CLA-2 CO:R:C:M 950197 LTO
Ms. Judy Campbell
W.Y. Moberly, Inc.
P.O. Box 164
Sweetgrass, Montana 59484
RE: Petrocleaner (Unit types 300 and 700); "vessel"; 8421.29.00;
EN 89.05(A) HQ 105463; HQ 106520; HQ 110276; HQ 110386; HQ
110994; HQ 111275; Note 1(l) to Sect. XVI; EN to Chapter 89;
General Headnote 5(g), TSUS; 19 U.S.C.A. 1401(a); 49 U.S.C.A.
App. 883; ("Jones Act"); 50 U.S.C.A. App. 2406(d); 33 CFR 2.05-
25(a)(3)(i); 33 CFR 329.4; C.S.D. 89-85; T.D. 75-276; Elizabeth
River Terminals, Inc. v. U.S.; Hitner Sons Co. v. U.S.; Todd
Shipyards Corp. v. U.S.; U.S. v. Moran Towing and Transportation
Co.
Dear Ms. Campbell:
This is in response to your letter of July 15, 1991, to the
District Director of Customs in New York, concerning the tariff
classification of the Petrocleaner (Unit types 300 and 700)
under the Harmonized Tariff Schedule of the United States
(HTSUS). Your letter was referred to this office for a response.
FACTS:
The merchandise under consideration is an oil skimming
device called the "Petrocleaner." The primary use of the
Petrocleaner is in oil spill recovery on open water, but it may
also be used for separation of one fluid floating on top of
another in more contained or artificial areas such as storage
ponds or lagoons. The Petrocleaner operates by using a multi-
blade screw that compresses and conveys contaminated water and
thereby expels purified water underneath and pushes thickened
surface material into a rear chamber.
Two models of the Petrocleaner are offered for sale. Type
300 is smaller and is sold in kit form for assembly at the job
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site. This model floats and is self-powered, but is remotely
controlled. Type 700 floats on pontoons and can carry three
people. It is self-propelled and is steered by an on-board
operator. Neither model has oil storage capacity: Type 300
typically pumps oil to a shore tank and Type 700 pumps oil to a
separate storage vessel.
ISSUE:
1. Whether recovery or transportation of oil by a skimming
vessel constitutes coastwise trade.
2. Whether the Petrocleaner is properly classifiable under
subheading 8421.29.00, HTSUS, which describes filtering or
purifying machinery and apparatus, for liquids or gases, or under
subheading 8905.90.50, HTSUS, which describes other vessels the
navigability of which is subsidiary to their main function.
LAW AND ANALYSIS:
1. Use of the Foreign-Built Skimmers in U.S. Waters
The coastwise laws of the United States prohibit the
transportation of merchandise between points in the United States
embraced within the coastwise laws, 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
persons who are citizens of the United States. 46 U.S.C.A. App.
883 (West Supp. 1991)(referred to as "the Jones Act").
The term "merchandise" is defined in the coastwise statute
to include valueless materials. 46 U.S.C. App. 883. The statute
further provides that the transportation of valueless material,
regardless of its commercial value, from a point or place in the
United States or a point or place on the high seas within the
Exclusive Economic Zone, as defined in the Presidential
Proclamation of March 10, 1983, to another point or place in the
United States or a point or place on the high seas within the
Exclusive Economic Zone falls within the ambit of the coastwise
statute.
From this statutory framework, the Customs Service has
concluded that the coastwise laws prohibit the use of a non-
coastwise-qualified mobile vessel for recovery or transportation
of oil in waters within the jurisdiction of the coastwise laws.
HQ 110386, dated September 29, 1989. However, Customs has held
that the use of a non-coastwise-qualified vessel as a stationary
facility for lodging, processing, storing, or other activities is
not a "transportation" that is prohibited by section 883. Id.
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If such a stationary vessel is being loaded or unloaded and must
be moved to another location temporarily due to stress of weather
or other reason involving the safety of the vessel, the coastwise
laws are not violated so long as no loading or unloading occurs
at any other coastwise point and the vessel is subsequently
returned to its original location once the danger has passed.
Id. The description provided on the use of the Petrocleaners
indicates that these skimmers are mobile recovery vessels. Their
use would constitute an engagement in the coastwise trade.
Only coastwise-qualified vessels may accept the transfer of
the recovered oil at a coastwise point for transportation to
another coastwise point, regardless of whether the vessel leaves
the territorial waters or exclusive economic zone of the United
States. HQ 110276, dated June 15, 1989. Transportation by a
non-coastwise-qualified vessel is permitted only if the oil is
unloaded at a foreign point. Id. However, you should be aware
that under 50 U.S.C.A. App. 2406(d) (1988), the exportation of
domestically produced crude oil that has been transported via the
Trans-Alaska Pipeline is prohibited, with certain narrow
exceptions.
Generally, the coastwise laws apply to points within the
territorial sea of the United States, 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. HQ 111275, dated November 13, 1990. Further, the
coastwise merchandise statute is applicable only to those
activities in the navigable waters of the United States, its
territories and possessions. The United States Coast Guard
determines whether a particular body of water is deemed to be
navigable waters of the United States in order to ascertain its
own jurisdiction to enforce the laws it administers. The Customs
Service, in ascertaining its own jurisdiction to enforce the
navigation laws it administers, is strongly disposed to follow
determinations of the Coast Guard in the absence of United States
judicial decisions or Congressional enactments. C.S.D. 89-85.
The test for navigability has been established by the
federal courts through the years. This test consists of four
essential elements that, when taken together, state that a
navigable waterway of the United States must (1) be or have been
(2) used or susceptible of use (3) in the customary modes of
trade and travel on the water (4) as a highway for foreign or
interstate commerce. See HQ 110994, dated May 24, 1990, and
cases cited therein; accord 33 CFR 2.05-25(a)(3)(i) (Coast Guard
regulations), 33 CFR 329.4 (Army Corps of Engineers regulations).
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The Petrocleaners will be used both on open waters and on other
water surfaces such as lagoons and water storage ponds. These
descriptions suggest that the principal use of Petrocleaners will
be on navigable waters, and use of the Petrocleaners would be
subject to coastwise restrictions. The water storage ponds,
which appear to be man-made containment areas, do not appear to
be navigable waters; the use of the Petrocleaner on such waters
would not be subject to coastwise restrictions.
2. Classification of the Petrocleaner
The General Rules of Interpretation (GRI's) to the HTSUS
govern the classification of goods in the tariff schedule. GRI 1
states that "for legal purposes, classification shall be
determined according to the terms of the headings and any
relative section or chapter notes . . . ."
The headings at issue are as follows:
8421 [F]iltering or purifying machinery and
apparatus, for liquids
* * * * * * * * * * * * *
8905 Light-vessels, fire-floats, dredgers,
floating cranes, and other vessels the
navigability of which is subsidiary to
their main function
Note 1(l) to Section XVI states that Section XVI does not cover
articles of Section XVII. Thus, if the Petrocleaners are
classifiable under Heading 8905 (a Section XVII heading), HTSUS,
they are excluded from Heading 8421 (a Section XVI heading),
HTSUS.
The Harmonized Commodity Description and Coding System
Explanatory Notes (EN) constitute the Customs Co-operation
Council's official interpretation of the Harmonized System.
While not legally binding, they provide a commentary on the scope
of each heading of the Harmonized System and are generally
indicative of proper interpretation of these headings.
The Petrocleaner's primary use is in oil spill recovery on
open water. The heart of the Petrocleaner is a multi-blade screw
in a casing, the blades of which change pitch over its length,
compressing and conveying the material rearward, expelling water
underneath and containing the thickened surface material in a
rear chamber for easy pumping.
Prior to implementation of the HTSUS, the focus of Customs
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in examining skimmers was on whether the article under
consideration was considered a "vessel." Under the Tariff
Schedules of the United States (TSUS), such a determination would
establish the eligibility of the skimmer to be exempt from entry
and payment of duty under General Headnote 5(g), TSUS.
Section 1401(a) of the Tariff Act of 1930, as amended, [19
U.S.C. 1401(a)] defines the term "vessel" so as to include "every
description of water craft or other contrivance used, or capable
of being used, as a means of transportation in water, but does
not include aircraft." The term "vessel" has been further
refined by judicial and administrative interpretation to limit
vessels included under General Headnote 5(g), TSUS, to watercraft
that are instrumentalities of commerce as opposed to articles of
commerce. Elizabeth River Terminals, Inc. v. United States, 1
C.I.T. 165, 170, 509 F. Supp. 517, 520 (1981). The structure of
the watercraft was considered secondary to the actual or possible
use of the watercraft as a means of transportation on water in
commerce or navigation. See Hitner Sons Co. v. United States, 13
Ct. Cust. App. 216, 221, T.D. 41175 (1922); Todd Shipyards Corp.
v. United States, 9 C.I.T. 464, 466, 624 F. Supp. 1553, 1556
(1985). The Customs Service has found oil skimmers to be
vessels. See HQ 106520, dated December 3, 1983; T.D. 75-276, 9
Cust. B. & Dec. 607 (1975).
The HTSUS introduced to United States customs law a new
nomenclature, including some new provisions relating to ships.
Chapter 89, HTSUS, includes ships, boats, and floating
structures. The Harmonized Commodity Description and Coding
System Explanatory Note to Chapter 89, pg. 1449, include within
this chapter "ships, boats and other vessels of all kinds
(whether or not self-propelled)...."
Among the new provisions to the tariff schedules is Heading
8905, HTSUS, which includes light vessels, fire-floats, dredgers,
floating cranes, and other vessels the navigability of which is
subsidiary to their main function; floating docks; floating or
submersible drilling or production platforms. EN 89.05(A), pg.
1452, states that the heading includes:
light vessels; drill ships; fire-floats; dredgers
of all kinds (e.g., grab or suction dredgers); salvage
ships for the recovery of sunken vessels; permanently
moored air-sea rescue floats; bathyscaphes; pontoons
fitted with lifting or handling machines (e.g.,
derricks, cranes, grain elevators) and pontoons
clearly designed to serve as a base for these
machines.
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In contrast to the rulings under the TSUS, this heading of
the HTSUS places greater emphasis on function than on
navigability. Moreover, this heading includes items previously
not considered to be vessels, such as, floating docks. See Todd
Shipyards, 9 C.I.T. at 467, 624 F. Supp. at 1556. Thus, a
previous determination that an item was not a vessel will not a
fortiori exclude such item from classification in Chapter 89,
HTSUS.
Unit type 300 is self-floating and self-powered, but carries
no persons. It is remotely controlled, generally from land, and
has no self-steering capabilities. Unit type 700 floats on two
pontoons, is self-propelled, and can carry three persons. While
they can only travel at two knots per hour, both are navigable
and both are similar to those vessels listed in the Heading and
the Explanatory Notes. Therefore, it is the opinion of this
office that the Petrocleaner (Unit type 300 and 700) is a
"vessel" contemplated by Heading 8905, HTSUS, and described by
subheading 8905.90.50, HTSUS.
Finally, it is necessary to comment on the fact that the
United States Coast Guard does not consider skimmers of this kind
to be vessels. The courts have recognized that different
considerations may affect decisions made by the Customs Service
when evaluating classification and dutiability and the Coast
Guard when evaluating documentation. United States v. Moran
Towing and Transportation Co., 374 F.2d 656, 664 (1967). Thus,
given the different mandates, it is inevitable that some craft
may be considered differently by the Customs Service and the
Coast Guard. See HQ 105463, dated March 3, 1982.
HOLDING:
1. The use of the Petrocleaner on navigable waters is subject
to coastwise restrictions. However, the use of the Petrocleaner
on non-navigable waters, such as, man-made storage ponds, is not
subject to these restrictions.
2. The Petrocleaner is classifiable under subheading
8905.90.50, HTSUS, which provides for "[l]ight-vessels, fire-
floats, dredgers, floating cranes, and other vessels the
navigability of which is subsidiary to their main function . . .
[o]ther . . . [o]ther." The applicable rate of duty for these
articles is "Free."
Sincerely,
John Durant, Director
Commercial Rulings Division