B-140872, MAY 10, 1960, 39 COMP. GEN. 758

B-140872: May 10, 1960

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TO ASSURE THAT AT LEAST 50 PERCENT OF GOVERNMENT SPONSORED CARGOES ARE MOVED ON PRIVATELY OWNED UNITED STATES-FLAG COMMERCIAL VESSELS. LAWRENCE RIVER PORTS FOR STORAGE BEFORE ULTIMATE EXPORTATION TO OVERSEAS DESTINATIONS COMES WITHIN THE PHRASE "WHICH MAY BE TRANSPORTED ON OCEAN VESSELS" SO THAT 50 PERCENT OF SUCH CARGO IS REQUIRED TO BE CARRIED ON UNITED STATES FLAG COMMERCIAL VESSELS. 1960: REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 28. DEEP-DRAFT SHIPS ARE NOW ABLE TO LOAD PARTIAL CARGOES OF GRAIN AT WESTERN GREAT LAKES PORTS. LAWRENCE PORT ELEVATORS AND USED IN "TOPPING OFF" THESE VESSELS IS TRANSPORTED TO THOSE POINTS BY WATER FROM WESTERN GREAT LAKES PORTS IN (1) UNITED STATES OR CANADIAN-FLAG VESSELS DESIGNED AS GREAT LAKES ORE-CARRIERS OR SO-CALLED LAKE CARRIERS (SHIPS USED PRINCIPALLY IN THE GRAIN TRADE).

B-140872, MAY 10, 1960, 39 COMP. GEN. 758

TRANSPORTATION - CARGO PREFERENCE ACT - GREAT LAKES CARRIERS - ADVANCE SHIPMENTS TO CANADIAN PORTS IN VIEW OF THE PURPOSE OF THE CARGO PREFERENCE ACT, TO ASSURE THAT AT LEAST 50 PERCENT OF GOVERNMENT SPONSORED CARGOES ARE MOVED ON PRIVATELY OWNED UNITED STATES-FLAG COMMERCIAL VESSELS, THE PHRASE "WHICH MAY BE TRANSPORTED ON OCEAN VESSELS," IN 46 U.S.C. 1241 (B), SHOULD BE CONSTRUED AS PERTAINING TO ALL CARGO MOVEMENTS BY WATER IN FOREIGN COMMERCE; THEREFORE, THE SHIPMENT ON LAKE OR OCEAN CARRIERS OF GRAIN FROM GREAT LAKES PORTS TO CANADIAN ST. LAWRENCE RIVER PORTS FOR STORAGE BEFORE ULTIMATE EXPORTATION TO OVERSEAS DESTINATIONS COMES WITHIN THE PHRASE "WHICH MAY BE TRANSPORTED ON OCEAN VESSELS" SO THAT 50 PERCENT OF SUCH CARGO IS REQUIRED TO BE CARRIED ON UNITED STATES FLAG COMMERCIAL VESSELS.

TO THE SECRETARY OF AGRICULTURE, MAY 10, 1960:

REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 28, 1959, REQUESTING OUR OPINION CONCERNING A QUESTION WHICH HAS ARISEN IN CONNECTION WITH THE ADMINISTRATION OF THE CARGO PREFERENCE ACT, PUBLIC LAW 664, 83D CONGRESS (46 U.S.C. 1241), AS A RESULT OF THE OPENING OF THE GREAT LAKES FOR USE BY OCEAN-GOING VESSELS AND THE CONSTRUCTION OF NEW GRAIN FACILITIES AT ST. LAWRENCE PORTS AIDING SUCH MOVEMENT.

YOUR QUESTION CONCERNS THE TRANSPORTATION OF GRAIN FROM WESTERN GREAT LAKES PORTS TO ELEVATORS AT ST. LAWRENCE RIVER PORTS. YOU POINT OUT THAT COMPARATIVELY LARGE, DEEP-DRAFT SHIPS ARE NOW ABLE TO LOAD PARTIAL CARGOES OF GRAIN AT WESTERN GREAT LAKES PORTS, SUCH AS SUPERIOR, WISCONSIN, AND DULUTH, MINNESOTA, THEN PROCEED THROUGH THE ST. LAWRENCE SEAWAY TO THE HARBOR AT MONTREAL,"TOPPING OFF" WITH GRAIN THERE OR AT OTHER ELEVATORS ON THE ST. LAWRENCE RIVER TO COMPLETE THEIR CARGOES FOR OVERSEAS DESTINATIONS. YOU ADVISE THAT THE GRAIN STORED AT SUCH ST. LAWRENCE PORT ELEVATORS AND USED IN "TOPPING OFF" THESE VESSELS IS TRANSPORTED TO THOSE POINTS BY WATER FROM WESTERN GREAT LAKES PORTS IN (1) UNITED STATES OR CANADIAN-FLAG VESSELS DESIGNED AS GREAT LAKES ORE-CARRIERS OR SO-CALLED LAKE CARRIERS (SHIPS USED PRINCIPALLY IN THE GRAIN TRADE), OR (2) UNITED STATES OR FOREIGN-FLAG OCEAN VESSELS WHICH MAY BE OPERATING DURING THE OPEN SEASON ON THE LAKES AND SEAWAY ONLY AND ELSEWHERE DURING THAT PART OF THE YEAR WHEN THE LAKES ARE CLOSED.

THE CARGO PREFERENCE ACT PROVIDES, INSOFAR AS HERE APPLICABLE, AS FOLLOWS (SECTION 901 (B), MERCHANT MARINE ACT, 1936, 46 U.S.C. 1241 (B), AS AMENDED):

* * * (B) WHENEVER THE UNITED STATES SHALL PROCURE, CONTRACT FOR, OR OTHERWISE OBTAIN FOR ITS OWN ACCOUNT, OR SHALL FURNISH TO OR FOR THE ACCOUNT OF ANY FOREIGN NATION WITHOUT PROVISION FOR REIMBURSEMENT, ANY EQUIPMENT, MATERIALS, OR COMMODITIES WITHIN OR WITHOUT THE UNITED STATES, OR SHALL ADVANCE FUNDS OR CREDITS OR GUARANTEE THE CONVERTIBILITY OF FOREIGN CURRENCIES IN CONNECTION WITH THE FURNISHING OF SUCH EQUIPMENT, MATERIALS, OR COMMODITIES, THE APPROPRIATE AGENCY OR AGENCIES SHALL TAKE SUCH STEPS AS MAY BE NECESSARY AND PRACTICABLE TO ASSURE THAT AT LEAST 50 PERCENTUM OF THE GROSS TONNAGE OF SUCH EQUIPMENT, MATERIALS, OR COMMODITIES (COMPUTED SEPARATELY FOR DRY BULK CARRIERS, DRY CARGO LINERS, AND TANKERS), WHICH MAY BE TRANSPORTED ON OCEAN VESSELS SHALL BE TRANSPORTED ON PRIVATELY OWNED UNITED STATES FLAG COMMERCIAL VESSELS * * * ( ITALICS SUPPLIED).

WHILE WE HAVE FOUND NOTHING IN THE LEGISLATIVE HISTORY OF THE CARGO PREFERENCE ACT TO INDICATE THE SPECIFIC INTENT OF THE CONGRESS IN USING THE PHRASE "WHICH MAY BE TRANSPORTED ON OCEAN SSELS," IT SEEMS TO US THAT THE MOST LOGICAL CONCLUSION IS THAT THE PHRASE SHOULD BE CONSTRUED AS PERTAINING TO ALL CARGO MOVEMENTS BY WATER TO FOREIGN COUNTRIES. HENCE, WE CONCUR IN YOUR VIEW THAT CARGO WHICH IS LOADED ON A VESSEL EITHER AT GREAT LAKES PORT OR A ST. LAWRENCE PORT AND IS CARRIED BY SUCH VESSEL TO AN OVERSEAS DESTINATION IS SUBJECT TO THE ACT; AND WE OBSERVE THAT YOUR DEPARTMENT IS ASSURING COMPLIANCE IN SUCH CASES.

WITH RESPECT TO THE TRANSPORTATION OF GRAIN FROM WESTERN GREAT LAKES PORTS TO ELEVATORS AT ST. LAWRENCE RIVER PORTS, YOU ADVISE THAT SUCH GRAIN IS PRIVATELY OWNED AND MOVES INTO CANADIAN ST. LAWRENCE PORTS IN ANTICIPATION OF ITS EXPORTATION LATER, EITHER AS "TOPPING" OR, PARTICULARLY AT TIMES WHEN THE SEAWAY IS CLOSED, AS FULL CARGOES FOR OCEAN VESSELS. YOU HAVE LIKENED THESE FACTS TO A SOMEWHAT SIMILAR SITUATION INVOLVING COTTON SHIPPED BY PRIVATE UNITED STATES BUSINESS OPERATORS TO EUROPEAN PORTS ON CONSIGNMENT PRIOR TO ITS SALE UNDER, OR IDENTIFICATION WITH, A GOVERNMENT PROGRAM WITHIN THE COVERAGE OF THE CARGO PREFERENCE ACT. YOU STATE THAT WHEN THE DEPARTMENT PERMITS THE INCLUSION OF SUCH CONSIGNED COTTON IN THE AGRICULTURAL TRADE DEVELOPMENT AND ASSISTANCE ACT OF 1954, AS AMENDED, PUBLIC LAW 480, 83D CONGRESS, 7 U.S.C. 1691 NOTE, PROGRAMS WHICH ARE SUBJECT TO THE CARGO PREFERENCE ACT, IT REQUIRES THAT PARTICIPANTS IN SUCH PROGRAMS FURNISH SUITABLE EVIDENCE THAT AT LEAST 50 PERCENT OF SUCH COTTON MOVED TO EUROPE IN UNITED STATES-FLAG VESSELS BEFORE TRANSPORTATION COSTS OF SUCH COTTON BECOME ELIGIBLE FOR GOVERNMENT FINANCING UNDER TITLE I OF PUBLIC LAW 480. YOU ADVISE THAT THIS REQUIREMENT IS MADE BECAUSE OCEAN TRANSPORTATION HAS OCCURRED, THE COSTS OF WHICH BECOME PART OF THE COMMODITY SALES PRICE FINANCED BY THE GOVERNMENT, AND NOT TO MAKE SUCH REQUIREMENT WOULD, IN YOUR OPINION, RESULT IN EVASION OF THE CARGO PREFERENCE ACT THROUGH THE DEVICE OF ADVANCE SHIPMENTS. IT IS OBSERVED THAT ON SEPTEMBER 1, 1959, FOLLOWING AN INFORMAL HEARING BEFORE THE COMMITTEE ON MERCHANT MARINE AND FISHERIES, HOUSE OF REPRESENTATIVES, YOU ANNOUNCED A SIMILAR REGULATION WHICH REQUIRES A SUPPLIER TO CERTIFY THAT GRAIN EXPORTED FROM CANADIAN TRANSSHIPMENT POINTS ON UNITED STATES FLAG VESSELS.

A REVIEW OF THE LEGISLATIVE HISTORY ESTABLISHES BEYOND DOUBT THAT THE CARGO PREFERENCE ACT WAS ENACTED PRIMARILY FOR THE PURPOSE OF ASSURING THAT AT LEAST 50 PERCENT OF GOVERNMENT-SPONSORED CARGOES WHICH MAY BE TRANSPORTED ON OCEAN VESSELS BE MOVED ON PRIVATELY OWNED UNITED STATES- FLAG COMMERCIAL VESSELS. AS STATED ABOVE, IT IS OUR VIEW THAT THE PHRASE "WHICH MAY BE TRANSPORTED ON OCEAN VESSELS" SHOULD BE CONSTRUED AS PERTAINING TO ALL CARGO MOVEMENTS BY WATER IN FOREIGN COMMERCE. HENCE, A MOVEMENT FROM AN AMERICAN GREAT LAKES PORT TO A CANADIAN PORT WOULD BE SUBJECT TO THE ACT. THEREFORE, WE CONCUR IN YOUR VIEW THAT THE ACT SHOULD NOT BE EVADED THROUGH THE DEVICE OF ADVANCE SHIPMENTS TO CANADIAN PORTS WITH THE INTENTION OF FURTHER EXPORTATION UNDER A PUBLIC LAW 480 PROGRAM.

ACCORDINGLY, WE PERCEIVE NO BASIS FOR ANY CRITICISM OF THE REGULATIONS ISSUED BY YOUR DEPARTMENT, WHICH APPEAR CLEARLY DESIGNED TO CARRY OUT THE OVERALL PURPOSES OF THE ACT.