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HQ 116424

March 25, 2005

VES-3-RR:IT:EC 116424rb


Ms. Maria Reinitz
ConAgra Trade Group, Inc.
Eleven ConAgra Drive, suite 5022
Omaha, NE 68102
(FAX: 402-595-5836)

RE: Coastwise trade; 46 U.S.C. App. 883; Wheat transported from United States and rejected at foreign destination; Subsequent transportation to U.S.

Dear Ms. Reinitz:

In your letter, dated March 15, 2005, with attachments, you request a ruling concerning the use of a foreign-flag vessel to transport hard red winter wheat from Trinidad to Puerto Rico, the wheat having initially been transported by a non-U.S. flag vessel from Louisiana to Trinidad where it was rejected by your customer, as not conforming to agreed-upon specifications. Our ruling in this matter follows.


In early January 2005, Alliance Grain, Inc. (Alliance), a subsidiary of ConAgra Foods, loaded a chartered foreign-flag vessel in the port of Paulina, Louisiana, with corn, soybeans and three separate lots of wheat, one of which was hard red winter wheat (HRW) that was to have a required grade specification of U.S. No. 2 or better, pursuant to the contract of sale with its customer, National Flour Mills, Ltd. (National), a flour mill in Trinidad, West Indies (W.I.). Notably, the bill of lading, and the certificate of U.S. origin issued by the Louisiana Maritime International Chamber of Commerce, for the HRW, which depict National as the deliver to/notify party or consignee, further state that: “THESE COMMODITIES LICENSED BY THE UNITED STATES FOR ULTIMATE DESTINATION TRINIDAD W.I.”

However, after the vessel departed from Paulina, Alliance found that the subject HRW did not meet the contract specifications, thereby rendering the HRW unuseable by National. Nevertheless, the vessel completed its voyage because the balance of the cargo was required by National at its mill in Trinidad, where all the cargo was discharged, including the HRW. National has confirmed that the HRW has since been held in storage at its facility; that the HRW has not been altered in any way; that National has rejected the HRW as not meeting the contract specifications essential for producing a certain desired quality of wheat flour therefrom; and that National requires that this rejected HRW be removed from its storage facility.

In order to retrieve and use the HRW in the most economical manner, Alliance has resolved to transport the HRW to San Juan, Puerto Rico, for use at ConAgra’s mill there. Since this transportation is intended to take place in a non-U.S. flag vessel, the question arises as to whether the coastwise merchandise law, popularly known as the Jones Act, would be violated.


Whether the HRW may be transported from Trinidad, W.I., to San Juan, Puerto Rico, in a foreign-flag vessel without violating the coastwise merchandise law, 46 U.S.C. App. 883.


The coastwise merchandise law, 46 U.S.C. App. 883, provides, in material part, that no merchandise may be transported between points in the United States embraced within the coastwise laws, either directly or via a foreign port, in any vessel other 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.

In the present case, under the prevailing law, transporting the HRW from Trinidad to Puerto Rico in a non-coastwise-qualified vessel would contravene section 883 only if such transportation were considered to be a component of a “continuous” voyage that commenced in Louisiana and would conclude in Puerto Rico. To this end, the longstanding rule that governs whether a voyage is continuous when it takes place, as here, between 2 domestic points via a foreign point is as follows:

A transportation from one point to another remains continuous, so long as intent remains unchanged, no matter what stoppages or transshipments intervene...Successive voyages, connected by a common plan and a common object, form a plural unit. They are links of the same chain, each identical in description with every other, and each essential to the continuous whole.

The Bermuda, 70 U.S. 514, at 553-555 (1866). “Clearly, whether successive voyages are connected by a common plan is a question of fact to be determined by the circumstances of each individual case” (32 Op. Atty. Gen. 350, at 352 (1920) (construing section 27 of the Merchant Marine Act of 1920, the predecessor to section 883) (transporting frozen fish from Ketchikan to Vancouver and thereafter to points in the United States was found to be a continuous voyage (not broken at Vancouver), since fish were merely warehoused in Vancouver for varying extended periods pending sale and consumption elsewhere, including U.S., and everyone concerned knew Vancouver was not “ultimate destination” of fish)).

On the other hand, in a case involving motor gasoline that was conveyed on a company’s foreign-flag vessel from Honolulu to American Samoa (a place not embraced within the coastwise laws, 48 U.S.C. 1664), where the gasoline was contaminated with diesel fuel when discharged at Samoa, thereby rendering it unsalable and unuseable, and so its delivery was refused in Samoa, it was concluded that, under these conditions, the continuity of the transportation had been broken at Samoa; and that, as a result, the gasoline could be re-laden and transported aboard the company’s vessel for reprocessing at its refinery in Pascagoula, Mississippi, without violating section 883, the subsequent transportation from Samoa to Pascagoula constituting a new and different transportation in this regard. See Customs telex, dated January 31, 1978 (file VES-3-17-R:CD:C 103281).

Consequently, in the instant case, where the HRW departed on a foreign-flag vessel from Paulina, Louisiana, and it was belatedly determined that it failed to meet mandatory contractual standards, thereby rendering it unuseable by the flour mill in Trinidad, and so its delivery at this intended destination was rejected, such transportation, due to this mishap, was manifestly broken at Trinidad; and, hence, the anticipated transportation of the HRW from Trinidad to San Juan, Puerto Rico, for use at ConAgra’s mill, would constitute a new and different transportation for purposes of section 883, rather than a resumption, pursuant to any common plan or design, of the initial voyage begun at Paulina, Louisiana.


On the facts presented, the transportation of the HRW from Paulina, Louisiana, was broken at Trinidad, W.I., so that the intended subsequent transportation of the HRW from Trinidad to Puerto Rico on a foreign-flag vessel would represent a new and different (non-coastwise) transportation that would not violate 46 U.S.C. App. 883.


Glen E. Vereb

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