VES-3-02-OT:RR:BSTC:CCI H050179 JLB
Ms. Ninfa Valdez
County of Los Angeles
Internal Services Department Purchasing Division
1100 North Eastern Avenue
Los Angeles, California 90063
RE: Coastwise Transportation; 46 U.S.C. § 55102
Dear Ms. Valdez:
This letter is in response to your correspondence dated January 27, 2009, requesting a ruling on whether a workboat purchased from a foreign manufacturer, designed for debris collection, which the manufacturer states will be built in the United States violates the Jones Act, 46 U.S.C. § 55102. You supplemented your original submission with your additional correspondence dated February 5, 2009. Our ruling on your request follows.
FACTS
The County of Los Angeles (“the County”) would like to purchase a multi-purpose aluminum catamaran workboat (“the vessel”) with an appropriate trailer designed for maneuverability in skimming surface litter and debris collection. The dimensions of the vessel are 23 ft. in length, 7.6 ft. in width and 2.4 ft. deep. The vessel would contain a cargo pod with the capability of transporting one ton of debris between the hulls into the removable collection basket. At a later time, the vessel should be able to accommodate an oil spill recovery pod, which would include the mounting of a range of recovery skimmers between the hulls, and a weed cutter pod.
The manufacturer that bid on the construction of this vessel is located in the United Kingdom therefore, you seek advice about whether or not the County can go forward with the purchase in view of the Jones Act. However, while the manufacturer is located in the United Kingdom, they assert that the vessel will be built in the United States. Since the license agreements are not yet finalized, the manufacturer cannot confirm where in the United States the vessel will be manufactured or by which builder. You wish to know whether this is sufficient evidence that the County has the intention of purchasing a U.S.-built vessel thereby complying with the build requirements of the Jones Act.
ISSUES
Whether the proposed operation constitutes an engagement in coastwise trade for purposes of 46 U.S.C. § 55102?
If so, whether the vessel described above is considered to be a U.S.-built vessel for the purposes of 46 U.S.C. § 55102?
LAW AND ANALYSIS
The Jones Act, former 46 U.S.C. App. § 883 recodified as 46 U.S.C. § 55102, pursuant to P.L. 109-304 (October 6, 2006), states 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 was built in and documented under the laws of the United States and owned by persons who are citizens of the United States. See also 19 C.F.R. §§ 4.80, 4.80b. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise-qualified.” 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 U.S. Customs and Border Protection (“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 C.F.R. § 4.80b(a). These regulations further clarify the term coastwise points as “including points within a harbor.” See 19 C.F.R. § 4.80(a). Accordingly, a vessel used solely to collect floating litter and debris from the surface of the water (i.e. valueless material) constitutes an engagement in coastwise trade if such material was laded at one coastwise point and unladen at another coastwise point. For purposes of 46 U.S.C. § 55102, the point of lading is considered to be the point at which the floating trash and debris is collected. See Headquarters Ruling Letter 110104, dated April 19, 1989.
Concerning your inquiry about the relevant endorsements, we defer to the U.S. Coast Guard (“USCG”) since the vessel documentation laws of the United States are administered by that agency. We note, however, since the subject vessel would be engaging in coastwise trade, a coastwise endorsement would be necessary. See Headquarters Ruling Letter 113846, dated May 5, 1997; and Headquarters Ruling Letter H024222, dated March 19, 2008. A coastwise endorsement may only be issued if the vessel is built in the United States, subject to certain exceptions not herein applicable. See 46 U.S.C. § 12112. It is within the purview of the USCG to determine whether the construction of a vessel 5 net tons or greater renders it U.S.-built for purposes of the navigation laws, including 46 U.S.C. § 55102. With respect to vessels less than 5 net tons, such determinations are within the jurisdiction of CBP. See Headquarters Ruling Letter 111188, dated September 14, 1990; Headquarters Ruling Letter 116373, dated February 9, 2005; Headquarters Ruling Letter 116623, dated May 3, 2006. If the vessel under consideration is 5 net tons or greater, we suggest you contact the USCG regarding this matter at:
U.S. Coast Guard
National Vessel Documentation Center
2039 Stonewall Jackson Drive
Falling Water, West Virginia 25419
(304) 271-2506
Pursuant to 46 U.S.C. § 12102(b), “[a] vessel of less than 5 net tons may engage in a trade without being documented if the vessel otherwise satisfies the requirements to engage in the particular trade.” Thus, no vessel exempt from documentation, specifically no vessel of less than 5 net tons, shall transport any passengers or merchandise between United States coastwise points unless the vessel is owned by a citizen of the United States and is entitled to or, except for its tonnage, would be entitled to be documented with a coastwise license. See 19 C.F.R. § 4.80(a)(2). Accordingly, if the subject vessel is less than 5 net tons, built in the U.S., and owned by U.S. citizens, it may engage in coastwise trade without violating 46 U.S.C. § 55102.
Parenthetically, we note your reference to possible future use of the subject vessel for weed cutter activities and oil spill recovery. In this regard you should know that these activities are subject to the requirements in 46 U.S.C. §§ 12113 (fishery endorsement) and 12117 (oil spill response vessels), respectively. Any inquiries you may have regarding these provisions should be directed to the USCG.
HOLDINGS
The proposed operation described above constitutes an engagement in the coastwise trade for purposes of 46 U.S.C. § 55102.
Consequently, the vessel to be used in the proposed operation must have a certificate of documentation issued by the U.S. Coast Guard and endorsed for the coastwise trade pursuant to 46 U.S.C. § 12112, or if exempt from documentation due to its tonnage, must otherwise be coastwise-qualified pursuant to 19 C.F.R. § 4.80(a)(2).
Sincerely,
Glen E. Vereb, Chief
Cargo Security, Carriers and Immigration Branch