ENT-1/CON-3/CON-7-CO:R:E:C 225339 AJS
Laurence J. Lasoff, Esq.
Collier, Shannon, Rill & Scott
3050 K Street, N.W. Ste. 400
Washington, D.C. 20007
RE: Equipment and supplies for oil spill cleanup in the U.S.
Virgin Islands; General Note 1; General Note 2; coastwise trade;
19 U.S.C. 1433; 19 U.S.C. 1434; Subheading 9801.00.10;
"exportation".
Dear Mr. Lasoff:
This is in reply to your request of April 14, 1994,
concerning Marine Spill Response Corporation (MSRC).
FACTS:
MSRC is a mutual benefit corporation organized exclusively
to promote the welfare of the public by mitigating environmental
damage to the waters of the United States. Under its charter
MSRC can only respond to spills occurring within or threatening
the waters (including the territorial seas and the exclusive
economic zone) of the United States (including the several states
of the U.S., the District of Columbia, the Commonwealth of Puerto
Rico, Guam, American Samoa, the U.S. Virgin Islands, the
Commonwealth of the Northern Mariana Islands, and any other
territory or possession of the United States). MSRC equipment
and resources were acquired through grants provided by the Marine
Preservation Association (MPA). MPA is a non-profit organization
whose members include oil companies, shippers and receivers of
oil and others who pay dues to MPA based on the amount of oil
they handle in the marine environment. Certain MPA members have
entered into contracts with MSRC to fulfill their required spill
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response plans and obligations under the Oil Pollution Act of
1990 (OPA). MSRC will also respond to oil spills of non-members
through agreements with the U.S. Government or through agreements
with non-members.
MSRC operates five regional response centers which house
necessary vessels (i.e., U.S.-built and flagged), equipment,
supplies and personnel to promptly respond to oil spills in order
to satisfy certain of its clients' obligations as required under
the OPA. In addition to the five regional centers, MSRC has
other facilities located in different locations, which serve as
prestaging sites. These sites also contain certain equipment
that may be necessary should a spill occur in a particular area.
MSRC maintains records of the inventoried equipment and supplies
located at each center and site. The equipment and supplies used
by MSRC are of both U.S. and foreign origin. The foreign origin
merchandise is imported into the U.S. and all applicable duties
are paid upon initial entry.
In situations involving a spill in U.S. waters, MSRC
equipment and supplies will be sent by vehicle, air or sea to the
spill site. MSRC must use its best efforts to initiate response
activities immediately and must use different equipment from the
various centers and sites as necessary to respond to the
particular demands of the spill. Once the spill response
activities are completed, all vessels, equipment and supplies are
cleaned and returned to the original response center or site in
the U.S., Puerto Rico or the U.S. Virgin Islands so that they can
be readied for subsequent oil spill events. During response
activities, equipment may break and the entire piece of equipment
or just the broken part may be returned to the U.S. for repair.
ISSUE:
Whether the subject equipment and supplies are exported when
sent on an oil spill.
Whether the subject equipment and supplies are subject to
Customs pre-exportation procedural requirements for articles
exported and returned or to Customs entry filing procedures or
duties upon their return to their U.S. port of origin.
LAW AND ANALYSIS:
All goods provided for in this schedule and imported into
the customs territory of the United States from outside thereof
are subject to duty or exempt therefrom as prescribed in general
note 3 through 13, inclusive. General Note 1, Harmonized Tariff
Schedule of the United States (HTSUS). The term "customs
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territory of the United States", as used in the tariff schedule,
includes only the States, the District of Columbia and Puerto
Rico. General Note 2, HTSUS.
MSRC will operate from various locations in the U.S. Under
its Charter "MSRC can only respond to spills occurring within or
threatening the waters (including the territorial seas . . .) of
the U.S. (including . . . the District of Columbia, the Common-
wealth of Puerto Rico, Guam, American Samoa, the U.S. Virgin
Islands, the Commonwealth of the Northern Mariana Islands, and
any other territory or possession of the U.S."
The recovery of spilled oil from a point or points in the 3-
mile U.S. territorial sea and the unloading/discharge of the oil
at another such point or points constitutes coastwise trade
which, pursuant to 46 U.S.C. App. 883, may only be performed by
vessels which are U.S.-built, owned and documented (i.e.,
coastwise-qualified). At this time, the response centers house
U.S.-built and flagged oil spill vessels. Oil spill recovery
operations conducted solely within U.S. territorial waters (not
including the exclusive economic zone) by other than coastwise-
qualified vessels are prohibited by 46 U.S.C. App. 883.
We note that with respect to Guam, American Samoa, Wake,
Midway, or Kingman Reef, vessels issued a certificate of
documentation with a registry endorsement (i.e., foreign-built
and U.S.-flagged) pursuant to 46 U.S.C. 12105(b) may engage in
the coastwise trade. With regard to the Commonwealth of the
Northern Mariana Islands (CNMI), sections 502(b) and 503(b) of
the "Covenant to Establish a Commonwealth of the Northern Mariana
Islands in Political Union with the United States of America"
provide in part that except for activities of the U.S. Government
and its contractors in the CNMI, the coastwise laws of the United
States do not apply to the CNMI. Furthermore, the coastwise laws
are not applicable to American Samoa pursuant to 48 U.S.C. 1664,
or to the U.S. Virgin Islands pursuant to 46 U.S.C. App. 877 (see
also 101.1(m), Customs Regulations and 19 U.S.C. 1401(h)).
As noted in the above statutory and regulatory authority, a
port in the USVI is considered a foreign port for purposes of
vessel entry and clearance. Accordingly, a vessel arriving in
the U.S. from the USVI must immediately report its arrival
pursuant to 19 U.S.C. 1433 and make formal entry within twenty-
four hours after arrival pursuant to 19 U.S.C. 1434. A vessel
leaving the U.S. bound to the USVI must clear for foreign
pursuant to 46 U.S.C. App. 91.
Your request correctly notes that "exportation" is defined
by 19 CFR 101.1(k) as:
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A severance of goods from the mass of things belonging to
this country with the intention of uniting them to the mass
of things belonging to some foreign country. The shipment
of merchandise abroad with the intention of returning it to
the United States with the design to circumvent provisions
of restriction or limitation of the tariff laws or to secure
benefit accruing to imported merchandise is not an
exportation. Merchandise of foreign origin returned from
abroad under these circumstances is dutiable according to
its nature, weight, and value at the time of its original
arrival in this country.
See Swann & Finch Company v. United States, 190 U.S. 143 (1903).
We agree that the equipment and supplies sent to the USVI do
not satisfy the above description. In situations involving a
spill, equipment and supplies will be sent by vehicle, air or sea
to the spill site. Once the spill response activities are
completed, all equipment and supplies are cleaned and returned to
their point of origin. Therefore, no intent exists to unite them
to the mass of things belonging to the USVI. Accordingly, no
exportation of the subject equipment and supplies occurs.
Subheading 9801.00.10, HTSUS, provides for the free entry of
U.S. products that are exported and returned without having been
advanced in value or improved in condition by any means while
abroad, provided the documentary requirements of 19 CFR 10.1 are
met. You request whether Customs' pre-exportation procedural
requirements for articles exported and returned are applicable.
Inasmuch as no exportation has occurred in this instance, these
procedural requirements are inapplicable.
As noted previously, all goods imported into the customs
territory of the U.S. from outside thereof are subject to duty or
exempt therefrom. Inasmuch as no exportation has taken place in
this instance, the subject equipment and supplies are not
imported when returned to the U.S. However, in order to support
the determination that an exportation did not occur,
documentation will be required to verify exactly which equipment
and supplies are initially sent to the spill and that these same
equipment and supplies are returned to the point of origin. For
example, the manifest required for an outgoing vessel in 19 CFR
4.60 could be provided listing the equipment and supplies on the
vessel, and the manifest required for an incoming vessel in 19
CFR 4.7 could be provided listing the equipment and supplies on
that vessel. This type of documentation would enable Customs to
verify that the items returned to the customs territory of the
U.S. are also the same items which departed the customs territory
of the U.S.
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Your request states that departures of equipment and
supplies from the U.S. may be by aircraft. 19 CFR 122.61(a)(1)
requires that all aircraft, except public and private, leaving
the U.S. for a foreign area are required to clear if carrying
merchandise for hire. 19 CFR 122.79(a) provides that an air
cargo manifest shall be filed for aircraft transporting cargo
between the U.S. and U.S. possessions. In addition, a Shipper's
Export Declaration is required for shipments from the U.S. to the
USVI. It appears that equipment and supplies departing by
aircraft would be subject to these provisions.
HOLDING:
The subject equipment and supplies are not exported when
sent to the USVI in response to an oil spill.
The subject equipment and supplies are not subject to
Customs pre-exportation procedural requirements for articles
exported and returned because they are not exported. In
addition, they would not be subject to duty because they are not
exported. Proper documentation must be provided to establish
that the equipment and supplies returning to the customs
territory of the U.S. are the same items which originally
departed the customs territory
U.S. vessels arriving with the subject equipment and
supplies from a foreign place are subject to Customs reporting
and entry filing procedures pursuant to 19 U.S.C. 1433 & 1434.
The subject vessels, departing the U.S. bound to the USVI, must
also clear for foreign pursuant to 46 U.S.C. App. 91. In
addition, items departing the U.S. by aircraft for the USVI are
subject to the requirements of 19 CFR 122.61 and 122.79.
Sincerely,
John Durant, Director
Commercial Rulings Division