VES-3-06-OT:RR:BSTC:CCI H070662 JLB
Mr. Gary M. Haugen
Bauer, Moynihan & Johnson, LLP
2101 Fourth Avenue, Suite 2400
Seattle, Washington 98121
RE: Coastwise Transportation; 46 U.S.C. § 55102
Dear Mr. Haugen:
This letter is in response to your correspondence dated July 27, 2009, and August 27, 2009, on behalf of your client, Puglia Engineering, Inc., in which you inquire about whether your client’s proposed scenarios involving a non-coastwise-qualified barge constitute a violation of the Jones Act, 46 U.S.C. § 55102. Our ruling on your request follows.
FACTS
Puglia Engineering, Inc. (“Puglia”) is the owner of Fairhaven Shipyards, a shipyard located in Bellingham, Washington. Puglia recently purchased the heavy lift barge, the FAITHFUL SERVANT (“the barge”), which, due to the fact that it is foreign-built and does not qualify for a coastwise endorsement, is documented with a registry endorsement only. Puglia intends to use the barge as both a semi-submersible heavy lift barge to transport heavy lift cargos in the registry trade and as a semi-submersible dry dock in conjunction with its shipyard operations at Fairhaven.
When operating as a semi-submersible dry dock, the barge’s primary function is that of a conventional dry dock, which is to haul a vessel out of the water to allow repair and maintenance work to be performed. You have presented two scenarios for the use of the semi-submersible dry dock and seek a determination on whether these scenarios violate 46 U.S.C. § 55102. In the first scenario, the barge is used as a stationary dry dock which will be moored to a permanent pier at Fairhaven’s facilities in Bellingham, Washington. The barge will be partially submerged by flooding its ballast tanks, then the vessel in need of repair will be floated over the barge and the barge’s ballast tanks will be pumped out, raising the barge and thus, lifting the vessel in need of repair out of the water. The barge will then remain stationary at the pier in Bellingham while work is performed on the lifted vessel. Once the work on the vessel is completed, the barge is re-submerged and the repaired vessel is floated off the barge. Other than the vertical lifting, the barge will remain stationary and will be moored to the same pier at all times during the operation, therefore, it will be functioning the same as any traditional floating dry dock.
In the second scenario, Puglia intends to move the barge to another location in the Puget Sound and lade the vessel in need of repair onto the barge at that location. This movement to another location could be due to various factors such as a lack of water depth at the dock, over or oddly sized lifts, or the inability of the vessel in need of repair to reach the barge under its own power. At this new location, the subject vessel will be laden aboard the barge. The crew will document the exact position of the point of lading on the barge by entering their position in its log as well as taking a Polaroid or digital picture of the FAITHFUL SERVANT’s GPS screen. The crew of the barge and the vessel in need of repair, if any, will then disembark those vessels and board a coastwise-qualified tug or assist vessels. The barge will then be towed to Fairhaven Shipyards where the work will be performed on the subject vessel. The vessel in need of repair will remain onboard the barge at all times while it is at the Fairhaven Shipyards. Once the work is completed, the barge will then be towed back to the same location in the Puget Sound as where the repaired vessel was laden. The crew of the barge will document that the vessel returned to the same location by again entering the position in the log and taking a Polaroid or digital picture of the barge’s GPS screen. The crew of the repaired vessel will board the repaired vessel from the tug or assist vessels either prior to, or immediately after the repaired vessel has been refloated.
ISSUE
Whether the proposed scenarios constitute an engagement in coastwise trade for 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). 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).
Stationary Dry Dock
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 Headquarters Ruling Letter H041428, dated October 22, 2008; Headquarters Ruling Letter 110283, dated 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 vertically elevated, such activity is not considered transportation between two coastwise points and thus does not violate 46 U.S.C. § 55102. See Headquarters Ruling Letter 113208, dated 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 since it is moored 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 Headquarters Ruling Letter 111889, dated February 11, 1992.
Off-Dock Lifts
As stated above, 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). CBP has consistently held that no coastwise transportation occurs in violation of 46 U.S.C. § 55102 when merchandise is laden at one coastwise point, transported to another coastwise point where it remains aboard the vessel, and is subsequently unladen at the point of lading. See, e.g., Headquarters Ruling Letter H047936, dated December 30, 2008; Headquarters Ruling Letter H054167, dated March 17, 2009; Headquarters Ruling Letter 110127, dated April 5, 1989. However, CBP has narrowly construed what constitutes the same coastwise point. See Headquarters Ruling Letter W115601, dated February 28, 2002 (where CBP determined that merchandise unladen even a vessel width from the dock where it is laden (with no contact with the dock at any point) is in violation of 46 U.S.C. § 55102); see Headquarters Ruling Letter H028458, dated June 19, 2008 (merchandise transported from one coastwise point, namely, Dock #2 of a U.S. facility, on a non-coastwise-qualified vessel to Dock #1 of the same U.S. facility, another coastwise point, via a foreign port was a violation of 46 U.S.C. § 55102). Accordingly, it is imperative that the repaired vessel be unladen at the same coastwise point at which it was laden. You assert that the crew of the barge will document the exact position of the point of lading by entering the position into the vessel’s log and will take a Polaroid or digital picture of the barge’s GPS screen. So long as the merchandise, the repaired vessel, will be laden and unladen at the same coastwise point in the Puget Sound no violation of 46 U.S.C. § 55102 would arise.
HOLDING
The proposed scenarios described above do not constitute an engagement in the coastwise trade in violation of 46 U.S.C. § 55102.
Sincerely,
Glen E. Vereb, Chief
Cargo Security, Carriers and Immigration Branch