VES-10-02-RR:IT:EC 115474 GEV
Colonel John B. O’Dowd
Department of the Army
New York District, Corps of Engineers
Jacob K. Javits Federal Building
New York, N.Y. 10278-0090
RE: Dredging; 46 U.S.C. App. § 292; Pub. L. 102-587
Dear Colonel O’Dowd:
This is in response to your letter of August 27, 2001, requesting a ruling as to whether Bean Stuyvesant, LLC (“Bean”) is legally permitted to participate in the U.S. dredging market and if so, whether it may use the non-hopper dredge TAURACAVOR, or another chartered non-hopper dredge, to perform dredging work in New York Harbor. Our ruling is set forth below.
The U.S. Army Corps of Engineers, through the U.S. Army Engineer District, New York (the “Corps”), is responsible for the Kill Van Kull and Newark Bay, New York and New Jersey, navigation improvement project. The project seeks to deepen the channels in New York Harbor from 40 feet to 45 feet below mean low water. The increased depths are required to accommodate the deep draft vessels currently being used by shipping companies. The estimated cost for the project is $733 million, of which $550 million is to be paid by the federal government and the remainder to be paid by the project’s non-federal sponsor, the Port Authority of New York and New Jersey. In order to complete the project the Corps has awarded multiple contracts and intends to award several additional contracts this year.
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Invitation for Bids (IFB) No. DACW51-01-B-0003 for the Kill Van Kull and Newark Bay Channels Improvement Project, Phase II, Area 5, Contract 5, New York and New Jersey, was issued by the Corps on December 21, 2000. Bids were opened on March 20, 2001. The apparent low bidder withdrew because of a mistake in bid, making Bean the next in line for award.
As part of her determination as to whether Bean is a responsible bidder, the contracting officer must determine whether it is qualified and eligible to receive an award under applicable laws and regulations. During this evaluation process, a question was raised by another contractor as to whether Bean is permitted to participate in the U.S. dredging market due to foreign ownership.
Subsequent to our receipt of your letter of August 27, 2001, we received a letter dated September 5, 2001, from the law firm Sher & Blackwell, counsel to Bean, regarding this matter. Counsel’s letter, submitted after reviewing your letter of August 27, 2001, is stated to be submitted for the purpose of correcting erroneous information contained in your letter. In addition, counsel specifically states that the relevant issue in this case has already been decided in Customs ruling letter 114556, dated December 15, 1998, and that there have been no changes in the law or facts of that ruling to date as compared to those in the request currently under consideration.
By letter dated September 4, 2001, from Lorraine Lee, District Counsel of the Corps, the erroneous information to which counsel to Bean referred is listed and offered for our consideration in rendering a final determination in this matter. In a telephone conversation with Ms. Lee on September 7, 2001, it was confirmed that the Corps did not dispute the factual information contained within counsel’s clarifying letter and was in fact adopting it for Customs consideration.
In addition, we received a letter dated September 14, 2001, from the law firm Starfield & Payne, counsel to Jay Cashman, Inc., an entity with a direct and demonstrable interest in the questions presented for this ruling. In this letter counsel raises several points regarding Customs interpretation of the applicable statutory authority in this case. Furthermore, at the behest of counsel pursuant to § 177.4, Customs Regulations (19 CFR § 177.4), a meeting was held at Customs Headquarters on October 1, 2001, to discuss this matter.
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With respect to the relevant factual information for our consideration, we note the following.
The TAURACAVOR (ex-ANTONE) is a U.S.-built, U.S.-flagged, non-hopper dredge owned by Bean Excavation LLC (“BELLC”). BELLC, a Delaware limited liability company, was owned by United States citizens eligible to operate in the coastwise trade within the meaning of §2 of the Shipping Act, 1916 (a “§ 2 citizen”) until the end of the TAURACAVOR’s charter to its previous owner, The Dutra Group (“Dutra”). BELLC is currently a documentation citizen owned 50% by Bean Horizon LLC, a Louisiana limited liability company wholly owned by U.S. citizens, and 50% by Stuyvesant Investments Inc. (SII), a
Delaware corporation which has all non-citizen shareholders. The TAURACAVOR has a valid registry endorsement on its current certificate of documentation issued by the U.S. Coast Guard pursuant to 46 U.S.C. § 12105. As confirmed with the U.S. Coast Guard National Vessel Documentation Center, this endorsement became effective on August 24, 2001, and will expire on August 31, 2002.
The TAURACAVOR will be time chartered to Bean for the duration of the New York Harbor dredging project in question. Bean is a 50/50 joint venture between Bean Horizon LLC and Stuyvesant Dredging Company (SDC). It is a limited liability company organized under the laws of Delaware. It is a dredging contractor that does not own any vessels but performs contracts using chartered vessels.
Whether the TAURACAVOR, or another non-hopper dredge documented under the U.S. flag with a registry endorsement, can be time chartered to Bean for dredging operations in the navigable waters of the United States without violating the provisions of 46 U.S.C. App. § 292, as amended.
LAW AND ANALYSIS:
The navigation law pertaining to dredging is found at § 1 of the Act of May 24, 1906 (34 Stat. 204; 46 U.S.C. App. § 292). This statute, which provided that dredging in the United States was prohibited by any foreign-built dredging vessel except one of those named in § 2 of the Act of May 24, 1906, was amended by the Oceans Act of 1992 (Pub. L. 102-587, § 5501(a)(1) and (2), 106 Stat. 5039, 5084-85, effective November 4, 1992) to provide, inter alia, that the coastwise
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eligibility requirements (i.e., U.S.-build, ownership and documentation) are applicable to vessels used as dredges as of the effective date of
that legislation. However, pursuant to the statutory language of
§ 5501(a)(2)(A)(iii) of Pub. L. 102-587, the amendments contained therein were not made applicable to the vessel STUYVESANT, as well as various other vessels including:
...any other non-hopper dredging vessel documented
under chapter 121 [section 12101 et seq. of Title 46]
and chartered to Stuyvesant Dredging Company or to
an entity in which it has an ownership interest, as is nec-
essary (a) to fulfill dredging obligations under a specific contract, including any extension periods; or (b) as
temporary replacement capacity which has become
disabled but only for so long as the disability shall last
and until the vessel is in a position to fully resume
dredging operations; however, this exception expires
on December 8, 2022 or when the vessel STUYVESANT
ceases to be documented under chapter 121 [section 12101
et seq. of Title 46], whichever first occurs. (Pub. L. 102-587,
With respect to the interpretation of the above provision, we note the well-established "plain language" principle which mandates that in determining legislative intent, the language of the statute must first be examined. Phone Mate, Inc. v. United States, 12 CIT 575, 690 F.Supp. 1048 (1988), aff’d, 867 F.2d 1404 (1989). Where the content of the statute is in “reasonably plain terms, that language must ordinarily be regarded as conclusive.” Negonsott v. Samuels, 507 U.S. 99, 113 S.Ct. 1119, 1122-23, 122 L.Ed.2d 457 (1993) (quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570, 102 S.Ct. 3245, 3249, 73 L.Ed.2d 973 (1982) Furthermore, in the absence of ambiguity, the plain meaning of that statute must prevail. United States v. RMS Electronics, Inc., 67 CCPA 79, C.A.D. 1249, 642 F.2d 1081 (1980) (See also Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980)
It is our position, as reflected in Customs ruling letters 114247 and 114556, dated February 17, 1998, and December 15, 1998, respectively, that the language of § 5501(a)(2)(A)(iii) of Pub. L. 102-587 is not ambiguous. It clearly sets forth four specific criteria that must be met in order for an otherwise non-coastwise-qualified vessel to engage in dredging in U.S. waters. As regards the dredge TAURACAVOR currently under consideration, it is readily apparent
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from the information provided that it would meet these criteria: (1) the vessel is a non-hopper dredging vessel; (2) the vessel is documented under Chapter 121 of Title 46; (3) the vessel will be chartered to Bean, an entity in which SDC has an ownership interest, to fulfill dredging obligations under a specific contract; and (4) the dredging will take place prior to December 8, 2022, or when the vessel STUYVESANT ceases to be documented under Chapter 121 of Title 46, whichever comes first.
Accordingly, compliance with the statutorily-imposed criteria cited above renders permissible the use of the TAURACAVOR, or any other such vessel, to engage in dredging in the navigable waters of the United States.
Counsel to Jay Cashman, Inc., in taking issue with the above interpretation, suggests a different result contrary to Bean based on the following: (1) Customs ruling letters 114247, dated February 17, 1988, and 114556, dated December 15, 1998, should not be relied upon in this case and Customs should consider their revocation or modification pursuant to §§ 177.9(c) and (d), Customs Regulations; (2) the language of the statute in question, § 5501(a)(2)(A)(iii) of Pub. L. 102-587, is not clear and unambiguous and therefore Customs should not rely on the “plain language” principle discussed above but rather the statute’s legislative history; (3) the TAURACAVOR is engaged in coastwise trade; (4) the coastwise endorsement on the TAURACAVOR’s certificate of documentation was erroneously issued by the U.S. Coast Guard; (5) the vessels MARICAVOR and BONACAVOR are also owned by Bean and have coastwise endorsements on their certificates of documentation that were also erroneously issued by the U.S. Coast Guard; (6) other vessels owned by Bean, including tugs, barges and workboats, have coastwise endorsements on their certificates of documentation that were erroneously issued by the U.S. Coast Guard; (7) the “blanket” approval provision of 46 CFR § 221.13 regarding the approval required by the Secretary of Transportation for the charter of vessels to non-U.S. citizens does not apply to the TAURACAVOR. In regard to these points, we offer the following.
The first of counsel’s objections pertains to §§ 177.9(c) and (d), Customs Regulations, the former of which provides, in pertinent part with respect to reliance on prior ruling letters, that “…no other person should rely on the ruling letter or assume that the principles of that ruling will be applied in connection with any transaction other than the one described in the letter.” In regard to counsel’s claim, although
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Customs ruling letter 114556 does involve a dredge contract different from the one currently under consideration (i.e., a different transaction), the remaining facts of that case do not differentiate from
those currently under review. The same vessel (albeit re-named), the same party (Bean) and the same issue (the entitlement of that vessel to dredge in U.S. waters pursuant to § 5501(a)(2)(A)(iii) of Pub. L. 102-587), are involved in both cases. Consequently, while reliance cannot be placed on Customs ruling letter 114556 since it does involve a different transaction, it should be noted that pursuant to
§ 177.9(a), Customs Regulations, “[a] ruling letter issued by the Customs Service under the provisions of this part represents the official position of the Customs Service with respect to the particular transaction or issue described therein and is binding on all Customs Service personnel in accordance with the provisions of this section unless modified or revoked.” (Emphasis added) Section 177.9(a) further provides that, “[i]n the absence of a change of practice or other modification or revocation which affects the principle of the ruling set forth in the ruling letter, that principle may be cited as authority in the disposition of transactions involving the same circumstances.”
Accordingly, Customs ruling letter 114556, which has not been modified or revoked and does address the same circumstances as those under consideration in this case, does, pursuant to § 177.9(a), Customs Regulations, constitute authority for Customs position regarding the entitlement of the TAURACAVOR to dredge in U.S. waters pursuant to § 5501(a)(2)(A)(iii) of Pub. L. 102-587.
With respect to Customs ruling letter 114247, it is distinguished from the case at hand as follows: (1) it involves SDC prior to its entering into a joint venture with Bean; (2) it involves a different dredge contract (i.e., a different transaction); and (3) it involves a different vessel. We therefore agree that it does not constitute authority for Customs position in the matter currently under review.
Section 177.9(d)(1), Customs Regulations, also cited by counsel to Cashman, provides in pertinent part, that , “[a]ny ruling letter found to be in error or not in accordance with the current views of the Customs Service may be modified or revoked.” To date no evidence has been presented that Customs ruling letters 114247 and/or 114556 are in error or not in accordance with the current views of the Customs Service in this matter. Consequently, we decline to implement the modification or revocation procedures set forth in § 177.9(d)(1) with respect to these two ruling letters.
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Counsel’s second objection concerns the language of the statute in question, § 5501(a)(2)(A)(iii) of Pub. L. 102-587. It is contended that this statutory language is unclear and ambiguous and therefore Customs should not rely on the “plain language” principle discussed
above but rather the statute’s legislative history. The specific language alleged by counsel to be ambiguous is the requirement that a non-hopper dredging vessel is to be “documented under chapter 121” of title 46 of the United States Code. Counsel points out that vessels can be documented under chapter 121 with different endorsements including registry, coastwise, fishery and recreational, and that the statute is ambiguous as to which of these endorsements is required.
In addition, counsel points out that the statute refers to “an entity in which it [SDC] has an ownership interest.” (Emphasis added) Counsel contends that it is not clear whether the statute includes entities in which the interest is created after the effective date of the law, as opposed to an interest that existed at the time the law became effective .
Counsel also points out that the other provisions of the statute (sub-paragraphs (a)(2)(A)(ii), (a)(2)(C)(iii), (a)(2)(D)(iii)), limit the statutory exemption to vessels documented as of August 1, 1989. Counsel, in noting that the TAUCAVOR was built in 1996, contends that the statute is ambiguous as to Congress’ intent as to whether that same restrictive language also applies to the provisions in subparagraph (a)(2)(A)(iii). It is suggested that in order to resolve these ambiguities, it would be appropriate to review the legislative history.
As to the alleged ambiguities noted above, we disagree with counsel’s claims. We find the particular statutory language to which counsel refers to be quite clear and devoid of any ambiguity. Documentation alone “under chapter 121” of Title 46 of the U.S. Code suffices for purposes of the exemption in question. While it is true that four categories of documentation endorsements exist under chapter 121 of Title 46 (registry, coastwise, fishery and recreational), Pub.L. 102-587 (§§ 5501(a)(1) and 5501(a)(2)), specifically recognize coastwise and registry endorsements as lawful endorsements for purposes of dredging in U.S waters pursuant to the provisions set forth therein (see also 46 U.S.C. App. §§ 292(a) and (b), authorizing coastwise and registry endorsements, respectively). The TAURACAVOR is documented under chapter 121 of Title 46 with a registry endorsement. It has therefore met the documentation requirements of this statute.
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With respect to counsel’s reference in the statute to “an entity in which it [SDC] has an ownership interest”, we believe that these are “reasonably plain terms” per the Court’s discussion in Negonsott, supra, and therefore “must ordinarily be regarded as conclusive.” Id.
Therefore, any examination of legislative history as to whether this phrase includes entities in which such an interest is created after the effective date of the law, as opposed to an interest that existed at the time it became effective, is superfluous.
In regard to whether the limitation of the statutory exemption is applicable only to vessels documented as of August 1, 1989, we note that counsel references other subparagraphs of the same statute which impose this date. In this regard we note that, “[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Gozlon-Peretz v. United States, 498 U.S. 395, 111 S.Ct. 840, 846-7 (1991), citing Russello v. United States, 464 U.S. 16, 23 (1983); and General Motors Corp. v. United States, 496 U.S. 530, 110 S.Ct. 2528, 2532 (1990). It is therefore our position that the omission of the aforementioned restrictive language in subparagraph (a)(2)(A)(iii) is an intentional act of Congress and we decline to read into the statute that which Congress deliberately chose to exclude.
Accordingly, we believe that the statute is clear on its face. It specifies the following criteria that must be met in order for an otherwise unqualified vessel to engage in dredging pursuant to this provision: (1) the vessel must be a non-hopper dredging vessel; (2) the vessel must be documented under Chapter 121 of Title 46; (3) the vessel must be chartered to SDC or to an entity in which it has an ownership interest, as is necessary to fulfill dredging obligations under a specific contract; and (4) the dredging will take place prior to December 8, 2022, or when the vessel STUYVESANT ceases to be documented under Chapter 121 of Title 46, whichever occurs first. These criteria, which have been met by the TAURACAVOR, are unambiguous. Therefore, pursuant to the judicially-recognized tenets of statutory construction discussed above, their plain language obviates the necessity to examine the statute’s legislative history.
As to counsel’s assertion that the engagement of the TAURACAVOR in dredging in U.S. waters is an engagement in the coastwise trade, we agree. However, as discussed above, § 5501(a)(2)(A)(iii) of Pub.
L. 102-587 permits an otherwise non-coastwise-qualified vessel to engage in dredging in U.S. waters provided the requirements therein
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are met. Such is the case with respect to the TAURACAVOR. As far as counsel’s allegation that the TAURACAVOR and other vessels owned by Bean were erroneously issued coastwise endorsements, we defer to the U.S. Coast Guard inasmuch as the documentation of vessels under the U.S. flag (i.e., under Chapter 121 of Title 46) is a matter within the purview of that agency. We reiterate, however, that the U.S. Coast Guard National Vessel Documentation Center has informed us that the TAURACAVOR has been issued a valid registry endorsement on its current certificate of documentation. This endorsement became effective on August 24, 2001, and will expire on August 31, 2002.
In regard to counsel’s reference to title 46, Code of Federal Regulations, § 221.13 (46 CFR § 221.13), concerning the approval required to charter vessels to non-U.S. citizens, we note that this regulatory authority is within the purview of the Maritime Administration (MARAD). Notwithstanding our deference to that agency with respect to the regulatory authority it administers, we nonetheless adhere to our position that under the facts of this case, the TAURACAVOR is authorized, pursuant to the terms of
§ 5501(a)(2)(A)(iii) of Pub. L. 102-587, to engage in dredging in the navigable waters of the United States.
The TAURACAVOR, or another non-hopper dredge documented under the U.S. flag with a registry endorsement, can be time chartered to Bean for dredging operations in the navigable waters of the United
States pursuant to Pub. L. 102-587, § 5501(a)(2)(A)(iii) without violating the provisions of 46 U.S.C. App. § 292, as amended.
Larry L. Burton
Entry Procedures and Carriers Branch