United States International Trade Commision Rulings And Harmonized Tariff Schedule
faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers
faqs.org > Rulings and Tariffs Home > Rulings By Number > 1993 HQ Rulings > HQ 0223198 - HQ 0223539 > HQ 0223306

Previous Ruling Next Ruling

HQ 223306

October 17, 1991

ENT-1-03 CO:R:C:E 223306 C


Andrea Grant, Esq.
Verner, Liipfert, Bernard, McPherson and Hand 901 15th Street, N.W.
Suite 700
Washington, D.C. 20005-2301

RE: Your letter of January 31, 1991, concerning 19 CFR 151.42(a)(2) - ullage taking for measurement of petroleum; TD 80- 142; TD 87-39

Dear Ms. Grant:

This responds to the referenced letter, wherein you requested an interpretation of section 151.42(a)(2) of the Customs Regulations, pertaining to the taking of ullages for reporting purposes only in circumstances where the methods specified in section 151.42(a)(1) are unavailable or inadequate. We have reviewed your submissions and our response follows.

Briefly, we set forth the proposed scenario as follows: A tanker containing No. 6 fuel oil will arrive at Stapleton Anchorage, where a quantity of fuel oil will be lightered for transport into New York harbor for entry. The quantity of fuel oil on the tanker will be measured prior to and following the lightering. The tanker will proceed to Central Hudson Gas & Electric's dock at Rosten. Upon arrival there, the quantity will be measured again. Because the No. 6 fuel oil on the tanker does not have the proper specifications to be used at the utility's facility, your client proposes to load No. 2 fuel oil onto the tanker to be blended with the No. 6 fuel oil while still on the tanker. The No. 2 fuel oil will be loaded onto the tanker from a barge positioned along side the tanker by a line-blending procedure. This blending will produce a fuel oil with the desired specifications which can then be offloaded into the shore tanks. The quantity of No. 2 fuel oil on the barge will be measured prior to line-blending.

Your client proposes that Customs employ ullage taking for reporting purposes, rather than the customary shore tank gauging method that is specified in section 151.42(a)(1)(a)(ii). This proposal is based on the assertion that shore tank gauging is inadequate in the circumstances and that ullage taking therefore is an acceptable method for measurement. Apparently, there is a question as to whether or not this assertion is correct.

In Treasury Decision (TD) 80-142, the regulations regarding petroleum measurement were modified. (See T.D. 80-142, 14 Cust. Bull. 274.) Prior to the TD, the regulation specified six methods that could be freely employed by the district director to control the unlading and measurement of petroleum (section 151.42(a) - (f)). One of these methods was the taking of ullages (section 151.42(f)). After the amendment, these specified methods were reduced to four (section 151.42(a)(1)(i) - (iv)) (three in the current regulation), and ullage taking was deleted. Ullage taking was removed to section 151.42(a)(2) where it resides in the current regulation. There, the district director is authorized to employ ullage taking as a means of measurement for reporting purposes only where the specified methods (in 151.41(a)(1)) are either unavailable or inadequate.

Ullage taking was removed to section 151.42(a)(2) because Customs decided - prompted by public comment solicited during the amendment process - that it was not a sufficiently reliable method for reporting purposes. Nonetheless, Customs felt that it was accurate enough to be used where other methods could not be. In addition, it was retained in the regulation to be used in every case as an indication of the accuracy of the quantity manifested and shore metering and tank gauge calibrations. (See Id. at 283.)

It appears that ullage taking was removed from the list of methods specified in section 151.42(a)(1), and placed in section 151.42(a)(2), so that Customs could gain stricter control of its use. The authority to employ it, however, remains with the district director. In the pre-amendment regulation, the district director could authorize any of the methods specified in the regulation based on "local conditions." While there is no such guidance for authorizing use of ullage taking in the post- amendment regulation (section 151.42(a)(2)), we believe that the district director is still expected to consider local conditions in making a determination. Now, however, the determination to be made is whether or not the other methods, in this case shore tank gauging, are either unavailable or inadequate.

We are inclined to believe that the circumstances set forth in this case - that the utility does not have shore tanks with the capacity to blend No. 6 fuel oil with No. 2 fuel oil and that the proposal is designed to address a need that could affect the public safety - are legitimate "local conditions" that can be considered by the district director in making a determination. We are disinclined to go further than this because we feel that interpreting section 151.42(a)(2) to rigidly limit the authorization of ullage taking to only situations where, for example, the benefit is to Customs or employment of other methods is literally impossible is to impose too much of a restriction on the district director who should properly consider local circumstances and problems. On the other hand, there is a legitimate question as to how lenient Customs should be in permitting ullage taking for reporting purposes under section 151.42(a)(2). Ultimately, it involves a judgment call by the district director.

We believe that implementation of section 151.42(a)(2) should be governed by district directors and operational considerations, rather than by a legal ruling or limiting interpretation fashioned by the Office of Regulations and Rulings. The substance of our response is that the decision is up to district directors, but factors such as those raised in the instant case are appropriately considered by the district director as he/she weighs "local conditions" against Customs need to record accurate measurements and to administer the program.

Regarding your interpretation of section 151.42(b)(3) and (4), we agree that the amendment of section 151.42(b) as published in T.D. 87-39, which changed the word "shall" to "may," was intended to provide Customs with the flexibility to determine when Customs officers will perform or witness ullaging or gauging. (See T.D. 87-39, 21 Cust. Bull. 58, 77.)

If you have any further questions or require further assistance, please contact this office. (566-5856).


William G. Rosoff

Previous Ruling Next Ruling