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HQ 116107

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February 13, 2004

VES-3-07:RR:IT:EC 116107 TLS

CATEGORY: CARRIER

Ms. Beverly J. Rudy
Sutherland, Asbill & Brennan, LLP
1275 Pennsylvania Ave, N.W.
Washington, D.C. 20004-2415

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

Dear Ms. Rudy:

This is in response to your letter dated November 17, 2003, in which you request a ruling regarding the proposed coastwise transportation of domestic slurry fuel oil that will be processed in the Bahamas before returning to the United States.

FACTS:

You propose to have United States-origin slurry fuel oil, which has a water content of 6.8 percent of the total volume, transported from a United States port aboard a foreign-flagged vessel to Sweden to be blended with foreign oil. The blended product, which would conform to American Standard for Testing Materials (ASTM) Standard Specification for Fuel Oils (D-396-02a), would then be transported in a foreign-flagged vessel back to a United States port for discharge. The specifications for the blending scenario you propose were enclosed with your letter.

ISSUE:

Whether the proposed blending of the slurry fuel oil as specified in the scenario referenced above results in a new and different product 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), which was promulgated pursuant to 46 U.S.C. App. § 883, 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 a new and different product.

The OLSS has concluded that the blending process you propose would result in a new and different product. The OLSS specifically concludes that the blended product would conform to ASTM standards for No. 6 fuel oil. It is noted that the blending process in particular lowers the water content of the fuel oil to meet the ASTM standard for No. 6 fuel oil of 2.0 percent water content. As No. 6 fuel oil, the blended product has a number of fuel oil uses, while the slurry fuel oil with high water content does not.

In light of these findings, we find that the movement of slurry fuel oil on a foreign-flagged vessel to the Bahamas to be processed into a new and different product as described, then transported by a foreign-flagged vessel back to the United States, does not violate 46 U.S.C. App. § 883. Please note that if the slurry fuel oil transported to the Bahamas is processed in a manner different than what you described to us in your November 17, 2003 submission, then our finding herein does not apply.

HOLDING:

The proposed blending of slurry fuel oil as specified in the scenario referenced above results in a new and different product 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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