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HQ 115665

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July 3, 2002

BOR-4-02-RR:IT:EC 115665 GEV

CATEGORY: CARRIER

Jeremy Kahn, Esq.
Kahn & Kahn
1730 Rhode Island Ave., N.W.
Suite 810
Washington, D.C. 20036

Dear Mr. Kahn:

This is in response to your letter dated May 3, 2002, with enclosures, on behalf of Transport Georges Léger Inc. (“Léger”), seeking Customs view as to the permissibility under § 123.14, Customs Regulations (19 CFR § 123.14) of certain practices relating to this company’s truck tractors. Our ruling on this matter is set forth below.

FACTS:

Léger is incorporated in Canada with its principal office located in St. Timothée, Québec, Canada. Léger has been engaged in international trucking services since approximately 1981, in the U.S. pursuant to operating authority issued by the now defunct Interstate Commerce Commission (now administered by the Federal Motor Carrier Safety Administration) in MC-172673, and in Canada pursuant to appropriate Canadian provincial operating authority.

Léger operates approximately 100 truck tractors; in excess of 95% of these tractors are used in Léger’s international transportation business; the remaining few are used solely for domestic transportation in Canada. Léger’s trucks are either of Canadian manufacture, or in the few instances they are of U.S. manufacture, they have been formally entered into Canada and are therefore now “Canadian” for Customs purposes.

Léger’s primary business is the transportation of general dry freight from points in the province of Québec to points in the West Coast states (i.e., California, Oregon, and Washington) and the return of fruits and vegetables from various West Coast points to points in the province of Québec. About 85% of its international trips fit into the category described above. Its other U.S. trips would involve carrying freight from the province of Québec to points in the East and Midwest and then picking up a return load in the U.S. for delivery to a point in Québec.

In each and every instance, when a Léger truck/tractor combination enters the U.S., it is carrying a shipment loaded in Canada to be delivered in the U.S., and once unloaded in the U.S., it will carry a shipment originating in the U.S. and destined to Canada. There may, however, be a very few instances where Léger tractors “bobtail” (i.e., operate without pulling a trailer) across the border.

In Léger’s principal office located in St. Timothée, Québec, it maintains all administrative functions, dispatch functions, and it garages and maintains all of its motor carrier equipment. In addition to its drivers, Léger employs approximately 50 persons there. In the conduct of its operations, Léger dispatches trucks from Canada to U.S. destination points; when they are empty, they are directed to pick up the next available load destined to Canada. Except for time spent awaiting a return load or resting to comply with “hours of service” safety requirements, Léger’s trucks are not parked or garaged in the U.S.

Léger also maintains an office at Hemet, California, for limited administrative purposes only. The purpose of this office is to receive mail, field telephone calls (callers are directed to the toll free phone number at Léger’s Canadian main office), and act as an address for the registration of its truck tractors under the International Registration Plan (IRP).

The IRP is a registration reciprocity agreement among the states of the United States and provinces of Canada providing for payment of license fees on the basis of total distance operated in all jurisdictions. It was created and is administered by the American Association of Motor Vehicle Administrators (AAMVA), a group which deals with various transportation regulation and safety issues involving commercial carriers operating in the United States, Canada, and Mexico, and among the three jurisdictions. A goal of the group is the harmonization of practices and procedures affecting trucking.

According to the AAMVA, the unique feature of the IRP is that even though license fees are paid to the various jurisdictions in which fleet vehicles are operated, only one (1) license plate and one (1) cab card is issued for each fleet vehicle when registered under the IRP. A fleet vehicle is known as an apportionable vehicle and such vehicle, so far as registration is concerned, may be operated both interjurisdictionally and intrajurisdictionally.

For motor carriers operating under the IRP, registering a fleet of interjurisdictional vehicles becomes a one-stop process for motor carriers, with a simple, one-step registration. Motor carriers so registered can operate on an interjurisdictional basis in any IRP member jurisdiction displayed on the cab card, provided they have obtained proper operating authority. In an effort to provide increased efficiency to the IRP and to offer new services to member jurisdictions, the AAMVA Board of Directors voted to incorporate it in 1993.

In support of Léger’s assertion that the vehicles in question have their “principal base of operations” in Canada, you have enclosed the following: (1) a copy of the “California Apportioned Cab Card”; and (2) a copy of the Québec registration certificate for a Model 2000 Volvo truck operated by Léger (Company unit #2236). It can be seen from the California registration that this covers the several states, as well as many Canadian provinces, including Québec, where Léger is headquartered, and Ontario, through which it often traverses. All of Léger’s trucks used in international service are registered in this way.

All of Léger’s trucks used internationally bear only a California IRP apportioned license plate. They are also registered with the Province of Québec, but, by reason of their “IRP” plate, do not bear a Québec license plate. Léger began registering its trucks with IRP plates in California approximately 20 years ago, at the direction of California officials. It established a limited “office” in California, as described above, to effect such registration. By registering its vehicles in California under the IRP system, it is able to operate throughout the U.S. and Canada with its trucks bearing only the California IRP license plate.

ISSUE:

Whether, under the circumstances described above, Léger’s trucks are considered to have their “principal base of operations in a foreign country” (i.e., Canada) for purposes of § 123.14, Customs Regulations (19 CFR § 123.14).

LAW AND ANALYSIS:

Instruments of international traffic enter the United States without the filing of a Customs entry and free of duty under the provisions of 19 U.S.C. 1322. To qualify as instruments of international traffic, trucks, busses and taxicabs having their "principal base of operations in a foreign country" must be arriving in the United States with merchandise or passengers destined for points in the United States, or arriving empty or loaded for the purpose of taking merchandise or passengers out of the United States (see section 123.14(a), Customs Regulations (19 CFR 123.14(a)).

It is the long-held position of the Customs Service that any determination as to a vehicle’s “principal base of operations” is dependent upon the evidence presented in each case. Customs has no specific criteria in this regard. As long as an operator has the demonstrated intention to establish a vehicle’s “principal base of operations” and operate out of a certain location, and presents sufficient evidence to support this intention, Customs will generally determine that point to be the vehicle’s base of operations. (Customs memorandum 108566, dated October 10, 1986; and Customs ruling letters 110785, dated October 12, 1990; 111548, dated September 3, 1991; and 112809, dated July 28, 1993)

With respect to Léger’s trucks currently under consideration, it is readily apparent that they are owned, dispatched, stored and maintained by a Canadian company in Canada. Notwithstanding the vehicles bearing only a California IRP license plate and being issued an attendant California Apportioned Cab Card which, although having the intended effect of harmonizing cross-border traffic, could possibly cast doubt on their “foreign-based” status, the Québec registration certificate for each of Léger’s trucks, taken in consideration with the other aforementioned factors, is probative of these vehicles having their “principal base of operations” in Canada. In this regard we note that for purposes of clarity and facilitation, the Québec registration certificate should accompany the California Apportioned Cab Card in each Léger truck so as to be readily displayed and/or available to U.S. Customs officials for examination at their discretion.

HOLDING:

Under the circumstances described above, Léger’s trucks are considered to have their “principal base of operations in a foreign country” (i.e., Canada) for purposes of § 123.14, Customs Regulations (19 CFR § 123.14).

Sincerely,

Jeremy Baskin

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