VES-3-17 CO:R:P:C 109629/109464 PH
Gerard S. Doyle, Jr., Esq.
Sea-Land Corporation
Attorney for Sea-Land Service, Inc.
Post Office Box 800
Iselin, New Jersey 08830
RE: Coastwise Transportation of Cranes to be Used in Loading
and Discharging Vessels - Sixth Proviso to 46 U.S.C. App. 883
Dear Mr. Doyle:
This in response to your letters of July 5 and 15, 1988,
in which you request a ruling on the applicability of the
coastwise laws to the transportation in a Dutch-flag vessel
of container handling cranes from Long Beach, California, to
Elizabeth, New Jersey. Our ruling of April 20, 1988 (File:
VES-3-17 CO:R:P:C 109464 PH), in response to a letter dated
April 13, 1988, from Stuart R. Breidbart, Esq., of your
company also concerned this matter.
FACTS:
In his April 13 letter, Mr. Breidbart stated that your
company owns two shore-side container handling cranes located
in a California port. He stated that these cranes are
specially designed to load and discharge marine cargo
containers from cellular containerships and are useful for no
other purpose.
Mr. Breidbart stated that your company needs to relocate
the cranes to its port facility in New Jersey to handle an
increased volume of cargo which will move through that
facility. This relocation was to be effected by the removal
of the cranes from their present location, the loading of
them onto a special pur- pose chartered "heavy lift" vessel,
and the transportation of the cranes on that vessel to the
New Jersey facility. There the cranes would be discharged
and erected next to other cranes now in service at the
facility. All of the cranes were be used to load and
discharge cargo of your company moving in the trades between
the United States and Europe, Asia, and Central America. In
addition, Mr. Breidbart stated, the facility was to be used
to load and discharge your company's vessels operating
between New Jersey and Puerto Rico, although this cargo
represents less than 10 percent of the cargo being loaded and
discharged at the New Jersey facility.
Mr. Breidbart stated that the cranes at your company's
New Jersey facility are used to stevedore the vessels of your
company and those of its terminal service customers. Your
company is the sole operator of the cranes now at the
facility and would contin- ue to be the sole operator of the
cranes when the cranes from California are erected at the New
Jersey facility.
Mr. Breidbart stated that the two cranes would take up
the entire capacity of, and be the only cargo on the
carrying vessel. He stated that the vessel would have to
ballast down to clear the Bayonne Bridge in New Jersey and
that there is no United States- flag or other vessel which
can pass under the bridge with the cranes on board.
Mr. Breidbart stated that the vessel used to transport
the cranes was to be a Dutch-flag and owned heavy lift
vessel. The vessel owner would voyage charter the vessel to
your company and your company would be responsible for all
land-side engineering preparation in connection with the
loading of the cranes in Cali- fornia. Your company would
also be responsible for routing the vessel in its transit to
the New Jersey facility and would oversee the discharge of
the cranes.
In your July 5 letter, you state that all facts in the
April 13 letter remain the same "[e]xcept for the change
from 'voyage charter' to 'bareboat (demise) charter', the
change in timing and the planned foreign commerce aspects of
the operations."
You describe the charter arrangement under which the
vessel will be chartered as a "bareboat charter party" and
you enclose a copy of the charter party. You state that
under the terms of the charter, the owner is relieved of the
responsibility to crew, op- erate, navigate, and manage the
vessel and those responsibilities become those of your
company. You state that your company may use the vessel as
it wishes, that it will use the vessel to carry its cranes at
no charge, and that it will seek to defray the charter hire
and operating costs by soliciting cargoes for carriage for
the voyage to Rotterdam, where the vessel will be returned to
the owner. Under the terms of the bareboat charter, a
"BARECON 'A' Standard Bareboat Charter":
The Vessel shall during the Charter period be in
the full possession and at the absolute disposal
for all purposes of the Charterers and under their
complete control in every respect. The Charterers
shall at their own expense and by their own
procurement man, victual, navigate, operate,
supply, fuel and repair the Vessel whenever
required during the Charter period and they shall
pay all charges and expenses of every kind and
nature whatsoever incidental to their use and
operation of the Vessel under this Charter,
including any foreign general municipality and/or
state taxes. The Master, officers and crew of the
Vessel shall be the servants of the Charterers for
all purposes whatsoever, even if for any reason
appointed by the Owners.
Your July 15, 1988, letter is in response to our inquiry
of July 11. In our letter, we asked you to describe the
actual use of the cranes under consideration, specifically
whether "the cranes will handle any domestic cargo, including
that destined to or coming from Puerto Rico." You state, in
your July 15 letter, that: "The cranes in question will be
erected on the Berth to handle only foreign trade." You note
that: "The cranes in question could physically be shifted to
load or discharge domestic cargo [but] Sea-Land has no
present plans to use the cranes for domestic cargo operation
because the Federal Aviation Administration (FAA) has advised
Sea-Land not to shift the cranes to the Slip [vessels which
carry Puerto Rican trade cargo berth exclusively at this
Slip], because they [i.e., the cranes] would then be in the
flight path for Newark International Airport."
ISSUE:
May cranes used to load and unload the cargo of the owner
of the cranes moving in foreign trade be transported from
California to New Jersey in a Dutch-flag vessel which is
chartered under a "BARECON 'A' Standard Bareboat Charter" by
the owner of the cranes from the vessel owner?
LAW AND ANALYSIS:
Title 46, United States Code Appendix section 883 (46
U.S.C. App. 883), often called the Jones Act, provides,
in part, that no merchandise shall be transported between
points in the United States embraced within the coastwise
laws, either directly or via a foreign port, or for any part
of the transportation, in any vessel other than a vessel
built in and documented under the laws of the United States
and owned by persons who are citizens of the United States.
The Act of September 21, 1965 (Public Law 89-194, 79 Stat.
823), added the so-called sixth proviso to section 883 and
the Act of August 11, 1968 (Public Law 90-474, 82 Stat. 700),
amended this proviso. Under the sixth proviso:
... Upon such terms and conditions as the Secretary
of the Treasury by regulation may prescribe, and,
if the transporting vessel is of foreign registry,
upon a finding by the Secretary of the Treasury,
pursuant to information obtained and furnished by
the Secretary of State, that the government of the
nation of registry extends reciprocal privileges to
vessels of the United States, this section shall
not apply to the transporta- tion by vessels of the
United States not qualified to engage in the
coastwise trade, or by vessels of foreign registry,
of ... (e) stevedoring equipment and material, if
such equipment and material is owned or leased by
the owner or operator of the transporting vessel,
or is owned or leased by the stevedoring compa- ny
contracting for the lading or unlading of that ves-
sel, and is transported without charge for use in
the handling of cargo in foreign trade.
Section 4.93, Customs Regulations (19 CFR 4.93), lists
the nations the vessels of which are entitled to the
privileges provided for by the proviso. The Netherlands is
listed as having been found to extend reciprocal privileges
in respect to the articles listed under paragraph (e) of the
proviso. We have ruled that cranes used in the loading and
unloading of cargo in foreign trade may qualify for the
exemption for stevedoring equipment and material in the sixth
proviso to 46 U.S.C. App. 883.
In order to qualify for the exemption for stevedoring
equipment and material in the sixth proviso, the cranes under
consideration must be:
(1) (a) owned or leased by the owner or operator
of the transporting vessel; or
(b) owned or leased by the stevedoring company
contracting for the lading or unlading of that
vessel; and
(2) ... transported without charge for use in the
handling of cargo in foreign trade.
As we stated in our April 20, 1988, ruling, a bareboat or
demise charterer may be considered an "owner or operator" of
a transporting vessel, for purposes of the sixth proviso, but
a time or "slot" charterer would not be so considered. We
held that the Dutch-flag vessel under consideration, to be
voyage chartered to your company, could not transport the
cranes under the sixth proviso because your company would not
be considered the "owner or operator," of the vessel and the
cranes would not be transported without charge.
It is generally settled law that, "To create a demise [or
bareboat charter] the owner of the vessel must completely and
exclusively relinquish 'possession, command, and navigation'
there of to the demisee ... It is therefore tantamount to,
though just short of, an outright transfer of ownership.
However, anything short of such a complete transfer is a time
or voyage charter party or not a charter party at all."
(Guzman v. Pichirilo, 369 U.S. 698, 699-670 (1962); see also,
Leary v. United States, 81 U.S. 607, 611 (1871), and 2B
Benedict on Admiralty (1978 Ed.), 3- 9 through 3-13, Test for
Demise Charter.)
On the basis of the foregoing authorities (see, also, 2B
Benedict, 4-9 et seq., in which the "BARECON 'A' Standard
Bareboat Charter" which is to be used in this case is set
forth as a bareboat charter), we conclude that the charter
agreement under which your company will charter the
Dutch-flag vessel under consideration, as described in your
July 5, 1988, letter and accompanying materials, is a
bareboat or demise charter. The cranes to be transported are
owned by your company which, as bareboat or demise charterer
of the Dutch-flag vessel, would be considered the "owner or
operator" of the vessel, for purposes of the sixth proviso.
The cranes are to be transported by your company without
charge and, according to your July 15, 1988, letter, are "to
handle only foreign trade."
HOLDING:
Pursuant to the sixth proviso of 46 U.S.C. App. 883, a
Dutch-flag vessel would not be prohibited by section 883 from
transporting from California to New Jersey cranes used to
load and unload the cargo of the owner of the cranes moving
in foreign trade when the vessel is chartered under a
"BARECON 'A" Standard Bareboat Charter" by the owner of the
cranes from the vessel owner, assuming that the charter
agreement is as described in the ruling request and
accompanying materials and this ruling.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch