VES-3-12-CO:R:IT:C 111420 LLB

Mr. William E Armstrong
South Florida Clean Harbors, Inc.
5915 Ponce De Lean Blvd.
Coral Gables, Florida 33146

Re: Oil pollution clean-up vessels; Skimmer-type vessels; Foreign-built vessels; Importation requirements; Duty consequences; Coastwise trade; Demonstration; 46 U.S.C. App. 883

Dear Mr. Armstrong:

This is in reference to your letter of November 28,1990, concerning the proposed purchase or charter, and use of one or more foreign-built harbor skimmer type vessels in South Florida.

FACTS:

It is proposed that South Florida Clean Harbors, Inc., a Florida corporation, either purchase or charter one or more Italian-built "Pelican"-type harbor skimming vessels. Permission is sought to "import" the vessels for the purpose of demonstrating their oil pollution recovery capabilities to local government officials. It is stressed that the importation would be temporary only, and that no fees would be charged for the demonstration services.

ISSUE:

Whether any restrictions exist on the "importation" of a foreign-built oil skimmer vessel, and what restrictions, if any, may exist on the use in the United States of such vessels for demonstration purposes.

LAW AND ANALYSIS:

Generally, the coastwise laws (e.g., 46 U.S.C. App. 289 and 883, and 46 U.S.C. 12106 and 12110) prohibit the transportation of merchandise or passengers between points in the United States embraced within the coastwise laws 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 coastwise law pertaining to the transportation of merchandise, section 27 of the Act of June 5, 1920, as amended (41 Stat. 999; 46 U.S.C. App. 883, often called the Jones Act), provides that:

No merchandise shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the trans- portation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to 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 other vessel 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 coastwise laws generally apply to points in the territorial sea, defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in the internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ. These laws have also been interpreted to apply to transportation between points within a single harbor.

"Merchandise", as used in section 883, includes any article, including even materials of no value (see the amendment to section 883 by the Act of June 7, 1988, Pub. L. 100-329; 102 Stat. 588). Pursuant to section 4.50, Customs Regulations (19 CFR 4.50), a "passenger" for purposes of the coastwise laws is defined as "any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business."

It is not stated whether local government officials might be aboard a vessel which is demonstrating the skimming process. Customs has previously ruled that the use of a vessel solely for the purpose of demonstration in which persons who are transported on demonstration rides embark and disembark at the same point is not a use in the coastwise trade even if the ride is entirely within territorial waters. Such persons are not considered to be passengers for the purposes of the coastwise laws. However, these rulings have been limited to demonstration rides originating and terminating at the same point because the transportation of persons between different points is itself evidence of a purpose other than the demonstration of a vessel. This, of course, would not apply to crew members.

The transportation aboard vessels of equipment necessary to the operation of the transporting vessel would likewise pose no problem. Such essential equipment is not considered merchandise under the coastwise laws.

In regard to the removal of surface oil by skimming, it is our position that the removal of oil from the water constitutes a lading of merchandise. The deposit of oil at a different point would constitute an unlading of merchandise. If these operations occur within the territorial waters, a violation of the coastwise merchandise statute will have occurred.

The present request for a ruling includes the request for an authorization to "import" skimmer vessels for demonstration purposes, free from duty. The special status accorded vessels, their tackle, apparel, equipment, and appurtenances has long been recognized, with vessels being considered sui generis and totally distinct from merchandise. (See The Conqueror, 166 U.S. 110, 17 S. Ct. 510, 41 L. Ed. 937 (1896); United States v. William Herman Wepner, 32 CCPA 30, C.A.D. 282 (1944)). The requirements for the entry of merchandise are provided in section 1484 of title 19, United States Code. Those requirements have no applicability to commercial vessels, of which skimmer vessels are examples. Accordingly, there would be no Customs duty requirements should such vessels be brought to the United States.

HOLDING:

Following a thorough review of the facts and analysis of the law and applicable precedents, we find that the vessels in question may engage in demonstration activities in the United States to the following extent:

1. Persons to whom vessel capabilities are being demonstrated may be transported from a shore site to a demonstration point and back to the original shore point to be disembarked, even if the entire operation occurs within territorial waters.

2. A full-scale operational demonstration may not be undertaken, in that oil skimmed within territorial waters is deemed to have been laden in such waters, and when such oil is later deposited, a violative transportation will have been consummated.

3. A commercial vessel, such a pollution control vessel, may be brought into the United States without the necessity of paying any Customs merchandise duties.


Sincerely,

B. James Fritz
Chief
Carrier Rulings Branch