Newly Released CBP HQ Ruling Feb. 14
The Customs Rulings Online Search System (CROSS) was updated Feb. 14 with the following headquarters rulings (ruling revocations and modifications will be detailed elsewhere in a separate article as they are announced in the Customs Bulletin):
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H332921: Vessel Importation; Deepwater Ports Act; 33 U.S.C. § 1518; Title 19, U.S. Code
| Ruling: (1) Delfin’s Floating Liquefied Natural Gas Vessel are vessels for the purposes of Titles 19 and 33, U.S. Code, as contemplated by the definitions at 19 U.S.C. 1401(a) and 33 U.S.C. 1502(19). (2) The customs laws administered by the Secretary of the Treasury will not apply to Delfin’s Floating Liquefied Natural Gas Vessels while they are moored at a deepwater port because 33 U.S.C. 1518(d) specifically excludes deepwater ports from the application of the customs laws. (3) Delfin’s Floating Liquefied Natural Gas Vessels are not considered merchandise imported into the customs territory of the United States for the purposes of Title 19 U.S.C. and Title 33 U.S.C. Because they are not imported merchandise, the customs duties contained in these chapters will not apply. |
| Issue: (1) Is Delfin’s Floating Liquefied Natural Gas Vessel considered a vessel as contemplated by 19 U.S.C. 1401(a) and 33 U.S.C. 1502(19)? (2) Is Delfin’s Floating Liquefied Natural Gas Vessel exempt from the customs laws administered by the Secretary of the Treasury within the meaning of 33 U.S.C. 1518(d)? (3) Is Delfin’s Floating Liquefied Natural Gas Vessel exempt from importation into the customs territory of the United States and exempt from dutiability as merchandise for the purposes of Title 19 and Title 33 U.S. Code? |
| Item: Delfin proposes to moor foreign-flagged FLNGVs at a deepwater port located on the Outer Continental Shelf (OCS) approximately 40 nautical miles off the coast of Cameron Parish, Louisiana. The FLNGVs will arrive at the deepwater port from Asia under their own power. While at the deepwater port, FLNGVs will be moored to the seafloor using Submerged Soft-Yoke systems (SSYs). Unlike permanent mooring systems, the SSYs will enable the FLNGVs to unmoor and disconnect from the deepwater port’s pipeline in a matter of hours. Once moored, the FLNGVs will take on natural gas from the deepwater port using a pipeline connection. The FLNGVs will then liquefy the natural gas to produce Liquefied Natural Gas (LNG) and store the LNG onboard in storage tanks. The FLNGV will then offload the LNG onto LNG tankers temporarily moored alongside it via loading arms using ship-to-ship transfer procedures. The FLNGVs are capable of sailing under their own propulsion with LNG stored on board. They can also steer and dynamically position without assistance. Upon their return to the deepwater port, the FLNGVs are capable of reconnecting to the SSYs on their own. |
| Reason: (1) Our consideration of the term “vessel” as utilized in statute should be broad in scope. Further, the courts have provided considerable guidance as to the physical characteristics of a vessel. The Supreme Court has opined that for the purposes of the Jones Act, a watercraft “capable of being used” as a means of transportation is a vessel, regardless of whether the watercraft was actually engaged in transportation. The Court applied the plain meaning definition of “vessel” in the U.S. Code, which included every watercraft “used, or capable of being used, as a means of transportation on water.” The FLNGVs have a traditional hull structure and are capable of navigating under their own power while merchandise (LNG) is stored on board. They are also capable of independently detaching from the deepwater port and moving to another location on the OCS in a matter of hours. The U.S. Coast Guard, responsible for enforcing Title 33 U.S.C., has opined that FLNGVs should be considered vessels. (2) Because the requirements of 19 U.S.C. don't apply to deepwater ports, the customs requirements placed upon vessels when they are utilizing U.S. ports don't apply when they are utilizing deepwater ports. (3) Based on extensive legal precedent, vessels transporting merchandise have not been considered “imported merchandise” for the purposes of the customs laws contained in 19 U.S.C., but rather the vehicles for such merchandise. Consequently, customs duties have not been imposed on such vessels. |
| Ruling Date: Feb. 12, 2023 |