H346571

H346571 March 10, 2026 OT:RR:BSTC:CCR H346571 KAM CATEGORY: Carriers Constantine G. Papavizas Winston & Strawn, LLP 1901 L Street, NW Washington, DC 20036 RE: 19 U.S.C. § 1466; Vessel Repair. Dear Mr. Papavizas: This responds to your April 4, 2025, letter and supplemental material (“ruling request”), in which you request a ruling on behalf of your client, [ ] (“the Company”) determining that the proposed work on the [ ] to be renamed [ ] (“the subject vessel”) constitutes modifications for the purposes of 19 U.S.C. § 1466.1 Our decision follows. FACTS Your client, the Company, is the owner of the United States-flagged vessel the subject vessel.2 The Company intends to have shipyard work done on the subject vessel in the 1 You have asked this office for confidential treatment of all information contained in brackets, which includes your client’s name. CBP Regulations at 19 C.F.R. § 177.2(b)(7) provide that the requester of a ruling from our office may ask that privileged or confidential commercial or financial information supplied for purposes of preparing the requested ruling not be disclosed. Such requests will be considered if the information is clearly identified and the reasons for requesting that information not be disclosed are provided. If this office receives a Freedom of Information Act request for your submission, Regulations at 6 C.F.R. § 5.12, et seq. regarding the disclosure of business information provide that the submitter of business information will be advised of receipt of a request for such information whenever the business submitter has in good faith designated the information as commercially or financially sensitive information. We accept your request for confidential treatment as a good faith request. 2 [ ] - CBP Request - at 1. 2 [ ] (“foreign country”) at the [ ] (“foreign shipyard”).3 Your ruling request states that the subject vessel is currently in lay-up status awaiting transit for work to begin in the foreign shipyard on or about [ ].4 On [ ], CBP issued a ruling [ ] (“the Initial Ruling”), which is incorporated herein by reference, on a similar request [ ].5 In the Initial Ruling, CBP determined that both repowering the propulsion systems of the vessels and converting a hold’s container stowage arrangement to enhance refrigerated container capacity constituted non-dutiable modifications. The proposed work was not performed on the subject vessel. Now, the Company proposes to carry out work discussed in the Initial Ruling with three modifications on the subject vessel: (1) repowering the propulsion systems on the subject vessel to increase fuel efficiency and lessen environmental impact; (2) converting the container stowage arrangement of multiple cargo holds [#1 and #3] to enhance the subject vessel’s refrigerated container capacity; and (3) the addition of a bridge console to accommodate new control and monitoring systems and a steering alarm system.6 The Initial Ruling addressed the replacement of the vessel’s current steam propulsion plant with a medium speed diesel engine.7 That modification was confirmed in the initial ruling.8 The current request also concerns the replacement of the current steam propulsion. However, rather than a medium speed diesel engine, the Company instead proposes to replace the vessel’s current steam propulsion plant with a slow speed diesel, liquified natural gas (“LNG”) ready engine plant and auxiliary power plants.9 The Initial Ruling also considered the conversion of one cargo hold, [ ].10 That modification was confirmed in the Initial Ruling.11 The current request also concerns the conversion of cargo holds, but instead of a single cargo hold [ ], modification is contemplated for multiple cargo holds, [ ].12 3 Id. 4 RFI Response 6-4-2025 at 1. 5 Id. 6 Id. 7 Id. 8 [ ]. 9 Id. 10 Id. 11 [ ]. 12 Id. 3 Vessel Repowering As described in the Initial Ruling [ ] and renewed by the current ruling request, this project will involve the complete removal of the subject vessel’s extant steam power plant.13 The steam power plant will then be replaced with a slow-speed diesel power plant specifically designed to support or be compatible with the capability to burn LNG.14 The Company asserts that “the purpose of this first phase of modifications is to remove the existing boilers/steam turbine and auxiliary systems, and install new dual-fuel main and auxiliary generators with the required engine room auxiliaries to make up the machinery plant.”15 The installation of the LNG system is second phase of the modification, currently planned for 2028/2029.16 The following items will be added to repower the vessel:17 1. One dual-fuel slow-speed main engine with associated engine foundations; 2. Three dual fuel auxiliary generators; 3. Indirect distributed fresh water cooling system; 4. Lube oil purification and filtration system; 5. Fresh water handling module; 6. Fresh water distiller; 7. Ballast and cargo hold bilge pumps and piping; 8. Compressed air system; 9. Electrical distribution boards; 10. Engine control and monitoring systems; 11. Ventilation system; 12. Exhaust gas system; 13. Engine room cranes and associated components; 14. Engine room wiring; 15. Engine room lighting; and 16. Flats and decks to support the revised engine room layout. The Company states that the installation of slow-speed diesel fuel LNG-ready engines will achieve better fuel efficiency and reduce environmental impacts.18 The Company further asserts that all the above-listed systems and components proposed to be removed are currently fully operational and in good repair.19 Conversion of Cargo Holds [ ] The Company intends to modify multiple cargo holds to allow stowage of refrigerated containers below deck in [ ].20 That conversion will require “the installation of 13 Id. 14 Id. (The Initial Ruling concerned medium speed diesel engines, whereas this request concerns slow speed diesel engines.). 15 RFI Response 6-4-2025 at 2. 16 Id. 17 [ ] - CBP Request - at 1. 18 Id. 19 Id. 20 Id. (In the same manner as was proposed in the Initial Ruling for a single, different hold). 4 platforms and inclined ladders to access refrigeration machinery, ventilation fans with distribution ducting, refrigerated container power supply plugs, new lighting, and associated electrical cables.”21 The ruling request states that “[a]dditional reefer power distribution supports the increased demand of refrigerated cargo to support interstate commerce to the islands of Hawaii,” as well as, “increases operating efficiency.”22 Your request also states that, “[h]eavier cargo below deck allows the vessel trim to be optimized to the characteristics of the new propulsion shafting and propeller arrangement. Addition of Bridge Console The Company further intends to add a bridge console to accommodate new control and monitoring systems and a steering alarm system, both of which are integral to the re-power modification.23 Your request states that, “in neither instance are components in need of repair being replaced,” and that repowering will not be complete without these bridge modifications.24 ISSUE Whether the work described above constitute repairs to the subject vessel such that the work is dutiable under 19 U.S.C. § 1466? LAW AND ANALYSIS Title 19, United States Code, section 1466(a) provides for the payment of duty at a rate of fifty percent ad valorem on the cost of foreign repairs to and equipment for vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to be employed in such trade. In its administration of 19 U.S.C. § 1466, CBP has held that modifications, alterations, or additions to the hull of a vessel are not subject to vessel repair duties.25 In considering whether a modification occurred, several factors may be considered. These factors are not by themselves determinative, nor are they the only factors which may be relevant in a given case. The factors are: 1. Whether there is a permanent inco

Title 19, United States Code, section 1466(a) provides for the payment of duty at a rate of fifty percent ad valorem on the cost of foreign repairs to and equipment for vessels documented under the laws of the United States to engage in foreign or coastwise trade, or vessels intended to be employed in such trade. In its administration of 19 U.S.C. § 1466, CBP has held that modifications, alterations, or additions to the hull of a vessel are not subject to vessel repair duties.25 In considering whether a modification occurred, several factors may be considered. These factors are not by themselves determinative, nor are they the only factors which may be relevant in a given case. The factors are: 1. Whether there is a permanent incorporation into the hull or superstructure of a vessel, either in a structural sense or as demonstrated by means of attachment so as to be indicative of a permanent incorporation.26 However, we note that a permanent incorporation or attachment may not necessarily involve a modification; it may involve a dutiable repair or dutiable equipment. 21 Id. 22 RFI Response 6-4-2025 at 3. 23 Id. 24 Id. 25 See HQ 116627 (Mar. 16, 2006); HQ 111425 (June 26, 1991); HQ 111747 (Feb. 19, 1992); and HQ 113127 (June 14, 1994). 26 See United States v. Admiral Oriental Line, 18 C.C.P.A. 137, 139 (C.C.P.A. 1930) citing Otte v. United States, 7 Ct. Cust. 166, 169 (Ct. Cust. App. 1916) and 27 Op. Atty Gen. 228, 239. 
5 2. Whether in all likelihood an item would remain aboard a vessel during an extended lay-up.27 3. Whether an item constitutes a new design feature and does not merely replace a part, fitting, or structure that is performing a similar function.28 4. Whether an item provides an improvement or enhancement in operation or efficiency of the vessel.29 Additionally, in order to qualify as a modification, rather than a repair, the documentation of record must reflect that the replaced element, if any, was in good and full working order at the time the work