CBP Says Floating Storage of Petroleum Won't Require Entry Filing Upon Return to U.S.

Petroleum stored on floating tanker vessels that will eventually return to the same U.S. port from where it was loaded does not require an entry filing, CBP told Morgan Stanley Capital Group in a July 25 internal advice ruling. While Morgan Stanley requested a prospective ruling in 2011, because the transaction has since occurred, the agency treated the request as internal advice, it said. The ruling, HQ H169017, considers the entry filing and other requirements for domestically produced or duty-paid petroleum stored on the vessels.

Morgan Stanley told CBP it intended to load petroleum products onto foreign flagged ocean-going tanker vessels at the port of New York, after which the ships were to sail to offshore locations and drop anchor up to 75 miles from the port for 51 to 89 days. Eventually, the tanker will return to port and offload the petroleum, said Morgan Stanley. The company sought the agency's advice as to whether the goods would be considered exported, if entry is required and if it subject to the Harbor Maintenance Tax (HMT), among other things.

The petroleum would not be considered to be exported, CBP told the company. While the vessel will leave the customs territory of the U.S, "CBP has held that no exportation can occur, even if merchandise leaves the customs territory of the United States, absent an intended or actual introduction of the merchandise into a foreign country for consumption, sale, or use," it said. Still, the company would need to be able to "demonstrate to the satisfaction of the port that the petroleum returning" is the same that left for the floating storage, the ruling said. Considering that the petroleum is not considered to be exported, "it will not be considered an importation upon its return," meaning no entry is required.

The company did not give CBP enough information to decide whether the HMT is applicable, the agency said. "It is not clear from the facts provided by Morgan Stanley whether the vessels will leave the New York port limits," which are described in 19 CFR 24, said CBP. "We cannot conclude that the movement of vessel between points within a port limit via a point outside the port limits constitutes an “intraport” movement. Accordingly, should the vessels leave the New York port limits it would not be eligible for an exemption from HMT." CBP also found that the floating storage does not constitute coastwise trade and wouldn't violate the Jones Act.