VES-13-18-CO:R:IT:C 112061 GEV
Deputy Assistant Regional Commissioner
Commercial Operations Division
423 Canal Street
New Orleans, Louisiana 70130-2341
RE: Vessel Repair Entry No. C20-0029780-7; S/S ROBERT E. LEE
V-59; Casualty; Seaworthiness
Dear Sir:
This is in response to your memorandum dated December 16,
1991, forwarding a petition for review of ruling 111758. Our
ruling on this matter is set forth below.
FACTS:
The S/S ROBERT E. LEE is a U.S.-flag vessel operated by
Waterman Steamship Corporation of New Orleans, Louisiana. The
subject vessel had foreign shipyard work performed in Suez,
Egypt, and Valletta, Malta. Subsequent to the completion of the
work the vessel arrived in the United States at New Orleans on
January 21, 1991. A vessel repair entry covering the work in
question was timely filed on January 24, 1991.
An application for relief, dated May 3, 1991, was filed
requesting remission pursuant to 19 U.S.C. 1466(d)(1). It was
stated that on September 29, 1990, at 5:36 a.m., the ROBERT E.
LEE ran aground at Suez. Soundings revealed the forepeak tank,
forward fuel tank, port and starboard fuel tanks, No. 1 ballast
tank, Nos. 1 and 2 void spaces and No. 2 port and starboard
double bottom tanks to be flooded. The vessel was refloated on
the third attempt, after discharging 36 fully loaded LASH barges.
Further examination of the damage by S.C.A. divers revealed
that the damage was more extensive than previously advised. The
damage was found to extend from the after end of No. 2 double
bottom tank (Fr. 82) through to the bulbous bow, a distance of
approximately 380 feet and extending over the flat bottom. The
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divers reported that it would be possible to effect temporary
underwater repairs to the fore peak and fuel tanks, but temporary
repairs of other tank openings was impractical and would be
ineffective.
The Salvage Association advised that for the vessel to
transit the Suez Canal they would require: (1) the fuel oil in
the damaged tanks be off-loaded; (2) the fore peak and damaged
fuel oil tank be closed and made watertight; (3) the vessel not
be deeper than its present draft (36 ft.) which required the
discharge of all remaining LASH barges; and (4) the vessel have a
tug escort while transiting the canal. (see Salvage Association
report no. 458/90, dated November 12, 1990)
In addition, a representative of the American Bureau of
Shipping (ABS) surveyed the vessel. After the temporary repairs
were effected, the ABS representative recommended that: (1) the
vessel be drydocked for further bottom examination and all
damages be dealt with as deemed necessary; (2) the vessel proceed
to the port of repairs in ballast condition at reduced speed and
upon Master's stability calculations; and (3) the vessel be
escorted by tugboat in congested and/or pilot water and channels.
The ABS further determined "...the vessel fit to proceed in
ballast condition at reduced speed from Suez, Egypt via the Suez
Canal to the available Mediterranean or European port (Atlantic
or Indian Ocean not to be considered) for drydocking..." (see
ABS report no. SZ 3771 and certificate no SZ 3771-X, both dated
October 12, 1990, and included as Attachment B of the petition)
On October 13, 1990, the subject vessel commenced its canal
transit on passage to Malta, and drydock.
In ruling 111758 RAH, dated September 27, 1991, Customs
denied the application. This denial was based on the fact that
after the immediate temporary repairs were performed at Suez,
Egypt, the vessel sailed over 1,300 miles to Malta where
permanent repairs were undertaken. After the repairs in Malta,
the vessel sailed back to Egypt before returning to the United
States. While agreeing that seaworthiness is a relative term
dependent upon a variety of factors including the condition of
the vessel, the proposed voyage, seasonal changes, etc., we noted
that to support their claim the applicant relied heavily on the
ABS and Salvage Association documentation cited above. While
this documentation appeared indicative of the opinion of those
two organizations on this matter, the record contained no U.S.
Coast Guard (USCG) documentation of any kind. This appeared to
run contra to sections 2.01-15 and 31.10-25, of the USCG
Regulations (46 CFR 2.01-15, 31.10-25).
By letter dated December 6, 1991, Waterman Steamship
Corporation filed a petition for review of Customs ruling on
their application. In reiterating their claim for remission
pursuant to 19 U.S.C. 1466(d)(1), the petitioner submitted a
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letter dated November 20, 1991, from the Officer-In-Charge, USCG
Marine Inspection Office (OCMI), New York, N.Y. (Attachment A)
and the aforementioned ABS documentation (Attachment B).
ISSUE:
Whether evidence is presented sufficient to prove that the
foreign repairs performed on the vessel for which relief is
sought, were necessary for its safety and seaworthiness thus
warranting remission pursuant to 19 U.S.C. 1466(d)(1).
LAW AND ANALYSIS:
Title 19, United States Code, section 1466, provides in part
for payment of an ad valorem duty of 50 percent of the cost of
foreign repairs to vessels documented under the laws of the
United States to engage in the foreign or coastwise trade, or
vessels intended to engage in such trade. Section 1466(d)(1)
provides that the Secretary of the Treasury is authorized to
remit or refund such duties if the owner or master of the vessel
was compelled by stress of weather or other casualty to put into
such foreign port to make repairs to secure the safety and
seaworthiness of the vessel to enable her to reach her port of
destination.
It is noted that section 4.14(c)(3)(i), Customs Regulations
(19 CFR 4.14(c)(3)(i)), provides that "port of destination" means
such port in the United States. This point is not in dispute,
however, it is an embellishment upon section 1466(d)(1) which
sets forth the following three-part test which must be met in
order to qualify for remission:
1. The establishment of a casualty occurrence.
2. The establishment of unsafe and unseaworthy conditions.
3. The inability to reach the port of destination without
obtaining foreign repairs.
In addition, if the above requirements are satisfied by
evidence, the remission is restricted to the cost of the minimal
repairs necessary to "...secure the safety and seaworthiness of
the vessel to enable her to reach her port of destination." (19
U.S.C. 1466(d)(1)). Repair costs beyond that minimal amount are
not subject to remission. In the case under consideration, the
evidence supports the claim that the subject vessel suffered a
marine casualty. However, the extent of that casualty (i.e.,
parts 2 and 3 of the three-part test set forth above) is the
critical issue upon which this case turns.
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All parties concerned are in agreement that the USCG is the
controlling agency that determines questions of a vessel's
fitness to proceed. The procedure by which the USCG renders such
a determination is set forth in sections 2.01-15 and 31.10-25,
USCG Regulations (46 CFR 2.10-15, 31.10-25). The former states
that a vessel may not proceed from one port to another for
repairs unless prior authorization is obtained from the USCG
OCMI either through the issuance of a USCG "Permit to Proceed to
Another Port for Repairs" (CG-948) or a CG-835 which would
specify the restrictions on, and duration of, any voyage
undertaken prior to obtaining permanent repairs. The latter
states that with respect to tank vessels, "No extensive repairs
to the hull or machinery which affect the safety of a vessel
shall be made without the knowledge of the Officer-In-Charge,
Marine Inspection."
Notwithstanding the clear wording of the above USCG
Regulations, specifically 46 CFR 2.10-15 which does not
distinguish between foreign or domestic locations, the OCMI, New
York, N.Y., in a letter dated November 7, 1991, states that "A
formal Permit to Proceed is not normally issued to a vessel
transiting foreign waters because the Certificate of Inspection
(COI) would have to be removed from the vessel which would cause
problems in transiting foreign waters."
In addition, we have subsequently learned from the Chief,
Merchant Vessel Inspection and Documentation Division, USCG
Headquarters, in a letter dated April 14, 1992, that "Vessel
operators often make casualty reports for U.S. flag vessels
damaged overseas verbally to the proper Coast Guard Marine
Inspection Office, followed by the required written report. The
Coast Guard cannot always send a marine inspector to a damaged
vessel overseas on short notice. In such cases, the Coast Guard
may consider the classification society report and the report of
the vessel's master to determine the required temporary repairs
and voyage restrictions."
In regard to the case now under consideration, the
petitioner has provided a letter dated November 20, 1991, from
the Officer-In-Charge, USCG Marine Inspection Office, New York,
N.Y., (Attachment A) wherein it is stated that the USCG concurred
with and approved all findings and recommendations included in
ABS report no. SZ 3771 (Attachment B). It is further stated
that, "Verbal permission was then granted to transit directly to
Valletta, Malta to undergo an emergency drydocking and effect
permanent repairs to all damaged areas." A USCG inspector from
the Marine Inspection Office in New York attended the
aforementioned drydocking. In addition, the OCMI states in his
letter that, "I would not have allowed this vessel to transit
from the Mediterranean to the United States at that time without
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making permanent repairs to all damaged areas due to the
conditions of the vessel and the extremely harsh climate of the
North Atlantic Ocean during the winter months."
Accordingly, evidence is presented sufficient to prove that
the subject foreign repairs were necessary for the vessel's
safety and seaworthiness thereby warranting remission pursuant to
19 U.S.C. 1466(d)(1).
Parenthetically, we note that in regard to future cases
such as the one now under consideration (i.e., where a vessel
that has been damaged foreign proceeds in a state of disrepair
between two foreign locations prior to its being repaired
foreign, and subsequently sails to its U.S. port of
destination), notwithstanding any practice of verbally reporting
foreign casualties to the USCG and that agency's subsequent
verbal instructions, remission pursuant to 19 U.S.C. 1466(d)(1)
will not be granted in the absence of documentary evidence that
the casualty occurrence was timely reported to the USCG and that
agency, directly or through the medium of a marine surveyor,
permitted the vessel to proceed between two foreign locations in
a damaged condition. The mere submission of a USCG Report of
Marine Accident, Injury or Death (CG-2692), without accompanying
documentation from the appropriate USCG OCMI (New York or
Honolulu) authorizing the vessel to proceed in a damaged
condition, will not suffice for granting remission pursuant to 19
U.S.C. 1466(d)(1).
HOLDING:
The evidence presented is sufficient to prove that the
foreign repairs performed on the subject vessel for which relief
is sought were necessary for its safety and seaworthiness
therefore remission pursuant to 19 U.S.C. 1466(d)(1) is granted.
Sincerely,
B. James Fritz
Chief
Carrier Rulings