OT:RR:BSTC:CCR H335529 AM
Utsav Mathur, Esq.
Norton Rose Fulbright US LLP
1301 McKinney Street
Suite 5100
Houston, Texas 77010-3095
RE: 46 U.S.C. 55102; 19 CFR 4.80b(a); New and Different Product; Proposed Transportation of Gasoline Blendstock.
Dear Mr. Mathur:
This is in response to your November 6, 2023, letter in which you request a ruling on behalf of [ company ] (collectively, the "Company") whether the proposed transportation of certain petroleum products by a non-coastwise-qualified vessel in conjunction with contemplated blending operations would constitute a violation of 46 U.S.C. 55102.[1] Our decision follows.
FACTS:
The following facts are from your ruling request. You propose to transport parcels of ungraded petroleum blending components from coastwise points of the United States along the
[ points ] to locations outside of the United States ("Foreign Points") including but not limited to points in [ points ] aboard foreign-flagged vessels.
You state that the blending components[2] will be blended at an onshore facility within shore tanks to produce four finished products (collectively, the "Finished Products"): Conventional Gasoline ("CG"), Conventional Blendstock for Oxygenated Blending ("CBOB"), Reformulated Blendstock for Oxygenated Blending ("RBOB"), and California Reformulated Gasoline Blendstock for Oxygenate Blending ("CARBOB"), that would be imported into the United States.
Following storing, blending, and testing, the resulting Finished Products will be transported aboard foreign-flagged vessels from the Foreign Points to different coastwise points of the United States, [ points ]. You state ethanol will be added to the Finished Products to create an oxygenated gasoline blend. The CG will not require oxygenate. You provided specifications for the exported blending products and stated that "each exported component will be distinguishable from each imported Finished Product."
Therefore, the Company contends that each of the Finished Products are a "new and different" product and seeks a ruling confirming that the contemplated blending activity described above would result in a new and different product such that its transportation between coastwise points would not violate 46 U.S.C. 55102.
ISSUE:
Whether, based on the product specifications provided, the proposed blending operation would result in the creation of a "new and different product" within the meaning of 19 C.F.R. 4.80b(a), such that the proposed transportation by a non-coastwise-qualified vessel would not be in violation of 46 U.S.C. 55102.
LAW AND ANALYSIS:
Pursuant to 46 U.S.C. 55102 ("the Jones Act"), a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel has a coastwise endorsement. (emphasis added).
The provisions of 46 U.S.C. 55102 are implemented by 19 CFR 4.80b(a), which provides:
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).
U.S. Customs and Border Protection ("CBP") has consistently held that in order for fuel oil to qualify as a new and different product, it must undergo a change in American Society for Testing Material ("ASTM") grade. In Headquarters Ruling ("HQ") H101115 (Apr. 23, 2010), CBP stated that in adherence to industry standards, when fuel oil changes ASTM grades, it becomes a new and different product. In that case, CBP found that the transportation would not be in violation of 46 U.S.C. 55102 because the merchandise when imported would not meet the ASTM specifications for gasoline but would be exported as unleaded gasoline meeting the ASTM specifications. See also HQ H190675 (Jan. 20, 2012); HQ 116650 (June 9, 2006); HQ 116230 (May 28, 2004); HQ 112895 (Feb. 2, 1994); HQ 111846 (Apr. 28, 1992).
Accordingly, we have sought and received advice from CBP's Laboratories and Scientific Services Directorate ("LSSD") as to whether the proposed blending operation results in a new and different product. Based on the information provided in your request, including specifications and blending processes, LSSD advised that a new and different article of commerce is produced within the meaning of 19 C.F.R. 4.80b(a) when the exported components are blended to make the Finished Products under ASTM D4814, RBOB, CBOB, or CARBOB as long as the product meets the respective specifications after blending with 10% ethanol. Therefore, we find that the four blending operations proposed would result in new and different products. Thus, under 19 C.F.R. 4.80b, the subsequent transportation of the finished product aboard a non-coastwise-qualified vessel would not be in violation of 46 U.S.C. 55102.
HOLDING:
Based on the import and export specifications provided, the four proposed blending operations as described above would result in the creation of a new and different products within the meaning of 19 C.F.R. 4.80b(a). Therefore, the proposed transportation by a non-coastwise-qualified vessel would not be in violation of the Jones Act, 46 U.S.C. 55102.
Please note that 19 C.F.R. 177.9(b)(1) provides that "[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based." If the terms of the import or export contracts and results of the sampling records vary from the facts stipulated to herein, or CBP ascertains discrepancies based upon a review of any other pertinent information, this decision shall not be binding on CBP as provided for in 19 C.F.R. 177(b)(1), (2) and (4), and 177.9(b)(1) and (2).
Sincerely,
W. Richmond Beevers
Chief, Cargo Security, Carriers, and Restricted Merchandise
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection
-----------------------
[1] You have asked this office for confidential treatment of all information contained in brackets which include your client's name and the ports of lading and unlading. CBP Regulations at 19 C.F.R. 177.2(b)(7) provide that the requester of a ruling from our office may ask that privileged or confidential commercial or financial information supplied for purposes of preparing the requested ruling not be disclosed. Such requests will be considered if the information is clearly identified and the reasons for requesting that information not be disclosed are provided. If this office receives a Freedom of Information Act request for your submission, Regulations at 6 C.F.R. 5.12, et seq. regarding the disclosure of business information provide that the submitter of business information will be advised of receipt of a request for such information whenever the business submitter has in good faith designated the information as commercially or financially sensitive information. We accept your request for confidential treatment as a good faith request.
[2] The blending components include alkylate, butanes, catalytic-cracked gasoline ("cat gas") (of which there are four varieties: Low Octane, High RVP, Light, and Heavy), cumene, ethylbenzene, naphtha (heavy and light), raffinate, reformate, toluene, and mixed xylenes. The Company intends to discharge and store the components in shore tanks at Foreign Points.