us-cbp-cross-rulings-hq-112895•HQ 112895: Coastwise Trade; Fuel Oil Blending; 46 U.S.C. App. 883; 19 C.F.R. 4.80b(a).
HQ 112895: Coastwise Trade; Fuel Oil Blending; 46 U.S.C. App. 883; 19 C.F.R. 4.80b(a).
us-cbp-cross-rulings-hq-112895HQ 112895: Coastwise Trade; Fuel Oil Blending; 46 U.S.C. App. 883; 19 C.F.R. 4.80b(a).Guidance
Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.
HQ 112895
February 2, 1994
VES-3-07 CO:R:IT:C 112895 JBW
CATEGORY: Carriers
Andrea Grant, Esquire
Verner, Liipfert, Berhard, McPherson and Hand
Suite 700
901 15th Street, N.W.
Washington, D.C. 20005-2301
RE: Coastwise Trade; Fuel Oil Blending; 46 U.S.C. App. 883; 19
C.F.R. 4.80b(a).
Dear Ms. Grant:
This letter is in response to your submissions, dated
September 22, 1993, filed on behalf of Global Petroleum
Corporation, in which you request a ruling on the applicability
of 46 U.S.C. App. 883 to several fuel oil blending operations.
FACTS:
Global Petroleum intends to blend finished gasoline products
in a bonded warehouse in Canada from separate blending
components. The finished gasoline, in most instances, will be
imported into the United States. Global Petroleum intends to
transport both the blending components and the finished product
on foreign-flag vessels. You request a ruling on the use of
specified blending components, which you describe as
representative of the blending operations performed. You state,
however, that the volumes and the specifications of the
components will vary.
Representative Transaction:
United States origin toulene, reformate, and rafinate will
be shipped from the United States to Canada in segregated tanks
on a foreign-flag vessel. These components contain the following
characteristics:
1. Toulene:
API Gravity 40
Distillation (Deg. C)
IBP 104
10% 110
50 % 118.5
90% 138
End. Pt. 166
RVP (psi) 1.5
RON 112
MON 102
(R+M)/2 107
2. Reformate:
API Gravity 40.7
Distillation (Deg. C)
IBP 129.5
10% 153
50 % 163
90% 180
End. Pt. 232
RVP (psi) 3.3
RON 97.4
MON 85.8
(R+M)/2 91.6
3. Raffinate:
API Gravity 75.5
Distillation (Deg. C)
IBP 42
10% 60
50 % 72.5
90% 102.5
End. Pt. 121.5
RVP (psi) 5.3
RON 59.3
MON 57.3
(R+M)/2 58.3
4. Pentanes:
Global Petroleum will export to the blending facility in
Canada pentane from Mexico. The specifications of this component
would be:
API Gravity 90.4
Distillation (Deg. C)
IBP 30
10% 35.6
50 % 36.1
90% 50
End. Pt. 79
RVP (psi) Range: 16.0-16.5
RON 75
MON 73
(R+M)/2 74
Additional Components Used for Blending:
Global Petroleum also plans to use the following other
components in its blending operation:
NAME SG RON MON R+M/2 LEAD 50PCT SULP MERC RVP
DEG C PCT PPM PSI
WT
ASTM LIMITS 82.0 87.0 77 MIN (2)
MIN MIN (1) MAX MAX
Normal Butane 0.58 95.2 89.0 92.1 0 34.0 0.01 1 62.5
Mexican
Pentanes 0.64 73.0 72.0 72.5 0 46.0 0.01 3 13.0
Hydrocrackate 0.65 85.0 83.2 84.1 0 44.5 0.02 3 14.4
Isomerate 0.65 87.1 85.4 86.3 0 41.0 0.01 3 13.6
Light Virgin
Naphtha 0.67 73.1 69.9 71.5 0 51.0 0.01 13 13.5
Belview
Natural 0.67 73.0 72.0 72.5 0 47.5 0.01 3 13.5
Light Straight
Run 0.68 78.3 73.9 76.1 0 60.0 0.01 3 10.5
Raffinate 0.70 71.9 75.0 73.5 0 76.0 0.01 3 6.0
Pygas (Light) 0.71 94.5 80.1 87.3 0 66.0 0.01 3 10.5
Full Range
Naphtha 0.72 54.8 53.5 54.2 0 105.0 0.01 5 10.0
Argentina 83
RON 0.72 83.0 75.0 79.0 0 95.0 0.00 3 10.0
MTBE 0.75 117.7 100.0 108.9 0 60.0 0.01 3 9.0
Toluene 0.87 118.0 96.0 107.0 0 110.0 0.01 3 0.1
Xylene 0.87 112.3 96.0 104.2 0 135.0 0.01 3 0.7
C9 0.87 115.0 95.8 105.4 0 168.0. 0.01 3 0.2
Additional Blending Components:
NAME SG RON MON R+M/2 LEAD 50PCT SULP MERC RVP
DEG C PCT PPM PSI
WT
ASTM LIMITS 82.0 87.0 77 MIN (2)
MIN MIN (1) MAX MAX
Light Cat Gas 0.70 90.3 79.3 84.8 0 78.0 0.01 3 11.1
Alkylate 0.70 95.0 92.3 93.7 0 104.0 0.01 3 7.5
Venezuelan
Cat Gas 0.76 91.0 80.0 85.5 0 105.0 0.07 3 8.0
Trinidad
Reformate 0.78 94.5 85.0 89.8 0 125.0 0.02 3 8.5
Heavy Cat
Gas 0.80 89.8 79.7 84.8 0 145.0 0.15 4 2.0
Pygas (Heavy) 0.86 97.2 82.4 89.8 0 154.0 0.01 3 2.0
Amoco Light
Cat Gas 0.68 93.4 80.8 87.1 0 56.0 0.01 3 11.2
NAME 10PCT 90PCT FBP DIST COP EXIST OXID V/L
DEG C DEG C DEG RES COR GUM STAB
PCT MG/
VOL 100ML
ASTM LIMITS 225 2PCT 5
MAX MAX MAX
Light Cat Gas 49 194 192 1.0 1 2 240+ 50.3
Alkylate 82 132 197 2.5 1 2 360+ 53.9
Venezuelan
Cat Gas 57 199 220 3.0 1 2 360+ 63.5
Trinidad
Reformate 66 171 235 1.0 1 2 240+ 67.8
Heavy Cat
Gas 80 180 210 1.0 1 3 240+ 88.6
Pygas (Heavy) 120 165 188 3.0 1B 10 150 98.1
Amoco Light
Cat Gas 44 96 128 1.0 1 2 360+ 45.3
The vapor liquid ratio (V/L) was calculated using the formula:
52.47 - 0.33RVP + 0.20T10 + 0.17T50, where T10 is the
distillation temperature in degrees C for 10 % evaporated, T50 is
the distillation temperature in degrees C for 50 % evaporated,
and RVP is RVP in kPA.
Finished Motor Gasoline:
The finished gasoline produced from the blending components
in the representative transaction would produce gasoline having
the following specifications. You acknowledge that these
specifications are only approximate and may only be determined
after testing the results of an actual blend.
Characteristics ASTM Specification Imported Gasoline
Distillation (Deg. C)
10% 50-70 Max. 52
50 % 77 Min. 92
90% 110-121 Max. 168
End. Pt. 225 Max. 196
V/L (2) Temp. (Deg. C) 41-60 57
RVP (psi) 15.0-7.8 Max. 9.02-8.76
RON --- 82.8
MON 82 Min. 92
(R+M)/2 87-91 & above 87.4
ISSUE:
Whether the blending operations described above are
sufficient to create a "new and different product" within the
meaning of 19 C.F.R. 4.80b(a) so that the proposed
transportation of the blend by a foreign-flag vessel is not in
violation of 46 U.S.C. App. 883.
LAW AND ANALYSIS:
Section 883 of Title 46, United States Code Appendix,
provides, in pertinent part:
No merchandise shall be transported by water,
or by land and water, on penalty of
forfeiture of the merchandise (or a monetary
amount up to the value thereof as determined
by the Secretary of the Treasury, or the
actual cost of the transportation, whichever
is greater...), between points in the United
States, including Districts, Territories, and
possessions thereof embraced within the
coastwise laws, either directly or via a
foreign port, or for any part of the
transportation, in any other vessel 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. App. 883. The Customs Service has ruled that a point
within the territorial waters of the United States is a point
embraced within the coastwise laws. The territorial waters of
the United States consist of 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.
Section 4.80b(a) of the Customs Regulations provides, in
part, that:
[M]erchandise 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.
19 C.F.R. 4.80b(a). In applying this section, the Customs
Service has held that merchandise manufactured or processed into
a new and different product must be landed and processed at an
intermediate port or place other than a coastwise point; the
manufacturing or processing may not take place on board a vessel.
Pursuant to Treasury Decision 91-32, 56 Fed. Reg. 14467
(April 10, 1991), the Customs Service requires the submission of
data on the procedures of and materials used in a fuel oil
blending operation to determine whether the merchandise is
subject to the provisions of 46 U.S.C. App. 883. In its
analysis, the Customs Service has adopted for most cases
standards established by the American Society for Testing
Materials (ASTM), for such standards represent industry-developed
criteria for characterizing fuel oils. The Customs Service will
generally consider fuel oils of different ASTM grades as
different products. Consequently, fuel oil that is loaded at a
coastwise point, blended at a foreign port or place, and unloaded
at another coastwise point must change ASTM grade to be
considered a "new and different" product for purposes of the
coastwise laws.
Review of the specifications of the exporting blending
components show that none meet the ASTM specifications for
gasoline and can be regarded as new and different products when
used to make gasoline meeting the ASTM specifications.
Therefore, the transportation of these blending components by
foreign-flag vessels will not result in a violation of 46 U.S.C.
App. 883.
We note, however, that several of the blending components
are extremely close in meeting the ASTM specifications for
gasoline. These products are: reformate, Argentina 83 RON,
light cat gas, Venezuelan cat gas, Trinidad reformate, and Amoco
light cat gas. While shipments have the identical specifications
as those submitted would not meet the ASTM requirements for
gasoline, we view the specifications as only typical.
Therefore, the specifications of the actual shipments may not be
exactly identical to the typical specifications provided. The
potential variance among different shipments may, in some
instances, cause the borderline products to come within
specifications for gasoline and would consequently not be
considered new and different products.
We also wish to stress that the approach taken by the
Customs Service to determine whether the blending of components
is a "new and different product" for purposes of 46 U.S.C. App.
883 is not the same as the approach taken by the Customs Service
to determine whether a product has undergone a "substantial
transformation" for purposes of other statutes. Regarding this
case, while several products may be considered to have become a
"new and different product," they may not be considered as having
undergone a substantial transformation, as they have only
undergone a simple blending process and absolutely no process in
which a chemical reaction has occurred.
HOLDING:
The blending components listed above do not meet the ASTM
standards as gasoline and can be regarded as new and different
products when used to make unleaded gasoline meeting the ASTM
specifications. Therefore, the transportation of these
blendstocks by foreign-flag vessels will not result in a
violation of 46 U.S.C. App. 883.
Sincerely,
Arthur P. Schifflin
Chief
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