Opinion ID: 362881
Heading Depth: 2
Heading Rank: 1

Heading: Merchandise Section 27 (Jones Act)

Text: 20 Section 27 speaks of merchandise being transported. 32 The inquiry thus becomes what merchandise is transported from Valdez to St. Croix and what merchandise is transported from St. Croix to the continental United States? It is clear that the merchandise on the first leg is Alaskan crude oil. If the facts of this case ended with the arrival of the Alaskan crude at the Hess refinery in St. Croix, Virgin Islands, the case would be very simple, because § 21 plainly states, (T)he coastwise laws of the United States shall not extend to the Virgin Islands; 33 hence § 27, perhaps the most important of the coastwise laws, would not restrict the transport to American vessels. 21 But the facts do not end at the Hess refinery, for it is there that the Alaskan crude is refined into eleven products, which are then largely transported to the continental United States. 34 Appellants contend that the two voyages must be considered as one and that the petroleum, whether in crude or refined form, must be thought of as one product, I. e., one type of merchandise within the statute. It is only on this theory that the Jones Act (§ 27) can apply to this case, I. e., if the merchandise transported from Valdez to St. Croix is the same merchandise subsequently transported to the continental United States, and if the two legs of the voyage thus must be treated as one. 22 We cannot agree with this concept, because crude oil is simply quite different from the ultimate products which come out of a refinery. Judge Gasch found that: 23 Alaskan oil that is refined at the Hess refinery will yield the following products in the following amounts: 24 Product % Volume ------- -------- benzene .47 toluene 2.23 xylene 0.27 paraxylene 1.08 regular gasoline 4.19 premium gasoline 4.19 unleaded gasoline 3.00 jet fuel 8.70 No. 2 Oil 14.50 No. 6 Oil 55.82 sulfer pellets 0.30 -------- 94.75 total marketable product recovery 5.25 fuel gas equivalent 25 Benzene, toluene, xylene and paraxylene are petrochemicals used in the manufacture of finished chemical products. Jet fuel is used as fuel for jet aircraft, and gasoline as fuel for motor vehicles. Sulphur is used in the manufacture of fertilizers and pharmaceuticals. No. 2 oil is used as home heating oil No. 6 oil is used as fuel by power plants. Each of these products is different in name, physical and chemical character, and use from each other and from crude oil. Moreover, crude oil cannot be used for any of these purposes. 35 (Emphasis added.) 26 We agree with the trial court's conclusion that all the credible evidence of record conclusively demonstrates that the products of the Hess refinery are new and different merchandise from the Alaskan crude oil. 36 It thus seems clear that the merchandise, the language of the statute, transported between Valdez and St. Croix is one thing, crude oil, while the merchandise transported from St. Croix to the continental United States is a collection of quite different other things, I. e., products which are physically, chemically, and usefully different from the original crude oil. 37 Assuming that the exception of § 21, (t)he coastwise laws of the United States shall not extend to the Virgin Islands, applies in full vigor, then each voyage, carrying different merchandise, is between a point within the coastwise laws of the United States and a point outside the coastwise laws of the United States. We hold that the requirement of the Jones Act that the cargo be carried in American vessels does not apply to either voyage; each is outside the coastwise trade of the United States. 38 27 Further, under the circumstances of this case, we hold that it is not the Intent of a shipper to send goods to a final destination that governs, but the degree to which the goods are altered In fact in the course of commercial dealings. 39 Thus we must reject appellants' contention that because Hess may have intended that most of the crude oil shipped from Valdez return in some form to the mainland United States in fact, that it was bound by law not to sell it abroad 40 the prohibitions of the Jones Act apply. 41 The enforcement provision cited by appellants which applies the penalty of forfeiture where there is intent to evade foreign vessel prohibitions 42 does not define under what circumstances evasion takes place. Such definition is provided in the substantive provisions of the Jones Act itself, which speaks not of Intent but of actual transport of merchandise. Since appellants have not contended in this case that in the absence of an actual violation of the Jones Act the forfeiture provisions should apply, and since no evidence has been adduced of any intent by Hess to evade the Act absent such actual violation, the issue of intent does not govern this case. 28