US TO REFUND FEES SHIPS PAID FOR FUELING STOPS

US TO REFUND FEES SHIPS PAID FOR FUELING STOPS

The U.S. Customs Service agreed to refund more than $1 million after admitting it was wrong in collecting user fees and agriculture inspection fees

from vessels stopping at a port only to buy bunker fuel.

The agency said it will refund the money to carriers that paid such charges at the California ports of Los Angeles and Long Beach. The decision is dated Jan. 9 and was disclosed Tuesday after the agency was queried by a reporter.The practice of stopping for bunker only is common for vessels leaving U.S. Gulf ports with grain or coal destined for Asia. The ships often stop in Los Angeles, where bunker fuel has been competitively priced, before proceeding to Asia.

"Tramp trades buy their fuel in the most economical place they can without a major deviation," said Jay Winter, executive secretary of the Steamship Association of Southern California, which fought the fees.

He said vessels pass within 50 miles of Los Angeles on their way to Asia.

Mr. Winter said the affected carriers, mostly bulk operators and car carriers, did not complain about the $397 Customs user fee for a number of years, but last summer, when a separate $544 Agriculture Department fee was slapped on, they began to protest.

In Los Angeles and Long Beach, the nation's busiest port region for taking on bunker fuel, Customs estimates shipping lines are due about $1.25 million in refunds of Customs user fees, which have been collected since 1986.

Refunds of Agriculture Department inspection fees, collected since last July, will exceed $190,000. Customs has no national estimate of the refunds due to carriers.

"We're happy this issue has finally been resolved," said Leo R. Brien, president of the Pacific Merchant Shipping Association in Oakland, Calif., one of the ocean carrier groups that worked to convince Customs that vessels taking on only bunker fuel and stores should not pay the fees.

When a vessel calls at a U.S. port to pick up or discharge cargo, it is charged a Customs user fee of $397.

Customs also collects, on behalf of the Agriculture Department, an inspection fee of $544. Even vessels with non-agricultural shipments, such as car carriers, are assessed the USDA fee.

The rub came when these same vessels left port and, on the way to a foreign destination, stopped at another U.S. port only to take on bunker fuel. Customs has been assessing the user fees on bunkering vessels since 1986.

Jim Pidd, the Customs seaport director of inspection and control in Los Angeles, said his office has been communicating back and forth with Customs headquarters in Washington, D.C., to obtain a ruling on this matter.

Customs' office of regulations and rulings issued a legal determination on Jan. 9.

Mr. Pidd said the Los Angeles district this week will issue a public bulletin telling carriers how to apply for refunds.

Larry Burton, a Customs attorney in Washington, said the agency has not yet determined if each district will issue a bulletin or if headquarters will. Mr. Burton agreed that Los Angeles is by far the busiest port for bunkering-only vessels.

Mr. Winter estimated that 2,000 vessels call at Southern California each year for bunkering only and maybe 40 percent of those are coming from another U.S. port.

Los Angeles is losing some of its bunkering business, however, because of a California tax imposed on fuel last year.

Mr. Brien said although Customs' decision to stop collecting the user fees is positive, the bunkering business will only return to normal if the California tax is rescinded. "That 8.25 percent tax is more onerous," he said.