HQ 226568: Shore tank gauging of petroleum products; 19 U.S.C.1484(a)(2)(C); 19 CFR 151.42(a)

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 226568

                                 March 12, 1996

ENT-1-03-RR:IT:EC   226568 GOB

Category: Entry

Joseph F. Donohue, Jr., Esq.
Donohue and Donohue
26 Broadway
New York, New York 10004

RE:  Shore tank gauging of petroleum products; 19 U.S.C.
1484(a)(2)(C); 19 CFR    151.42(a)

Dear Mr. Donohue:

     This is in response to your letter dated November 16, 1995
on behalf of Amerada Hess Corporation ("Hess").

FACTS:

     You state, in pertinent part:

     Recently, Hess has begun mixing some domestic or previously
     imported residual fuel oil ("resid") with catfeed at the
     refinery and feeding the mix to the cat cracker.  Because of
     limited tankage at the refinery, and also because of the
     high rate of pressure at which the catfeed is discharged
     from the vessel, the mixing can be done most efficiently if
     it occurs in the catfeed receiving tank while the catfeed is
     being discharged.  Therefore, Hess requests permission to
     transfer domestic or previously-imported resid from refinery
     storage tank(s) into the catfeed receiving tank(s) at the
     same time that the imported catfeed is being discharged.1  
     Accuracy as to the quantity of catfeed unladen will be
     ensured through the continued use of a Customs-approved
     public gauger who will take the readings of the relevant
     shore tanks prior to and following discharge.2 Vessel
     ullages prior to and following discharge will also be taken. 
     Hess proposes to enter the quantity determined through shore
     tank gauging unless the report of vessel ullaging is higher,
     in which case entry will be made at the ullaged quantity.3
     ...

     By regulation, Customs has determined that shore tank
     gauging is a reliable method of determining the quantity of
     petroleum unladen from a vessel.  See 19 C.F.R. 
     151.42(a)(ii).  Hess has used shore tank gauging to report
     entered quantities for years.  While more than one shore
     tank would require gauging under the proposed method, Hess
     is confident that it can be done in a manner that is
     consistent with past practice and with Customs'
     requirements.

     1 In some infrequent cases, the transfer might be of a fuel
     oil other than resid, or even an off-grade catfeed.  It is
     assumed that the decision herein will be equally applicable
     to the transfer of these other materials.

     2 The public gauger will gauge the shore tanks essentially
     as follows: (1) Ascertain quantity of resid in shore tank
     prior to and following transfer to catfeed tank; the
     difference represents the amount of resid sent to the
     catfeed tank; (2) ascertain quantity of catfeed in catfeed
     shore tank prior to discharge; (3) ascertain quantity of
     material (mixed catfeed and resid) in catfeed tank following
     discharge from vessel and transfer from resid tank; (4)
     subtract from (3) the beginning inventory in the catfeed
     tank and the quantity of transferred resid referred to in
     (1), to reach discharged quantity.

     3 Hess has no objection to entering based only on the shore
     tank report, but proposes to use the higher of the two
     results to resolve any doubts as to quantity in Customs'
     favor.

     In a facsimile transmission to Customs on February 14, 1996,
you stated as follows:

     It is understood that Hess will perform the ullaging of the
     shore tank(s) from which the domestic/duty-paid material is
     removed prior to and promptly after removal from such
     tank(s), and will provide Customs with the results of
     ullaging such tanks, together with the results of ullaging
     the receiving tank(s), shortly after unlading.

     Since the imported catfeed will be commingled in the shore
     tank(s) with domestic or previously imported material, any
     determination as to the properties or characteristics of the
     imported product will be based on samples taken from the
     vessel and not from the receiving shore tank(s).

ISSUE:

     Whether Hess may transfer domestic or previously-imported
resid from a refinery storage tank or tanks into the catfeed
receiving tank or tanks at the same time that the imported
catfeed is being discharged, in the manner described supra.


LAW AND ANALYSIS:

     19 U.S.C. 1484(a)(2)(C) provides:

      1484.   Entry of merchandise.

     (a) Requirement and time

     * * * * *

     (2)(C) The Secretary, in prescribing regulations to carry
     out this subsection, shall establish procedures which insure
     the accuracy and timeliness of import statistics,
     particularly statistics relevant to the classification and
     valuation of imports.  Corrections of errors in such
     statistical data shall be transmitted immediately to the
     Director of the Bureau of the Census, who shall make
     corrections in the statistics maintained by the Bureau.  The
     Secretary shall also provide, to the maximum extent
     practicable, for the protection of the revenue, the
     enforcement of laws governing the importation and
     exportation of merchandise, the facilitation of the commerce
     of the United States, and the equal treatment of all
     importers of record of imported merchandise. 

     19 U.S.C. 1499(a)(1) provides in pertinent part:

      1499.   Examination of merchandise

     (a) Entry examination

     (1) In general

     Imported merchandise that is required by law or regulation
     to be inspected, examined, or appraised shall not be
     delivered from Customs custody (except under such bond or
     other security as may be prescribed by the Secretary to
     assure compliance with all applicable laws, regulations, and
     instructions which the Secretary or the Customs Service is
     authorized to enforce) until the merchandise has been
     inspected, appraised, or examined and is reported by the
     Customs Service to have been truly and correctly invoiced
     and found to comply with the requirements of the laws of the
     United States.
     
     The Customs Regulations relevant to this request are found
in Part 151, Subpart C (19 CFR 151.41 - 151.47).  19 CFR
151.42(a) provides:


      151.42  Controls on unlading and gauging.

       (a) Methods of control.  (1) Each port director shall
     establish controls and checks on the unlading and
     measurement of petroleum and petroleum products imported in
     bulk by vessel, truck, railroad car, pipeline or other
     carrier.  One of the following methods of control shall be
     employed:
       (i) Customs-approved metering and sampling installations
provided by the     importer;
       (ii) Shore tank gauging; or
       (iii) Weighing the trucks and railroad cars.
       (2) Vessel ullages shall be taken in every case unless the
     port director determines that it is impracticable to do so
     for safety or technological reasons.  Ullages may be taken
     for trucks and railroad cars if weighing or shore tank
     gauging is not available as a method of control.  Vessel
     ullages will not be used to determine the quantity unladen
     unless none of the other methods provided for in this
     paragraph is available or adequate.
       (3) The metering and sampling installations described in
     paragraph (a)(1)(i) of this section are approved by Customs
     on a case-by-case basis.  Importers seeking approval shall
     send a complete description of the installation to the port
     director who, with the concurrence of the Director,
     Laboratory & Scientific Services, or his designee, shall
     give approval or shall state, in writing, the reasons for
     disapproval.  Approved installations are subject to periodic
     verification by Customs.  Importers desiring to modify a
     Customs-approved installation shall obtain Customs approval
     beforehand.

     The procedure described in footnotes 2 and 3, supra, is
consistent with the applicable statute and regulations.  The
quantity of petroleum unladen is determined by including "the
higher of the two results" condition stated in footnote three
supra.  It is understood that Customs' field officials are
satisfied with the clarity, sufficiency, and timing of the
documentation received by Customs pursuant to this procedure.  
All discharge valves of the receiving tanks must be closed when
those tanks are receiving petroleum.

     It is understood that, for the purpose of sampling the
petroleum, or for any purpose other than determining the
quantity, the petrolem on the vessel must be used.









HOLDING:  

     Customs officers may approve the transfer of domestic or
previously-imported fuel oil from a refinery storage tank or
tanks into the catfeed receiving tank or tanks at the same time
that the imported catfeed is being discharged if the party in
interest insures that all discharge valves of the receiving tanks
are closed during the transfer and if the quantity of the
imported petroleum product is the highest gauged amount, whether
from the shore tanks or the vessel tanks.
     
                              Sincerely,



                              Director,
                              International Trade Compliance
Division

cc:  James McDermott
     Port Director of Customs
     205 Jefferson Street
     Perth Amboy, New Jersey  08861