VES-3/5-CO:R:IT:C 111615 GEV

William N. Myhre, Esq.
Preston Gates Ellis & Rouvelas Meeds
1735 New York Avenue, N.W.
Washington, D.C. 20006-4759

RE: Coastwise Trade; Fisheries; Net Servicing Platform; 46 U.S.C. App. 289, 883; 46 U.S.C. 12101, 12108

Dear Mr. Myhre:

This is in response to your letter dated April 5, 1991, requesting a ruling on behalf of Connors Aquaculture, Inc. the owners of a floating Canadian-built net servicing platform. Our ruling on this matter is set forth below.

FACTS:

Connors Aquaculture, Inc. ("Connors") is the owner of a Canadian-built non-self-propelled platform made of steel and measuring 24' by 50' by 30" deep. An all-wood service building measuring 24' by 30' is affixed to the platform. The platform is also equipped with one "Netmaster" heavy duty net washer. The builder's estimate of the gross tonnage of the platform, under Canadian measurement, is approximately 12.5 gross tons. The Net Servicing Platform is presently undocumented.

Connors intends to tow the platform to Eastport, Maine where it will be moored in a stationary position to augment the company's aquaculture operations at that location by providing space to service nets. Specifically, a coastwise-qualified vessel will pick up empty nets at various cage sites in the area and bring them to the Net Servicing Platform where the nets will be washed and cleaned. The nets will also be inspected for any damage or wear and tear and will be repaired as necessary. The nets will then be picked up by a coastwise-qualified vessel for re-delivery back to the appropriate cage site. There will be no other equipment on the Net Servicing Platform other than the net washing machine, and ancillary net repair equipment and materials. - 2 -

The washing and repair will be undertaken by two or three employees of Connors who generally will work a normal work day, five days a week. There are no overnight accommodations on the platform. The operations conducted on the platform are identical to those presently conducted on land, but because of competing demands for the limited land available, the net cleaning function is being transferred to the floating platform. The Net Servicing Platform will be used only for the net cleaning and repair described above and will not operate to process, store, transport, plant, cultivate, catch, take or harvest fish or other marine life.

Once the platform is initially stationed, the normal operations of the aquaculture facility do not require movement of the platform nor does Connors plan to relocate the platform. To the extent it is ever moved, however, such movement will be undertaken without any individuals or merchandise on board.

In addition to the aforementioned Net Servicing Platform, Connors attempted to bring into the United States through the Port of Calais, Maine the FREDA C, an 18' by 40' powered-steel barge, also built in Canada. It is anticipated that the FREDA C will measure less than 5 net tons and hence will be excluded from U.S. documentation. Customs officials in Calais advised Connors that the vessel could engage in the fisheries provided it measured less than 5 net tons. Because the U.S. Coast Guard had not completed measurement of the vessel at the time of its attempted entry, Customs officials prohibited the importation and required the barge to be exported immediately from the United States.

The Net Servicing Platform was also prohibited from importation. The application was reviewed by Customs officials in Portland, Maine who concluded that to the extent the platform measured more than 5 net tons, and was foreign-built, it could not be imported into the United States pursuant to C.D. 971.

ISSUES:

1. Whether a foreign-built, stationary, floating platform operating exclusively as a net cleaning and repair facility in connection with a fisheries operation in U.S. waters is engaged in the fisheries as defined in 46 U.S.C. 12101(a) and is therefore in violation of 46 U.S.C. 12108.

2. Whether a foreign-built, stationary, floating platform operating exclusively as a net cleaning and repair facility in connection with a fisheries operation in U.S. waters is engaging in the coastwise trade in violation of 46 U.S.C. App. 883. - 3 -

3. Whether a foreign-built barge of less than 5 net tons operating in connection with a fisheries operation in U.S. waters is engaged in the fisheries as defined in 46 U.S.C. 12101(a) and is therefore in violation of 46 U.S.C. 12108.

4. Whether a foreign-built barge of less than 5 net tons operating in connection with a fisheries operation in U.S. waters is engaged in the coastwise trade in violation of 46 U.S.C. App. 883. LAW AND ANALYSIS:

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 United States navigable waters and the 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)(1) 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.

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.

The above definition of fisheries supersedes the definition of "fishing" found in section 4.96(a)(5), Customs Regulations (19 CFR 4.96(a)(5) which included the transportation of marine products by a vessel other than the taking vessel under the complete control and management of a common owner or bareboat charterer. It should be noted that this superseded definition was applicable only to the transportation of marine products taken and transferred on the high seas and did not provide any exception to the coastwise laws.

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., 16 U.S.C. 1801, et seq., under which a foreign vessel may obtain a permit from the National Marine Fisheries Service to engage in fishing- 4 -

in the EEZ). Pursuant to 19 U.S.C. 1401(a), the word "vessel" includes every description of water craft or other contrivance used, or capable of being used, as a means of transportation in water, but does not include aircraft. Under 46 U.S.C. 12108(a), only a vessel eligible for documentation (i.e., over 5 net tons and owned by a U.S. 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. With regard to vessels of less than 5 net tons, Customs has long held that such vessels, if owned by United States citizens or by resident aliens, may engage in the fisheries even if foreign- built (see e.g., Treasury Decision (T.D.) 56382(6)). Legislative support for this provision may be found in 16 U.S.C. 1802(31)(B).

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). This statute has been found to apply even to the transportation of merchandise from point to point within a harbor. Pursuant to 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. 588) 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 law) as interpreted by the Customs Service, prohibits the transportation of passengers between points in the United States embraced within the coastwise laws, either directly or by way of a foreign port, in a non- coastwise-qualified vessel (see above). For purposes of section 289, "passenger" is defined as "...any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business." (19 CFR 4.50(b))

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 internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ.

In regard to the Net Servicing Platform under consideration, it is apparent that its exclusive use in cleaning and repairing nets does not fall within the definition of "fisheries" as set - 5 -

forth in 46 U.S.C. 12101(a). Accordingly, the proposed use of this stationary foreign-built platform in connection with a fisheries operation would not violate 46 U.S.C. 12108.

Furthermore, Customs has long-held that the use of a non- coastwise-qualified vessel as a moored facility does not violate the coastwise laws, or any other law administered by Customs provided that the vessel remains stationary. Accordingly, the proposed use of this foreign-built platform in connection with a fisheries operation would not violate 46 U.S.C. 289 or 883.

In regard to the FREDA C we note that its proposed use in this fishing operation is unclear. If the vessel is to be used the same way as the Net Servicing Platform discussed above (i.e., moored in a stationary position for the purpose of cleaning and repairing nets) it also would not be considered engaged in the fisheries as defined in 46 U.S.C. 12101(a), nor would it constitute coastwise trade within the meaning of 46 U.S.C. App. 289 and 883.

If the FREDA C is used for the transportation of merchandise and/or passengers between coastwise points (e.g., from a point within U.S. waters to a point on shore) it is engaged in the coastwise trade. Pursuant to section 4.80(a)(2), Customs Regulations (19 CFR 4.80(a)(2)), no foreign-built vessel, regardless of its tonnage, may engage in the coastwise trade. Accordingly, such use would be a violation of 46 U.S.C. App. 289 and/or 883. The use discussed immediately below would not be a use in the coastwise trade under those statutes.

In the event the FREDA C is engaged in the fisheries as defined in 46 U.S.C. 12101(a), since it is foreign-built, regardless of its tonnage it is not eligible for documentation for the fisheries under 46 U.S.C. 12108. We note, however, that if it is less than 5 net tons, equipped with propulsion equipment of any kind, and numbered pursuant to 46 U.S.C. 12301 et seq. it is considered a vessel of the United States pursuant to 16 U.S.C. 1802(31)(B) and may engage in the fisheries provided it is owned by United States citizens or resident aliens.

It should be noted that C.D. 971, while determinative as to what constitutes a "vessel" for purposes of assessing duty under the appropriate tariff provision, is irrelevant regarding issues pertaining to the use of vessels in the fisheries and coastwise trade.

HOLDINGS:

1. A foreign-built, stationary, floating platform operating exclusively as a net cleaning and repair facility in connection with a fisheries operation in U.S. waters is not engaged in the - 6 -

fisheries as defined in 46 U.S.C. 12101(a) and therefore is not in violation of 46 U.S.C. 12108.

2. A foreign-built, stationary, floating platform operating exclusively as a net cleaning and repair facility in connection with a fisheries operation in U.S. waters is not engaged in the coastwise trade and therefore is not in violation of 46 U.S.C. App. 289 and 883.

3. A foreign-built barge of less than 5 net tons operating in connection with a fisheries operation in U.S. waters is not engaged in the fisheries as defined in 46 U.S.C. 12101(a) if it is operating exclusively as a net cleaning and repair facility and therefore is not in violation of 46 U.S.C. 12108.

If its activities in this fishing operation go beyond a net cleaning and repair facility to include those activities listed in 46 U.S.C. 12101(a), it is engaged in the fisheries and, regardless of its tonnage, since it is foreign-built it is not eligible for documentation for the fisheries under 46 U.S.C. 12108(a). If, however, it is numbered pursuant to 46 U.S.C. 12301 et seq. it is considered a vessel of the United States pursuant to 16 U.S.C. 1802(31)(B) and may engage in the fisheries provided it is owned by United States citizens or by resident aliens.

4. A foreign-built barge of less than 5 net tons operating in connection with a fisheries operation in U.S. waters is not engaged in the coastwise trade in violation of 46 U.S.C. App. 289 and 883 provided it remains moored in a stationary position. If it is used for the transportation of passengers and/or merchandise between coastwise points it is engaged in the coastwise trade which, notwithstanding its tonnage, constitutes a violation of the coastwise laws pursuant to section 4.80(a)(2), Customs Regulations.

Sincerely,

B. James Fritz
Chief
Carrier Rulings Branch