VES-3/7/10-02-CO:R:P:C 111188 GEV

Hannu Halme
Managing Director
Lannen Engineering
SF-27820 Iso-Vimma, Finland

RE: Watermaster; Dredging; Coastwise Trade; Fisheries; 46 U.S.C. App. 292, 289, 883, 316(a), 316(d); 46 U.S.C. 12101, 12108

Dear Mr. Halme:

This is in reference to your letters dated July 3 and August 3, 1990, regarding the proposed use of the Watermaster in the United States. Our ruling on this matter is set forth below.

FACTS:

The Watermaster is a Finnish-built, Finnish-owned, amphibious, multi-purpose excavator designed to operate in and around inland waterways such as lakes, ponds, rivers, streams, canals, settlement ponds, reservoirs, swamps, marshes and other wetland areas. The Watermaster, with the aid of quickly changeable attachments, is designed to rehabilitate and maintain the above waterways by being able to excavate, pump, rake, drill or hammer, and lift (e.g., logs).

Specifically, the Watermaster performs tasks in three different areas: environmental management; construction; and maintenance of waterways for leisure-related activities. In the area of environmental management, the Watermaster rehabilitates eutrophic rivers and lakes, and provides landscaping and flood control. It also performs such technical work as removing aquatic vegetation and sunken logs, laying underwater pipe and cable, managing industrial water areas, reservoirs, and special civil engineering water projects. The Watermaster is also designed to perform several functions related to maintaining waterways for leisure activities including: constructing boating routes; deepening channels and marinas; rehabilitating bathing beaches; and improving shorelines and banks.

The vessel has a steel frame. Its attachments include a pump and hoe bucket, discharge pipes, a spout, and excavation equipment. It is self-propelled by a diesel engine which - 2 -

operates a propeller through a transmission. The dimensions of the Watermaster are as follows: 10.2m in length; 3.2m in width and 14.1 tons in weight.

In response to a request from Lannen Engineering ("Lannen"), the Finnish manufacturer, the U.S. Customs Service, by letter dated May 4, 1990 (CLA-2 CO:R:C:G 084006 VEA) held the Watermaster to be properly classifiable as a dredger the navigability of which is subsidiary to its main function, in heading 8905, subheading 8905.10.00 and subject to a free rate of duty. The May 4 ruling, however, stated that "the coastwise laws (i.e., 46 U.S.C. App. 883, 289, 316(a), and 316(d) and the law prohibiting the use of a foreign-built dredge in the United States (i.e., 46 U.S.C. App. 292) may affect the permissible use of the Watermaster." Heeding the advice contained in the May 4 ruling, Lannen contacted the U.S. Customs Service Carrier Rulings Branch regarding the applicability of the above laws. It is Lannen's contention that the classification of the Watermaster as a dredge is a misnomer since their customers are not dredging contractors but rather earthmoving, pipeline and land reclamation contractors that need specialized equipment that can perform a variety of tasks. To illustrate this an updated brochure depicting the Watermaster was enclosed with Lannen's letter of July 3, 1990.

ISSUE:

Whether the use of a foreign-built, foreign-owned, multi- purpose, excavating vessel to preserve, restore, and rehabilitate inland waterways as described above is prohibited by 46 U.S.C. App. 883, 289, 292, 316(a) and 316(d).

LAW AND ANALYSIS:

Section 1 of the Act of May 24, 1906 (34 Stat. 204; 46 U.S.C. App. 292), provides that, "a foreign-built dredge shall not, under penalty of forfeiture, engage in dredging in the United States unless documented as a vessel of the United States." The Customs Service has ruled that dredging, for purposes of 46 U.S.C. App. 292, means the use of a vessel equipped with excavating machinery in digging up or otherwise removing submarine material. We have long held that dredging in United States territorial waters (generally defined as the belt, 3 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline), and certain dredging on the United States Outer Continental Shelf outside territorial waters, is dredging in the United States, for purposes of this statute.

In our interpretation of 46 U.S.C. App. 292, we and our predecessor in the administration of the navigation laws, the Bureau of Marine Navigation, have consistently held that, under - 3 -

46 U.S.C. App. 292, a foreign-built dredge (except those dredges named in section 2 of the Act of May 28, 1906; see below) may not engage in dredging in the United States whether or not documented as a vessel of the United States. This is so because of the historical background and legislative history of the Act of May 28, 1906. The provision was enacted as a result of controversy which arose over the use of foreign-built dredges to repair damage done by a hurricane at Galveston, Texas, in 1900. At the time of the enactment of the provision, foreign-built vessels could not be documented in the United States, unless captured in war by citizens of the United States and lawfully condemned as prize or adjudged to be forfeited for a breach of the laws of the United States (section 4132, Revised Statutes). Thus, at the time of enactment, the proviso in section 1 of the Act of May 28, 1906, "unless documented as a vessel of the United States," was by itself, practically meaningless. However, section 2 of the Act of May 28, 1906, provided:

That the Commissioner of Navigation is hereby authorized to document as vessels of the United States the foreign-built dredges Holm, Leviathan, Nereus, and Triton, owned by American citizens and now under con- struction abroad for use at Galveston, on which an American citizen, the contractor at Galveston, has an option.

Reading both sections together, it is clear that the proviso in section 1, "unless documented as a vessel of the United States," refers to the dredges which were authorized and directed to be documented as vessels of the United States by section 2. The legislative history of the Act confirms this interpretation (see Cong. Rec. 7029 (1906)) and, stated above, the Act has consistently been so interpreted by the agencies responsible for its administration. Even though a foreign-built dredge may now be documented as a vessel of the United States (see 46 U.S.C. 12102, 12105), it would be prohibited by 46 U.S.C. App. 292 from engaging in dredging in the United States.

Thus, in our interpretation of 46 U.S.C. App. 292 we have, as is proper, considered the statute as a whole and in the context of the time that it was enacted. The phrase, "unless documented as a vessel of the United States," makes it clear that the statute was intended to apply to dredges which are vessels, as does section 2 of the Act of May 28, 1906, which refers to the dredges named therein as vessels and dredges. Moreover, we have consistently applied 46 U.S.C. App. 292 to dredges which are vessels and are not aware of any application of the statute to a dredge which is not a vessel. A vessel is defined as including "...every description of water craft or other contrivance used, or capable of being used, as a means of transportation in water..." (19 U.S.C. 1401(a); see also, 1 U.S.C. 3 and 46 U.S.C. 2101(45)). Pursuant to an Opinion of the Attorney General (42 - 4 -

Op. Atty. Gen., dated August 7, 1963) Customs has considered dredges to be vessels for purposes of 46 U.S.C. App. 292, even if they are not self-propelled.

In response to Lannen's contention that the Watermaster is not a dredge and therefore not subject to the provisions of the dredging statute (46 U.S.C. App. 292), we note that while the statute does not define dredging, other sources offer helpful guidelines. One court stated that:

Dredging is defined as "excavation" by any means ...The word "excavate" is derived from the latin word meaning to hollow out. Its common, plain and ordinary meaning is to make a cavity or hole in, to dig out, hollow out, to remove soil by digging, scooping out or other means. The common plain and ordinary meaning of the word "dredging" is the removal of soil from the bottom waters by suction or scooping or other means. Gar-Con Development v. State, 468 So.2d 413 (Fla. App. 1 Dist. 1985).

The International Maritime Dictionary defines a dredge as:

A vessel or floating structure equipped with excavating machinery, employed in deepening channels and harbors, and removing submarine obstructions such as shoals and bars. De Kerchove, International Maritime Dictionary, Second Edition (1961), p. 241.

Given the foregoing definition, it is clear that the various uses of the Watermaster, with the exception of cable and pipe- laying, drilling/pile driving and harvesting aquatic vegetation, constitute dredging so as to come within the purview of 46 U.S.C. App. 292, as discussed above.

Accordingly, the use of the foreign-built Watermaster as a dredge in the United States is prohibited by 46 U.S.C. App. 292 regardless of whether it is documented as a vessel of the United States or, as in this case, foreign-owned which would preclude it from U.S. documentation pursuant to 46 U.S.C. 12102. In the event that the Watermaster would be constructed in North America (a possibility stated in your letter of August 3, 1990) you should know that only construction in the United States, not Canada as suggested in your letter, would suffice for purposes of 46 U.S.C. App. 292 and the other navigation laws administered by Customs. The determination as to whether a particular vessel's construction renders it U.S. built for purposes of the fisheries and navigation laws, is a function of the U.S. Coast Guard (USCG). This determination, made by the U.S. Coast Guard for vessels 5 net tons or greater, is dependent upon whether that - 5 -

agency considers the vessel to be "built in the United States" as that term is defined in section 67.09-3, Coast Guard Regulations (46 CFR 67.09-3). We suggest you contact the USCG regarding this matter. We note that although the fact that the Watermaster is Finnish-owned precludes it from being documented as a vessel of the United States pursuant to 46 U.S.C. 12102, if it is considered to be U.S.-built as discussed above, its use in the United States is permitted since the prohibition in section 292 is applicable only to foreign-built dredges.

In regard to the uses of the Watermaster which do not constitute dredging (i.e., cable and pipe-laying, drilling/pile driving, and harvesting aquatic vegetation) we note the following.

Title 46, United States Code Appendix, section 883 (46 U.S.C. App. 883), the coastwise merchandise statute 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 (i.e., a coastwise-qualified vessel). Pursuant to title 19, United States Code, section 1401(c) (19 U.S.C. 1401(c)) the word "merchandise" means goods, wares and chattels of every description and includes merchandise the importation of which is prohibited. Furthermore, Public Law 100-329 (102 Stat. 508) amended section 883 to apply to the transportation of "valueless material..."

Title 46, United States Code Appendix, section 289 (46 U.S.C. App. 289, the passenger coastwise statute), prohibits the transportation of passengers between points embraced within the coastwise laws of the United States, either directly or by way of a foreign port, in a non-coastwise-qualified vessel. Pursuant to section 4.50(b), Customs Regulations (19 CFR 4.50(b)) a "passenger" for purposes of section 289 is defined as "any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership or business."

Points embraced within the coastwise laws include all points within the territorial waters of the United States, including points within a harbor. The territorial waters of the United States consist of the territorial sea, defined as the belt, 3 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline.

In regard to the laying of cable and pipe, Customs has long- held that the use of a vessel solely in laying cable and pipe is not considered a use in the coastwise trade of the United States, even when the cable and pipe are laid between two points in the United States embraced within the coastwise laws. Accordingly, - 6 -

regardless of foreign build or ownership, the Watermaster would not be prohibited from engaging in this type of activity. Furthermore, this vessel would not be prohibited from being used for drilling or pile driving.

The aforementioned May 4, 1990 letter from Customs referenced 46 U.S.C. App. 316(a) and 316(d). Title 46, United States Code Appendix, section 316(a) (46 U.S.C. App. 316(a), the coastwise towing statute) prohibits the use of a non-coastwise- qualified vessel to tow any vessel other than a vessel in distress, from any point or place embraced within the coastwise laws of the United States to another such port or place, or for any part of such towing. Accordingly, the use of the Watermaster to tow any vessel, other than a vessel in distress, between two coastwise points, or for any part of such towing, is prohibited.

Title 46, United States Code Appendix, section 316(d) (46 U.S.C. 316(d)), in pertinent part, prohibits the engagement of a foreign vessel in salvaging operations on the Atlantic or Pacific Coast of the United States, or in territorial waters of the United States on the Gulf of Mexico, except when authorized by treaty or when the Commissioner of Customs, after investigation, authorizes the use of a foreign vessel or vessels in the salvaging operations. For purposes of the navigation laws administered by Customs, including 46 U.S.C. App. 316(d) a point in the United States territorial waters (discussed above) is considered a point within the navigation laws.

In order for a marine operation to constitute "salvage," according to the law developed in this area (see B.V. Bureau Wijsmuller v. United States, 702 F.2d 333, 337 (1983), in which the history of salvage law is briefly discussed), three elements are necessary. These elements are: "marine peril; service voluntarily rendered, not required by duty or contract; and success in whole or in part, with the service rendered having contributed to the success." (Wijsmuller, 702 F.2d at 338, citing The Sabine, 101 U.S. 384, 25 L.Ed. 982 (1880)) To quote further from Wijsmuller, 702 F.2d at 338: "[p]eril necessary to give rise to a claim for salvage must be present and impending, although it need not be immediate or absolute. 'A situation of actual apprehension, though not of actual danger, is sufficient.' ...Absent danger, any services rendered a vessel cannot properly be called salvage ..." (See also Cope v. Vallette Dry-Dock Co., 119 U.S. 625 (1887); Simmons v. The Steamship Jefferson, 215 U.S. 130 (1909); and de Kerchove's International Maritime Dictionary, 2d Ed., 1961, p. 680, defining "Salvage Service.")

- 7 -

Accordingly, although it does not appear from the literature submitted that the Watermaster would be used for salvage operations, its use in such operations would be prohibited by 46 U.S.C. App. 316(d).

We note that other than legislation enacted by Congress to explicitly exempt a particular vessel from the application of the navigation laws discussed above, the only other waiver authority is that contained in the Act of December 27, 1950 (64 Stat. 1120), under which the navigation laws may be waived by the Secretary of the Treasury in the interest of national defense. This Act, among other things, directs the granting of a waiver upon the request of the Secretary of the Defense and permits such a waiver upon the written recommendation of the head of any other United States Government agency.

Aside from the applicability of the various navigation laws discussed above, we note an additional concern not mentioned in Customs letter of May 4, 1990, pertaining to the use of the Watermaster in harvesting marine vegetation. In this regard we note that the Commercial Fishing Industry Vessel Anti- Reflagging Act of 1987 (the "Act", Pub. L. 100-239; 101 Stat. 1778) amended 46 U.S.C. 12101(6) by changing the definition of "fisheries" set forth therein to include the "processing, storing, and transporting (except in foreign commerce)" of fish and related fishery resources in the United States navigable waters and the United States Exclusive Economic Zone (EEZ), as well as the catching-related activities provided for in the former definition. Accordingly, the new definition of fisheries, now set forth in 46 U.S.C. 12101(a) reads as follows:

"fisheries" includes processing, storing, transporting (except in foreign commerce), planting, cultivating, catching, taking, or harvesting fish, shellfish, marine animals, pearls, shells, or marine vegetation in the navigable waters of the United States or in the exclusive economic zone. (emphasis added)

The EEZ is defined in Presidential Proclamation 5030 of March 10, 1983 (48 FR 10605), as extending outward for 200 nautical miles from the baseline from which the territorial sea is measured.

Title 46, United States Code, section 12108(b) limits the employment in the fisheries to a vessel issued a certificate of documentation with a fishery endorsement, "subject to the laws of the United States regulating the fisheries" (see e.g., the Magnuson Fishery Conservation and Management Act of 1976 (MFCMA), 16 U.S.C. 1801 et seq., under which a foreign vessel may obtain a permit from the National Marine Fisheries Service (NMFS) to engage in fishing in the EEZ). Under 46 U.S.C. 12108(a), only a - 8 -

vessel eligible for documentation (i.e., over 5 net tons and owned by a citizen) which was built in the United States may be endorsed for the fisheries. Pursuant to 46 U.S.C. 12108(b), subject to the laws of the United States regulating the fisheries, only a vessel so endorsed may engage in the fisheries.

Accordingly, it is apparent that the use of the Watermaster to harvest aquatic vegetation constitutes an engagement in the fisheries within the meaning of 46 U.S.C. 12101(a)(1). Since it is foreign-built it is not eligible for documentation in the fisheries under 46 U.S.C. 12108(a) and therefore cannot engage in this activity.

It should be noted that the provisions of title 46, United States Code, relating to the fisheries and navigation laws administered by Customs, are applicable only to those vessels engaged in activities in U.S. territorial waters including the inland navigable waters of the United States and its territories and possessions. The U.S. Coast Guard determines whether a particular body of water is deemed to be navigable waters of the United States in order to ascertain its jurisdiction to enforce the laws its administers. The U.S. Customs Service, in ascertaining its own jurisdiction to enforce the laws it administers, is strongly disposed to follow determinations of the U.S. Coast Guard in the absence of Federal judicial decisions or explicit Congressional enactment, although it is not required to do so.

HOLDINGS:

1. The use of a foreign-built, foreign-owned, multi-purpose excavating vessel to preserve, restore and rehabilitate inland waterways recognized as navigable by the U.S. Customs Service as described above (with the exception of cable and pipe-laying, drilling/pile driving and harvesting aquatic vegetation) constitutes dredging and is prohibited by 46 U.S.C. App. 292.

2. The use of a foreign-built, foreign-owned, multi-purpose excavating vessel to perform cable and pipe-laying and drilling/pile driving on inland waterways recognized as navigable by the U.S. Customs Service does not constitute coastwise trade and therefore is not prohibited by 46 U.S.C. App. 289 and 883.

3. The use of a foreign-built, foreign-owned, multi-purpose excavating vessel to tow a vessel, other than a vessel in distress, between two coastwise points on an inland waterway recognized as navigable by the U.S. Customs Service, or for any part of such towing, is prohibited by 46 U.S.C. App. 316(a).

- 9 -

4. The use of a foreign-built, foreign-owned, multi-purpose excavating vessel for salvage on inland waterways recognized as navigable by the U.S. Customs Service is prohibited by 46 U.S.C. App. 316(d).

5. The use of a foreign-built, foreign-owned, multi-purpose excavating vessel to harvest aquatic vegetation on inland waterways recognized as navigable by the U.S. Customs Service constitutes an engagement in the fisheries within the meaning of 46 U.S.C. 12101(a). Such vessel is not eligible for a certificate of documentation with a fisheries endorsement under 46 U.S.C. 12108(a) and therefore is prohibited from engaging in such activity.

Sincerely,

B. James Fritz
Chief
Carrier Rulings Branch