequent to the completion of the work the vessel arrived in the United States at New Orleans on January 21, 1991. A vessel repair entry covering the work in question was timely filed on January 24, 1991.

An application for relief, dated May 3, 1991, was filed requesting remission pursuant to 19 U.S.C. 1466(d)(1). It was stated that on September 29, 1990, at 5:36 a.m., the ROBERT E. LEE ran aground at Suez. Soundings revealed the forepeak tank, forward fuel tank, port and starboard fuel tanks, No. 1 ballast tank, Nos. 1 and 2 void spaces and No. 2 port and starboard double bottom tanks to be flooded. The vessel was refloated on the third attempt, after discharging 36 fully loaded LASH barges.

Further examination of the damage by S.C.A. divers revealed that the damage was more extensive than previously advised. The damage was found to extend from the after end of No. 2 double bottom tank (Fr. 82) through to the bulbous bow, a distance of approximately 380 feet and extending over the flat bottom. The
divers reported that it would be possible to effect temporary underwater repairs to the fore peak and fuel tanks, but temporary repairs of other tank openings was impractical and would be ineffective.

The Salvage Association advised that for the vessel to transit the Suez Canal they would require: (1) the fuel oil in the damaged tanks be off-loaded; (2) the fore peak and damaged fuel oil tank be closed and made watertight; (3) the vessel not be deeper than its present draft (36 ft.) which required the discharge of all remaining LASH barges; and (4) the vessel have a tug escort while transiting the canal. (see Salvage Association report no. 458/90, dated November 12, 1990)

In addition, a representative of the American Bureau of Shipping (ABS) surveyed the vessel. After the temporary repairs were effected, the ABS representative recommended that: (1) the vessel be drydocked for further bottom examination and all damages be dealt with as deemed necessary; (2) the vessel proceed to the port of repairs in ballast condition at reduced speed and upon Master's stability calculations; and (3) the vessel be escorted by tugboat in congested and/or pilot water and channels. The ABS further determined "...the vessel fit to proceed in ballast condition at reduced speed from Suez, Egypt via the Suez Canal to the available Mediterranean or European port (Atlantic or Indian Ocean not to be considered) for drydocking..." (see ABS report no. SZ 3771 and certificate no SZ 3771-X, both dated October 12, 1990, and included as Attachment B of the petition) On October 13, 1990, the subject vessel commenced its canal transit on passage to Malta, and drydock.

In ruling 111758 RAH, dated September 27, 1991, Customs denied the application. This denial was based on the fact that after the immediate temporary repairs were performed at Suez, Egypt, the vessel sailed over 1,300 miles to Malta where permanent repairs were undertaken. After the repairs in Malta, the vessel sailed back to Egypt before returning to the United States. While agreeing 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 noted that to support their claim the applicant relied heavily on the ABS and Salvage Association documentation cited above. While this documentation appeared indicative of the opinion of those two organizations on this matter, the record contained no U.S. Coast Guard (USCG) documentation of any kind. This appeared to run contra to sections 2.01-15 and 31.10-25, of the USCG Regulations (46 CFR 2.01-15, 31.10-25).

By letter dated December 6, 1991, Waterman Steamship Corporation filed a petition for review of Customs ruling on their application. In reiterating their claim for remission pursuant to 19 U.S.C. 1466(d)(1), the petitioner submitted a
letter dated November 20, 1991, from the Officer-In-Charge, USCG Marine Inspection Office (OCMI), New York, N.Y. (Attachment A) and the aforementioned ABS documentation (Attachment B).

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 "...secure the safety and seaworthiness of the vessel to enable her to reach her port of destination." (19 U.S.C. 1466(d)(1)). 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. However, the extent of that casualty (i.e., parts 2 and 3 of the three-part test set forth above) is the critical issue upon which this case turns.

All parties concerned are in agreement that the USCG is the controlling agency that determines questions of a vessel's fitness to proceed. The procedure by which the USCG renders such a determination is set forth in sections 2.01-15 and 31.10-25, USCG Regulations (46 CFR 2.10-15, 31.10-25). The former states that a vessel may not proceed from one port to another for repairs unless prior authorization is obtained from the USCG 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. The latter states that with respect to tank vessels, "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."

Notwithstanding the clear wording of the above USCG Regulations, specifically 46 CFR 2.10-15 which does not distinguish between foreign or domestic locations, the OCMI, New York, N.Y., in a letter dated November 7, 1991, states that "A formal Permit to Proceed is not normally issued to a vessel transiting foreign waters because the Certificate of Inspection (COI) would have to be removed from the vessel which would cause problems in transiting foreign waters."

In addition, we have subsequently learned from the Chief, Merchant Vessel Inspection and Documentation Division, USCG Headquarters, in a letter dated April 14, 1992, that "Vessel operators often make casualty reports for U.S. flag vessels damaged overseas verbally to the proper Coast Guard Marine Inspection Office, followed by the required written report. The Coast Guard cannot always send a marine inspector to a damaged vessel overseas on short notice. In such cases, the Coast Guard may consider the classification society report and the report of the vessel's master to determine the required temporary repairs and voyage restrictions."

In regard to the case now under consideration, the petitioner has provided a letter dated November 20, 1991, from the Officer-In-Charge, USCG Marine Inspection Office, New York, N.Y., (Attachment A) wherein it is stated that the USCG concurred with and approved all findings and recommendations included in ABS report no. SZ 3771 (Attachment B). It is further stated that, "Verbal permission was then granted to transit directly to Valletta, Malta to undergo an emergency drydocking and effect permanent repairs to all damaged areas." A USCG inspector from the Marine Inspection Office in New York attended the aforementioned drydocking. In addition, the OCMI states in his letter that, "I would not have allowed this vessel to transit from the Mediterranean to the United States at that time without
making permanent repairs to all damaged areas due to the conditions of the vessel and the extremely harsh climate of the North Atlantic Ocean during the winter months."

Accordingly, evidence is presented sufficient to prove that the subject foreign repairs were necessary for the vessel's safety and seaworthiness thereby warranting remission pursuant to 19 U.S.C. 1466(d)(1).

Parenthetically, we note that in regard to future cases such as the one now under consideration (i.e., where a vessel that has been damaged foreign proceeds in a state of disrepair between two foreign locations prior to its being repaired foreign, and subsequently sails to its U.S. port of destination), notwithstanding any practice of verbally reporting foreign casualties to the USCG and that agency's subsequent verbal instructions, remission pursuant to 19 U.S.C. 1466(d)(1) will not be granted in the absence of documentary evidence that the casualty occurrence was timely reported to the USCG and that agency, directly or through the medium of a marine surveyor, permitted the vessel to proceed between two foreign locations in a damaged condition. The mere submission of a USCG Report of Marine Accident, Injury or Death (CG-2692), without accompanying documentation from the appropriate USCG OCMI (New York or Honolulu) authorizing the vessel to proceed in a damaged condition, will not suffice for granting remission pursuant to 19 U.S.C. 1466(d)(1).

HOLDING:

The evidence presented is 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 granted.

Sincerely,

B. James Fritz

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