VES-3-OT:RR:BSTC:CCI H041428 GG
Mr. John A. Moran, Esq.
Jones Walker
499 South Capitol Street, S.W.
Suite 600
Washington, D.C. 20003
RE: Coastwise Trade; 46 U.S.C. § 55102; 19 CFR § 4.80
Dear Mr. Moran:
This is in response to your correspondence of October 10, 2008, on behalf of your client, Cooper/T. Smith Stevedoring Co., Inc. (hereinafter “Cooper/T. Smith”), in which you request a ruling on whether the use of a foreign-built, semi-submersible barge to dry dock and repair a damaged floating grain elevator constitutes a violation of the Jones Act, 46 U.S.C. § 55102. Our ruling is set forth below.
FACTS
Cooper/T. Smith of Mobile, Alabama, owns and operates the AMERICA, a floating grain elevator (or weigh rig). The AMERICA suffered substantial damage to the hull and superstructure on September 1, 2008, during Hurricane Gustav. Cooper/T. Smith would like to return the AMERICA to service as quickly as possible, and repair crews are currently aboard the weigh rig performing topside repairs. In order for the repair crews to perform necessary hull repairs above and below the waterline, the weigh rig must be lifted out of the water. Cooper/T. Smith proposes to engage an available, non-coastwise-qualified semi-submersible barge to lift the AMERICA out of the water and perform the necessary repairs at a berth on the Lower Mississippi River. The semi-submersible barge in question is not self-propelled, and would not be used to transport merchandise between two coastwise points. Further, it would be at a berth, stationary and anchored to the bottom or moored in place during the entire repair operation. The AMERICA would be floated into position over the submerged barge, after which the submersible barge would be floated, lifting the AMERICA straight out of the water. The necessary hull repairs on the AMERICA would then be performed, after which the submersible barge would be submerged. The AMERICA would then be floated back in the water at the same point from which it was elevated. You state that the facts in this case are nearly identical to those in prior rulings issued by U.S. Customs and Border Protection (CBP), such as Headquarters Ruling Letters HQ 113208 and HQ 110283.
ISSUE
Whether the proposed use of a non-coastwise-qualified semi-submersible barge to dry dock and repair a damaged floating grain elevator, as described above, constitutes an engagement in coastwise trade for purposes of 46 U.S.C. § 55102.
LAW AND ANALYSIS
Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise qualified.”
The coastwise law applicable to the transportation of merchandise, the Jones Act, is found in 46 U.S.C. § 55102 (recodified by Pub. L. 109-304, enacted on October 6, 2006) and provides in pertinent part that “a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel—(1) is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and (2) has been issued a certificate of documentation with a coastwise endorsement under chapter 121 of Title 46 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.” See also CBP Regulations, 19 CFR §§ 4.80, 4.80b.
The coastwise laws generally apply to points in the territorial sea, which is 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.
Pursuant to 19 U.S.C. § 1401(c), the word “merchandise” is defined as “goods, wares, and chattels of every description, and includes merchandise the importation of which is prohibited, and monetary instruments as defined in section 5312 of Title 31.” For purposes of the Jones Act, merchandise also includes "valueless material." See 46 U.S.C. § 55102(a)(2). The CBP regulations promulgated under the authority of 46 U.S.C. § 55102 provide that a coastwise transportation of merchandise takes place when merchandise laden at a coastwise point is unladen at another coastwise point, regardless of origin or ultimate destination. See 19 CFR 4.80b(a).
CBP has long held that the use of a non-coastwise-qualified vessel as a moored dry dock facility does not violate the coastwise laws, provided that the vessel remains stationary. See HQ 110283 (November 17, 1989). Moreover, if a foreign-built dry dock remains moored and merely hauls vessels out of the water for repairs and subsequently places the vessels back in the water at the same point from which the vessels were elevated, such activity is not considered transportation between two coastwise points and thus not prohibited by 46 U.S.C. § 55102. See HQ 113208 (September 19, 1994).
In the present case, the subject non-coastwise-qualified semi-submersible barge would be used as a stationary floating dry dock while moored. As such, it would not be engaging in coastwise trade while in operation. However, it should be noted that by virtue of its being anchored within territorial waters, the subject barge itself would be considered a coastwise point. Therefore, any movement of merchandise or passengers between the subject barge and any other coastwise point must be accomplished by use of a coastwise-qualified vessel. See also HQ 111889 (February 11, 1992).
HOLDING
The proposed use of a non-coastwise-qualified semi-submersible barge to dry dock and repair a damaged floating grain elevator, as described above, would not constitute an engagement in coastwise trade in violation of 46 U.S.C. § 55102.
Sincerely,
Glen E. Vereb
Chief
Cargo Security, Carriers and Immigration Branch