VES 2-CO:R:IT:C 111930 BEW
Mr. Paul Campbell
International Transportation Coordinator
Link-Belt Construction Equipment Company
2651 Palumbo Drive
Lexington, Kentucky 40583-3600
RE: Waiver of the Coastwise laws concerning the transportation
of merchandise from the ports of Newport News, Virginia to
the port of Houston, Texas; 46 U.S.C. App. 883.
Dear Mr. Campbell:
This is in reference to your letter of September 7, 1991
(corrected to October 7, 1991), concerning a request for a waiver
of the coastwise laws to permit cargo which was loaded on board
the ENARXIS V-91017, a foreign-flag vessel, at the port of
Newport News, Virginia, to be discharged from the vessel on
October 12, 1991, at the port of Houston, Texas, without the
assessment of penalties.
FACTS:
You state that the reason for the waiver request is that
you tendered the cargo to Intermarine on September 5, 1991, and
that the subject vessel was scheduled to sail on September 10,
1991. You further state that the cargo was not loaded on board
the vessel until September 25, 1991. In view of this delay, you
state that the cargo will not arrive in Korea in time for the
customer to complete their project, and that your customer is in
danger of losing their contract. You indicate that the customer
has requested that you unlade the cargo from the subject vessel
when it arrives at the Port of Houston on October 12, 1991, and
that you send the cargo by air freight to Seoul, Korea, as
quickly as possible.
You state that it is not your intent to violate the
coastwise laws, but that you are trying to satisfy your
customer's needs due to the fact the contract carrier delayed
shipment of the cargo. You request that we permit the vessel to
discharge the cargo at the port of Houston, and that we issue a
waiver of any penalty that would be assessed since the cargo will
not be entering the commerce of the United States, but will be
sent directly to Korea by air freight.
ISSUE:
Whether the coastwise laws may be waived when cargo is
transported on a non-coastwise-qualified vessel from a coastwise
port, and subsequently discharged from the vessel and shipped by
air frieght at another coastwise port for reasons of commercial
expendiency?
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 "Jones Act", 46 U.S.C. App. 883, was enacted in
1920, for the protection of American shipping and shipbuilding.
The Act of December 27, 1950 (64 Stat. 1120) provides that
the navigation laws (such as sections 883 and 289) may only be
waived when deemed necessary in the interest of national
defense. Under the 1950 Act, the Customs Service, acting for
the Department of the Treasury, is required to waive the
navigation laws which it enforces, including the coastwise laws,
if requested to do so by the Department of Defense in the
interest of national defense. In addition, the Treasury
Department is authorized to waive such laws on its initiative or
the recommendation of another Government agency to the extent
that Treasury determines such action is necessary in the
interest of national defense. A waiver of the provisions of the
coastwise laws cannot be issued solely for economic reasons.
Accordingly, the waiver request is denied.
In the absence of grounds to invoke a waiver in the interest
of national defense, the only other method by which a waiver may
be granted to transport merchandise or passengers on a
non-coastwise-qualified vessel between United States ports would
be through Congressional action.
We regret that we cannot grant a waiver of the coastwise
laws since the circumstances surrounding your request would not
be in the interest of national defense. The transportation of
the merchandise from one coastwise port, namely, Newport News,
Virginia, on a foreign-flag vessel to Houston, Texas, another
coastwise port, would be in violation of section 883.
If the subject cargo is discharged at the port of Houston,
the merchandise would be subject to forfeiture (or a monetary
amount up to the value thereof as determined by the Secretary of
the Treasury, or the actual cost of the transportation, whichever
is greater, would be recoverable from any consignor, seller,
owner, importer, consignee, agent, or other person or persons so
transporting or causing said merchandise to be transported).
Once penalties have been assessed, there is no law or
regulation which permits Customs to waive the assessed penalties.
However, under the provisions of section 1618, title 19 United
States Code, you have a right to file a petition for relief from
the assessed penalties. If the Secretary of the Treasury finds
that such penalties were incurred without willful negligence or
without any intention on the part of the petitioner to defraud
the revenue or to violate the law, or finds the existence of such
mitigating circumstances as to justify remission or mitigation,
he may mitigate the penalties upon such terms and conditions as
he deems reasonable and just.
HOLDING:
The waiver request is denied. The coastwise laws may not be
waived when cargo is transported on a non-coastwise-qualified
vessel from a coastwise port, and subsequently discharged from
the vessel and shipped by air frieght at another coastwise port
for reasons of commercial expendiency where there is no showing
of national defense interest.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch
cc: District Director Houston