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HQ 115943

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May 20, 2003

VES-3-07:R:IT:EC 115943 TLS

CATEGORY: CARRIER

Mr. Phillip Caulier
Senior Project Manager
Emera, Inc.
P.O. Box 910
Halifax, Nova Scotia
Canada B3J 2W5

RE: Coastwise transportation; Merchandise; New and Different Product; 46 U.S.C. App. §883; 19 CFR 4.80b(a).

Dear Mr. Caulier:

This is in response to your letter dated March 5, 2003, in which you request a ruling regarding the proposed coastwise transportation of petroleum coke that will be processed in Canada before returning to the United States.

FACTS:

Emera, Inc. proposes to have petroleum coke transported from a United States port aboard a foreign-flagged vessel to Canada to be blended with coal from various foreign origins. The blended product would then be transported to another United States port in foreign-flagged vessels to be used in various power plants. The specifications for the two blending scenarios you propose were enclosed with your letter.

ISSUE:

Whether the proposed blending of petroleum coke as specified in the two scenarios referenced above results in new and different products within the meaning of 19 CFR 4.80b(a).

LAW AND ANALYSIS:

Under 46 U.S.C. App. §883, no merchandise shall be transported by water between points in the United States, either directly or via a foreign port in any vessel other than a vessel built in and documented under the laws of the United States and owned by citizens of the United States. Under 19 CFR 4.80b(a), the following is provided:

A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point, regardless of the origin or ultimate destination of the merchandise. However, merchandise is not transported coastwise if at an intermediate port or place other than a coastwise point (that is at a foreign port or place, or at a port or place in a territory or possession of the United States not subject to the coastwise laws), it is manufactured or processed into a new and different product, and the new and different product thereafter is transported to a coastwise point. (Emphasis added.)

We have sought and received advice from our Office of Laboratories and Scientific Services (OLSS) as to whether the processing you describe results in new and different products. The two proposed processing blends are as follows:

20% petroleum coke/30% Colombian coal/50% Indonesian low sulfur coal; and 20% petroleum coke/80% Indonesian low sulfur coal.

The OLSS has concluded that the processing blends you propose are uniquely tailored to the power plant(s) in which they are designed to burn. The OLSS further concludes that the coke/coal combinations are a vast improvement as power plant fuels over the original petroleum coke. Therefore, OLSS concludes, the coke/coal blends are new and different products when compared to the original petroleum coke.

In light of these findings, we find that the coastwise movement of petroleum coke to Canada to be processed into new and different products as described, then transported back to the United States, does not violate 46 U.S.C. App. §883. Please note that if the petroleum coke transported to Canada is processed in a manner different than what you described to us in your March 5, 2003 submission, then our finding herein does not apply.

HOLDING:

The proposed blending of petroleum coke as specified in the two scenarios referenced above results in new and different products within the meaning of 19 CFR 4.80b(a). Consequently, the proposed use of foreign-flagged vessels does not violate 46 U.S.C. App. §883.

Sincerely,

Glen E. Vereb
Chief

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