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HQ 114893

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December 15, 1999

BOR-4-04-RR:IT:EC 114893 GEV

CATEGORY: CARRIER

Roderick N. Portine, Jr.
Manager, Liquid Distribution
Agway Energy Products
Post Office Box 4852
Syracuse, New York 13221-4852

RE: Instruments of International Traffic; Canadian-based Trucks; Temporary Clearance; 19 U.S.C. § 1322

Dear Mr. Portine:

This is in response to your letter dated November 30, 1999, regarding the temporary use of Canadian-based trucks for the transportation of propane between U.S. points. Our ruling on this matter is set forth below.

FACTS:

Agway Energy Products (AEP), headquartered in Dewitt, New York, services approximately 198,000 propane customers in New York, New Jersey, Pennsylvania, and Vermont. It receives some of its propane supply from Canadian vendors. These vendors not only supply the product, they also supply transportation services to deliver the propane to AEP distribution sites in New York and Vermont.

If the propane supply is disrupted in Canada because of Y2K or other reasons, AEP should be able to provide propane from a U.S. origin. However, the transportation to move the propane from the U.S. origins to AEP’s distribution sites is problematic. While the Canadian drivers sit idle, U.S. carriers are handling the normal seasonal load and cannot take on any additional volume during this time. AEP experienced this problem last January when the southern part of the Province of Ontario was being hit by blizzards. The Queensway (Route 401) was closed down a few times, disrupting your propane supply to Jefferson and St. Lawrence Counties in New York. You had the product at a rail transfer facility in Phoenix, New York, but could not find transportation to move it north.

While the Department of Transportation and the U.S. Immigration and Naturalization Service have already been contacted regarding this matter, you have been informed that Customs has an interest in it as well. Specifically, you ask the following questions:

1. Can Canadian carriers get temporary clearance to operate point-to-point within the U.S. to cover the period of January 3-17, 2000 prior to January 1, 2000?

2. If a temporary situation develops, as it did last January, how fast can you get temporary clearance for the Canadian carriers to operate point-to-point within the U.S.?

The U.S. points of origin and destination for the subject propane are as follows:

Origins Destinations

Phoenix, Harford Mills, and Canton, Pulaski, and Watertown, NY Watkins Glen, NY

Albany and Selkirk, NY Malone, Plattsburgh, Saranac Lake, and Westport, NY

ISSUE:

Whether the temporary use of Canadian-based trucks in the United States as described above is violative of 19 CFR § 123.14.

LAWS AND ANALYSIS:

Section 141.4, Customs Regulations (19 CFR § 141.4), provides that entry as required by title 19, United States Code, § 1484(a) (19 U.S.C. § 1484(a)), shall be made of every importation whether free or dutiable and regardless of value, except for intangibles and articles specifically exempted by law or regulations from the requirements for entry. Since Canadian-based trucks are not so exempted, they are subject to entry and payment of any applicable duty.

Instruments of international traffic may be entered without entry and payment of duty under the provisions of 19 U.S.C. § 1322. To qualify as instruments of international traffic, trucks having their principal base of operations in a foreign country must be arriving in the United States with merchandise destined for points in the United States, or arriving empty or loaded for the purpose of taking merchandise out of the United States (see 19 CFR § 123.14(a)). Further-more, certain foreign-based vehicles engaged, in whole or in part, in the domestic carriage of merchandise that either originates from a location outside the United States or will be sub-
sequently moved to a destination outside the United States, or such vehicles moving without a payload between two points in the same country, shall be considered as engaged in international traffic. (See Customs Bulletin of October 1, 1997, Vol. 31, No. 40, at pp. 7-13.)

In addition, pursuant to § 123.14(c)(1), Customs Regulations (19 CFR § 123.14(c)(1)), as amended by T.D. 99-10, a Canadian-based vehicle “may carry merchandise...between points in the United States if such carriage is incidental to the immediately prior or subsequent engagement of that vehicle in international traffic.” This regulatory provision further provides that, “[a]ny such carriage by the vehicle in the general direction of an export move or as part of the return of the vehicle to its base country shall be considered incidental to its engagement in international traffic.”

The above-cited authority contains no waiver/exemption provision to cover AEP’s proposed temporary use of Canadian-based trucks in the U.S. Consequently, absent such use in the U.S. in accordance with this legal authority (e.g., engaging in international traffic either immediately prior or subsequent to the use in U.S. domestic traffic), Canadian-based trucks are prohibited from engaging in the transportation of merchandise between U.S. points. Pursuant to 19 CFR § 123.14(d), Canadian-based trucks transporting merchandise in contravention of 19 CFR § 123.14 may result in liabilities being incurred under § 592, Tariff Act of 1930, as amended (19 U.S.C. § 1592).

HOLDING:

The temporary use of Canadian-based trucks in the United States as described above is prohibited unless done in accordance with the provisions of 19 CFR § 123.14(c)(1).

Sincerely,

Jerry Laderberg

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