Pursuant to U.S. Cabotage Laws, 46 U.S.C § 55102, a vessel may not provide transportation of merchandise, between points in the United States, unless the vessel has a coastwise endorsement. However, under 19 C.F.R. § 4.80b(a) a coastwise endorsement is not required "if at an intermediate port or place other than a coastwise point" the merchandise is processed into a "new and different product, and the new and different product thereafter is transported to a coastwise point."
In August 2014, the U.S. Customs and Border Protection ("CBP") issued rulingH254877 in response to an inquiry about adding Conventional Regular Gasoline Blendstock ("CBOB") and Reformulated Blendstock for Oxygenate Blending ("RBOB") to Undenatured Ethanol to produce fuel grade denatured ethanol for the purpose of creating a new and different product as described under 19 C.F.R. § 4.80b(a). In considering this question, the CBP relied on advice from the Laboratories and Scientific Services Directorate ("LSSD"), the scientific arm of the CBP, which determined that the undenatured ethyl alcohol and the fuel grade denatured ethyl alcohol are simply different grades of the same product and were not of a "chemical or structural difference."
More specifically, the LSSD found that the undenatured ethyl alcohol and the fuel grade denatured ethyl alcohol: 1) only differed in the type and amount of impurity in the product; 2) had chemical structures identical to the chemical structure of the predominant component; 3) only differed in the amount of denaturant added; and 4) were both classified as ethyl alcohol by the Harmonized Tariff Schedule. Therefore, the transportation of essentially the same product, on a non coastwisequalified vessel, were in violation of 46 U.S.C § 55102.
Subsequently, in its January 2015 ruling H259293, the CBP ruled that blending Alkylate, Reformate, Light Naphtha, Heavy Naphtha, Raffinate, Butane, Catalytic Cracked Gasoline and Heavy Aromatics to produce CBOB, RBOB, 87 Octane Index Conventional Gasoline, and 93 Octane Index Conventional Gasoline would result in a new and different product within the meaning of 19 C.F.R. § 4.80b(a) and would not violate 46 U.S.C § 55102.
Therefore, unlike simply changing grades of a product by adding already formulated CBOB and RBOB, producing CBOB and RBOB from various "raw" materials is an acceptable reformulation of products so that the resulting new products can be transported between US ports by a noncoastwisequalified vessel in compliance with U.S. Cabotage Laws.