HQ 116424

March 25, 2005

VES-3-RR:IT:EC 116424rb

CATEGORY: Carriers

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.

FACTS:

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.

ISSUE:

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.

LAW AND ANALYSIS:

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]{.underline}, 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]{.underline}, 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.

HOLDING:

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.

Sincerely,

Glen E. Vereb

Chief

Entry Procedures and Carriers Branch