VES-3-21 CO:R:IT:C 112807 JBW
Herbert E. Harris II
Harris & Ellsworth
The Watergate
2600 Virginia Avenue, N.W.
Suite 1113
Washington, D.C. 20037-1905
RE: Coastwise; Vessel; Equipment; Collapsible Bladders; Dracones;
Emergency Response; Oil Pollution Act of 1990; 46 U.S.C. app.
883.
Dear Mr. Harris:
Thank you for your letter of June 17, 1993, in which you
request a ruling by the Customs Service on the application of the
coastwise laws (46 U.S.C. app. 883) to the use of collapsible
bladders known as "dracones" or "temporary storage bladders
(TSBs)" for emergency response to oil and hazardous substance
discharges. To expedite our response on this issue, we will
address the question of classification and dutiability of these
articles in a separate letter.
FACTS:
Dracones or TSBs are flexible containers used for the
containment of oil or other hazardous substances skimmed from the
surface of the water. The TSBs are attached to the skimming
equipment of a skimming vessel and filled with oil spill waste.
The TSBs are then detached from the skimming vessel, and they
either remain stationary for discharge into a support barge or may
be towed to a discharge area. After discharge, the TSBs are rolled
up and transported back to the skimming vessels where they may be
reused.
The only use of the TSBs under consideration is for oil
recovery and storage. The materials from which they are made
render the TSBs unusable for non-petroleum products. Moreover,
the TSBs currently are not used for the commercial transportation
of cargo nor, given their unique design, are they capable of such
use.
ISSUE:
Whether TSBs used for oil and hazardous waste clean-up are
vessels and consequently subject to the restrictions of the
coastwise laws.
LAW AND ANALYSIS:
The coastwise laws of the United States prohibit the
transportation of merchandise between points in the United States
embraced within the coastwise laws, either directly or via a
foreign port, 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. 46 U.S.C.A. app.
883 (West Supp. 1993)(referred to as "the Jones Act").
The term merchandise is defined in the coastwise statute to
include valueless materials. 46 U.S.C. app. 883. The statute
further provides that the transportation of valueless material,
regardless of its commercial value, from a point or place in the
United States or a point or place on the high seas within the
Exclusive Economic Zone, as defined in the Presidential
Proclamation of March 10, 1983, to another point or place in the
United States or a point or place on the high seas within the
Exclusive Economic Zone falls within the ambit of the coastwise
statute.
From this statutory framework, the Customs Service has
concluded that the removal of surface oil by skimming constitutes
a lading of merchandise. Headquarters Ruling Letter 111420, dated
June 17, 1991. The deposit of the skimmed oil at a different point
would constitute an unlading of merchandise. The coastwise laws
prohibit the use of a non-coastwise-qualified mobile vessel for
such recovery and transportation of oil in waters within the
jurisdiction of the coastwise laws. Headquarters Ruling Letter
110386, dated September 29, 1989. However, Customs has held that
the use of a non-coastwise-qualified vessel as a stationary
facility for lodging, processing, storing, or other activities is
not a "transportation" that is prohibited by section 883. Id. If
such a stationary vessel is being loaded or unloaded and must be
moved to another location temporarily due to stress of weather or
other reason involving the safety of the vessel, the coastwise laws
are not violated so long as no loading or unloading occurs at any
other coastwise point and the vessel is subsequently returned to
its original location once the danger has passed. Id.
Only coastwise-qualified vessels may accept the transfer of
the recovered oil at a coastwise point for transportation to
another coastwise point, regardless of whether the vessel leaves
the territorial waters or Exclusive Economic Zone of the United
States. Headquarters Ruling Letter 110276, dated June 15, 1989.
Transportation by a non-coastwise-qualified vessel is permitted
only if the oil is unloaded at a foreign point. Id.
The coastwise restrictions set out above are applicable only
to objects that are "vessels" under the statute. The term vessel,
for purposes of the coastwise law, is statutorily defined to
include: "every description of watercraft or other artificial
contrivance used, or capable of being used, as a means of
transportation on water." 1 U.S.C.A. 3 (West 1985); 46 U.S.C.A.
2101(45) (West 1993). The courts have not specifically addressed
the definition of vessel as it is used in 46 U.S.C. app. 883.
However, examination of the term has been the focus of judicial
inquiry in other contexts.
The variety of structures and the different uses to which
they are put have led courts to examine "the purpose for which the
craft is constructed and the business in which it is engaged" when
evaluating whether a particular watercraft or structure is a
vessel. Gremillion v. Gulf Coast Catering Co., 904 F.2d 290, 293
(5th Cir. 1990)(quoting The Robert W. Parsons, 191 U.S. 17 (1903)).
The court in Gremillion states: "The caselaw is heavily skewed in
favor of conferring such status upon craft whose primary mission
is the transportation of cargo, equipment, or passengers over
navigable waters." Id. The vessel must be designed for navigation
and commerce. Fox v. Taylor Diving & Salvage Co., 694 F.2d 1349,
1354 (5th Cir. 1983). Although watercraft that are not considered
vessels may possess some navigability, any transportation function
must be incidental to the primary function of the watercraft.
Brunet v. Boh Brothers Construction Co., 715 F.2d 196, 198 (5th
Cir. 1983). Finally, courts may determine whether the designation
of a craft as a vessel is consistent with underlying policy of the
statute. See generally, T. Schoenbaum, Admiralty and Maritime Law
3-6 (1987).
From these authorities, we determine that TSBs used for oil
or hazardous materials clean-up are not vessels for purposes of 46
U.S.C. app. 883. The purpose for which the TSBs are used is to
collect and contain skimmed oil or other hazardous substances, not
for the transportation of those waste materials. In essence, the
TSBs are external storage tanks that are more properly
characterized as equipment than as vessels. See Headquarters
Ruling Letter 111892, dated September 16, 1991. The fact that they
float and can be moved on water is incidental to the primary
containment purpose. Finally, the policy purposes of the coastwise
laws are to protect and promote the United States merchant marine,
shipyards, and national defense. Wirth Ltd. v. S/S Acacia Forest,
537 F.2d 1272 (5th Cir. 1976). Emergency oil spill recovery is not
an activity typically associated with the merchant marine, and TSBs
are not the type of watercraft that are usually constructed in
United States shipyards. Thus, extending vessel status to TSBs
is not consistent with the underlying policies of the coastwise
laws.
Treasury Decision 55274(1) held that dracones are vessels that
are subject to the coastwise laws. T.D. 55274(1), 95 Treas. Dec.
511 (1960). The items under consideration in that determination
were intended to be used in commercial intercoastal trade. Id.
Since that decision, commercial transportation using dracones has
proven to be unfeasible. The facts presented in this earlier case
may therefore be distinguished from the present facts, and we do
not find Treasury Decision 55274(1) to be controlling in this case.
HOLDING:
TSBs used for oil or hazardous materials clean-up are not
vessels for purposes of 46 U.S.C. app. 883.
Sincerely,
Acting Chief