Storage of butane on a foreign-flagged vessel within US territorial waters; 46 U.S.C. App. §883

HQ 116007 July 25, 2003 VES-3-21 RR:IT:EC 116007 CK Mr. David J. Marchetti Manager, R&S Raw Material Product Chartering Sunoco, Inc. Ten Penn Center 1801 Market Street Philadelphia, PA 19103-1699 RE: Storage of butane on a foreign-flagged vessel within US territorial waters; 46 U.S.C. App. §883 Dear Mr. Marchetti: This is in response to your letter dated June 5, 2003 in which you request a ruling on the feasibility of your company storing a load of butane on a foreign-flagged vessel and berthing the vessel on the Delaware River or to Big Stone anchorage. Our reply follows. FACTS: Sunoco intends to charter a foreign-flagged vessel to load a cargo of butane at its refinery facility at Marcus Hook, PA. Sunoco intends to shift the loaded vessel to a lay berth on the Delaware River or to Big Stone anchorage, if either option is economically feasible and acceptable to the Coast Guard. In the event those options are foreclosed, then the vessel would shift offshore to a position deemed safe by the Master giving consideration to the prevailing weather conditions. Upon the cessation of the storage contract, which is anticipated to be thirty (30) days, the vessel will rebirth at the original loading point at Marcus Hook Refinery and return the full cargo to the shore tanks. ISSUE: Whether the use of a foreign-flagged vessel to store a load of butane described in the above scenario is in compliance with 46 U.S.C. App. §883. LAW AND ANAYLIS: Title 46, United States Code Appendix, § 883 (46 U.S.C. App. § 883, the merchandise coastwise law often called the “Jones Act”), provides, in part, that no merchandise shall be transported between points in the United States embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any vessel other than one that is coastwise-qualified (i.e., U.S.-built, owned and documented). Pursuant to § 4.80b(a), Customs Regulations (19 CFR § 4.80b(a)), promulgated pursuant to 46 U.S.C. App. § 883, a coastwise transportation of merchandise takes place when merchandise laden at one coastwise point is unladen at another coastwise point. The coastwise laws generally apply to points in the territorial sea, defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ. As we stated in our earlier letter to you (HQ 115731) dated, September 10, 2002, the Bureau of Customs and Border Protection (CBP) consistently has held that the use of a foreign-flag vessel as a storage facility in United States territorial waters does not violate the coastwise laws, or any other law administered by CBP, provided that the vessel remains stationary. CBP also has held that if the vessel is being loaded or unloaded and must be moved to another location because of stress of weather or other reason involving the vessel's safety, subsequently is returned to the same point to continue its loading or unloading, and loads or unloads no merchandise at any other point in the United States, the coastwise laws are not violated. See also, HQ 110127, dated April 5, 1989. In this case, you state that the butane will be loaded on the foreign-flagged vessel at your Marcus Hook Refinery, and will be moved to a stationary point within US territorial waters. At the end of the storage contract, which you anticipate to be 30 days, the vessel will be unloaded at the Marcus Hook Refinery. Since the coastwise point of loading and unloading are the same, this scenario would not constitute a violation of 46 U.S.C. App. §883. HOLDING: The use of a foreign-flagged vessel as a storage facility for butane as described above does not constitute a violation of 46 U.S.C. App. §883. Sincerely, Glen E. Vereb Chief Entry Procedures and Carriers Branch