HQ 226568 - Shore tank gauging of petroleum products; 19 U.S.C. - United States International Trade Commision Rulings

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HQ 226568

March 12, 1996

ENT-1-03-RR:IT:EC 226568 GOB

Category: ENTRY

Joseph F. Donohue, Jr., Esq.
Donohue and Donohue
26 Broadway
New York, New York 10004

RE: Shore tank gauging of petroleum products; 19 U.S.C.

Dear Mr. Donohue:

This is in response to your letter dated November 16, 1995 on behalf of Amerada Hess Corporation ("Hess").

FACTS:

You state, in pertinent part:

Recently, Hess has begun mixing some domestic or previously imported residual fuel oil ("resid") with catfeed at the refinery and feeding the mix to the cat cracker. Because of limited tankage at the refinery, and also because of the high rate of pressure at which the catfeed is discharged from the vessel, the mixing can be done most efficiently if it occurs in the catfeed receiving tank while the catfeed is being discharged. Therefore, Hess requests permission to transfer domestic or previously-imported resid from refinery storage tank(s) into the catfeed receiving tank(s) at the same time that the imported catfeed is being discharged.1 Accuracy as to the quantity of catfeed unladen will be ensured through the continued use of a Customs-approved public gauger who will take the readings of the relevant shore tanks prior to and following discharge.2 Vessel ullages prior to and following discharge will also be taken. Hess proposes to enter the quantity determined through shore tank gauging unless the report of vessel ullaging is higher, in which case entry will be made at the ullaged quantity.3 ...

By regulation, Customs has determined that shore tank gauging is a reliable method of determining the quantity of petroleum unladen from a vessel. See 19 C.F.R. ? 151.42(a)(ii). Hess has used shore tank gauging to report entered quantities for years. While more than one shore tank would require gauging under the proposed method, Hess is confident that it can be done in a manner that is consistent with past practice and with Customs' requirements.

1 In some infrequent cases, the transfer might be of a fuel oil other than resid, or even an off-grade catfeed. It is assumed that the decision herein will be equally applicable to the transfer of these other materials.

2 The public gauger will gauge the shore tanks essentially as follows: (1) Ascertain quantity of resid in shore tank prior to and following transfer to catfeed tank; the difference represents the amount of resid sent to the catfeed tank; (2) ascertain quantity of catfeed in catfeed shore tank prior to discharge; (3) ascertain quantity of material (mixed catfeed and resid) in catfeed tank following discharge from vessel and transfer from resid tank; (4) subtract from (3) the beginning inventory in the catfeed tank and the quantity of transferred resid referred to in (1), to reach discharged quantity.

3 Hess has no objection to entering based only on the shore tank report, but proposes to use the higher of the two results to resolve any doubts as to quantity in Customs' favor.

In a facsimile transmission to Customs on February 14, 1996, you stated as follows:

It is understood that Hess will perform the ullaging of the shore tank(s) from which the domestic/duty-paid material is removed prior to and promptly after removal from such tank(s), and will provide Customs with the results of ullaging such tanks, together with the results of ullaging the receiving tank(s), shortly after unlading.

Since the imported catfeed will be commingled in the shore tank(s) with domestic or previously imported material, any determination as to the properties or characteristics of the imported product will be based on samples taken from the vessel and not from the receiving shore tank(s).

ISSUE:

Whether Hess may transfer domestic or previously-imported resid from a refinery storage tank or tanks into the catfeed receiving tank or tanks at the same time that the imported catfeed is being discharged, in the manner described supra.

LAW AND ANALYSIS:

19 U.S.C. 1484(a)(2)(C) provides:

? 1484. Entry of merchandise.

(a) Requirement and time

(2)(C) The Secretary, in prescribing regulations to carry out this subsection, shall establish procedures which insure the accuracy and timeliness of import statistics, particularly statistics relevant to the classification and valuation of imports. Corrections of errors in such statistical data shall be transmitted immediately to the Director of the Bureau of the Census, who shall make corrections in the statistics maintained by the Bureau. The Secretary shall also provide, to the maximum extent practicable, for the protection of the revenue, the enforcement of laws governing the importation and exportation of merchandise, the facilitation of the commerce of the United States, and the equal treatment of all importers of record of imported merchandise.

19 U.S.C. 1499(a)(1) provides in pertinent part:

? 1499. Examination of merchandise

(a) Entry examination

(1) In general

Imported merchandise that is required by law or regulation to be inspected, examined, or appraised shall not be delivered from Customs custody (except under such bond or other security as may be prescribed by the Secretary to assure compliance with all applicable laws, regulations, and instructions which the Secretary or the Customs Service is authorized to enforce) until the merchandise has been inspected, appraised, or examined and is reported by the Customs Service to have been truly and correctly invoiced and found to comply with the requirements of the laws of the United States.

The Customs Regulations relevant to this request are found in Part 151, Subpart C (19 CFR 151.41 - 151.47). 19 CFR 151.42(a) provides:

? 151.42 Controls on unlading and gauging.

(a) Methods of control. (1) Each port director shall establish controls and checks on the unlading and measurement of petroleum and petroleum products imported in bulk by vessel, truck, railroad car, pipeline or other carrier. One of the following methods of control shall be employed:
(i) Customs-approved metering and sampling installations provided by the importer;
(ii) Shore tank gauging; or
(iii) Weighing the trucks and railroad cars. (2) Vessel ullages shall be taken in every case unless the port director determines that it is impracticable to do so for safety or technological reasons. Ullages may be taken for trucks and railroad cars if weighing or shore tank gauging is not available as a method of control. Vessel ullages will not be used to determine the quantity unladen unless none of the other methods provided for in this paragraph is available or adequate.
(3) The metering and sampling installations described in paragraph (a)(1)(i) of this section are approved by Customs on a case-by-case basis. Importers seeking approval shall send a complete description of the installation to the port director who, with the concurrence of the Director, Laboratory & Scientific Services, or his designee, shall give approval or shall state, in writing, the reasons for disapproval. Approved installations are subject to periodic verification by Customs. Importers desiring to modify a Customs-approved installation shall obtain Customs approval beforehand.

The procedure described in footnotes 2 and 3, supra, is consistent with the applicable statute and regulations. The quantity of petroleum unladen is determined by including "the higher of the two results" condition stated in footnote three supra. It is understood that Customs' field officials are satisfied with the clarity, sufficiency, and timing of the documentation received by Customs pursuant to this procedure. All discharge valves of the receiving tanks must be closed when those tanks are receiving petroleum.

It is understood that, for the purpose of sampling the petroleum, or for any purpose other than determining the quantity, the petrolem on the vessel must be used.

HOLDING:

Customs officers may approve the transfer of domestic or previously-imported fuel oil from a refinery storage tank or tanks into the catfeed receiving tank or tanks at the same time that the imported catfeed is being discharged if the party in interest insures that all discharge valves of the receiving tanks are closed during the transfer and if the quantity of the imported petroleum product is the highest gauged amount, whether from the shore tanks or the vessel tanks.

Sincerely,

Director,
International Trade Compliance

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