VES-3-24-OT:RR:BSTC:CCI H217185 WRB
R. Scott Jenkins, Esq.
Jones, Walker, Waechter, Poitevent, Carrère & Denègre L.L.P.
201 St. Charles Avenue
New Orleans, LA 70170-5100
RE: Coastwise Transportation; lightering; 46 U.S.C. § 55102
Dear Mr. Jenkins:
This letter is in response to your correspondence dated May 2, 2012, on behalf of your client, The Coeclerici Group (hereinafter “Coeclerici”), in which you inquire about whether non-coastwise-qualified bulk carriers may engage in lightering operations whereby cargo is transported from a U.S. port to ocean-going vessels anchored outside U.S. territorial waters for carriage to foreign ports without violating 46 U.S.C. § 55102. Our ruling on your request follows.
FACTS
Coeclerici is an Italian company based in Milan, Italy, trading in transocean shipping, logistics and raw material trading sectors in all international markets. Coeclerici engages in the handling of bulk raw materials by sea, serving international operators in the energy, steel and cement industries. Coeclerici, through its U.S. subsidiary, Coeclerici Americas, LLC, is considering the construction of “transfer vessels” to store and transport coal and other bulk cargo arriving from various locations via coastwise-qualified barges in the lower Mississippi River Region, primarily in the New Orleans area. Once the transfer vessel is filled, it will transport the cargo to a larger oceangoing vessel (referred to as a “cape vessel”) that will be located beyond the U.S. territorial waters (i.e. beyond three miles from the United States coastline). The cape vessel will either be anchored or secured to a buoy or free-floating at the time it is loaded with the bulk cargo. Once the cape vessel is filled with the bulk cargo, it will depart to a foreign destination. The cape vessel will make no stops in the United States prior to departing for the foreign destination.
The transfer vessels can be described generally as bulk carrier Panamax vessels converted into Floating Storage Transfer Stations (“FSTS”). Each transfer vessel will be equipped with four heavy lift cranes which will be used to discharge the cargo from the transfer vessel’s holds into adjacent hoppers feeding multiple conveyors leading to a large ship loading boom which loads the cargo into the larger cape vessel. At all times this portion of the operation will take place beyond U.S. territorial waters. The transfer vessels will be foreign-flagged; the cape vessel into which the bulk cargo will ultimately be loaded for transit to the foreign destination may be owned by Coeclerici or a third party. Either way, it is presumed that the cape vessel will be foreign-flagged.
Coeclerici requests a ruling as to whether proposed operations under four different scenarios involving the storage and transportation of bulk cargo in the transfer vessels would violate the coastwise laws of the United States. The specific factual scenarios involved in the proposed operations for which Coeclerici requests this ruling, are as follows:
Scenario No. 1:
Barges will transport the bulk cargo down the Mississippi River to a Coeclerici Americas, LLC, transfer vessel, which will be loaded with cargo while the vessel is either moored midstream or at a dock along the Mississippi River. As a foreign-flag vessel, the transfer vessel will have a foreign crew, which will load the cargo onto the transfer vessel using the transfer vessel’s cranes. No cargo will be discharged by the transfer vessel at any point within U.S. territorial waters. The bulk cargo will be stored in the transfer vessel until it is filled, at which time the transfer vessel will travel down the Mississippi River into the Gulf of Mexico, beyond U.S. territorial waters, where the bulk cargo will be loaded into a cape vessel for transportation to a foreign destination. The cape vessel will either be anchored or secured to a buoy or free-floating at the time of the loading at the location beyond the U.S. territorial waters.
Scenario No. 2:
At times, the cape vessel may travel upriver and receive bulk cargo directly from the barges transporting the bulk cargo. The cape vessel and the transfer vessel will both be partially loaded with bulk cargo while moored midstream or at a dock in the Mississippi River. The transfer vessel will have a foreign crew, which will load the cargo using its onboard cranes. No cargo will be discharged by either the cape vessel or the transfer vessel at any midstream location or any dock along the Mississippi River. Additionally, no “topping off” will occur by the transfer vessel within U.S. territorial waters. At some point, both the cape vessel and the transfer vessel will travel down the Mississippi River into the U.S. Gulf of Mexico, beyond U.S. territorial waters, at which time the cape vessel will be “topped off” with bulk cargo from the transfer vessel, and then transported to a foreign destination. The cape vessel will either be anchored or secured to a buoy or free-floating at the time of the loading at the location beyond U.S. territorial waters.
Scenario No. 3:
The transfer vessel or the cape vessel will receive bulk cargo from barges traveling down the Mississippi River. The transfer vessel will have a foreign crew, which will load the cargo using the transfer vessel's cranes. At the time of lading, the cape vessel or transfer vessel will be moored midstream. After receiving the bulk cargo, the cape vessel or transfer vessel will proceed to a dock along the Mississippi River for mooring. The cape vessel or transfer vessel will later be moved back to the midstream location to receive additional bulk cargo and then return to the dock again for mooring. This cycle will continue until the vessel is filled, but no cargo will be discharged by the cape vessel or transfer vessel during this process. Once filled, the vessel may travel from the midstream location or the dock to the Gulf of Mexico, beyond U.S. territorial waters, where the cape vessel will be ‘topped off” with the bulk cargo in the transfer vessel. The cape vessel will either be anchored or moored to a buoy or free-floating at the time. The cape vessel will then proceed to a foreign destination.
Scenario No. 4:
Under any of the above three factual scenarios, the transfer vessel may not be able to offload all of the bulk cargo into the cape vessel at the location beyond U.S. territorial waters. In those situations, the transfer vessel will need to return with the residual bulk cargo to the location at midstream in the Mississippi River or to the dock where the residual bulk cargo was initially loaded. The residual bulk cargo will either be unloaded or will remain in the transfer vessel where additional bulk cargo will be added to it for the next trip for offloading at the cape vessel. It is presumed that if the residual bulk cargo is unloaded, it will be placed back into a barge but the barge may not be the same barge from which the cargo was originally loaded. Alternatively, the residual bulk cargo will be discharged to the stockpile at the terminal from which it was originally loaded.
ISSUE
Whether the proposed operations constitute 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.
For purposes of the Jones Act, merchandise 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).
Scenario No. 1:
In this scenario, coastwise-qualified barges transport the bulk cargo down the Mississippi River to a transfer vessel, which will be loaded with cargo while the transfer vessel is either moored midstream or at a dock along the Mississippi River. The transfer vessel would load the cargo onboard using its own cranes, then travels down the Mississippi River into the Gulf of Mexico, beyond U.S. territorial waters, where the bulk cargo would be loaded into a cape vessel for transportation to a foreign destination.
CBP has previously determined that such movement by vessel does not constitute a violation of 46 U.S.C. § 55102. Headquarters Ruling Letter H015481, dated October 12, 2007, pertained to similar facts as presented in the current matter. In that matter, foreign-built lighter vessels were used to transport cargo from Kivilina, Alaska, to a foreign-flagged bulk carrier anchored beyond the three-mile U.S. territorial sea. The lightering vessel then discharged all of the cargo laden in Kivilina onto the foreign-flagged bulk carrier, which then transported the cargo to its final destination in various places in Canada and Asia. This movement was not in violation of 46 U.S.C. § 55102 since the merchandise was not unladen at a U.S. coastwise point.
Scenario No. 2:
In this scenario, the cape vessel travels upriver and receives bulk cargo directly from the barges transporting the bulk cargo. The cape vessel and the transfer vessel would both be partially loaded with bulk cargo while moored midstream or at a dock on the Mississippi River. The transfer vessel would load the cargo with its onboard cranes, and no cargo would be discharged by either the cape vessel or the transfer vessel at any midstream location or any dock along the Mississippi River. Additionally, no “topping off” would occur by the transfer vessel within U.S. territorial waters. Then, both the cape vessel and the transfer vessel travel down the Mississippi River into the U.S. Gulf of Mexico, beyond U.S. territorial waters, at which time the cape vessel would be “topped off” with bulk cargo from the transfer vessel, and then transported to a foreign destination.
CBP has previously determined that such movement by vessel does not constitute a violation of 46 U.S.C. § 55102. Headquarters Ruling Letter H152956, dated August 10, 2011, pertained to similar facts as presented in the present matter. In one scenario considered in H152956, a foreign-flagged ocean-going bulk carrier vessel, already partially loaded with cargo at one or more U.S. ports, would rendezvous with a transfer vessel at a predetermined location outside the territorial waters of the United States. After meeting with the anchored foreign-flagged, ocean-going bulk carrier at a point outside the territorial waters of the United States, the transfer vessel would transfer the U.S.-laden bulk cargoes to that vessel, topping it off. Once the foreign-flagged, ocean-going bulk carrier vessel is fully loaded, it would proceed directly onward to its foreign destination. As in Scenario No. 1 above, the merchandise will not be unladed at a United States coastwise point. Accordingly, the proposed movement discussed in Scenario No. 2 would not be in violation of 46 U.S.C. § 55102 since the merchandise would not be transported between two U.S. coastwise points.
Scenario No. 3:
Under this scenario, the transfer vessel or the cape vessel will receive bulk cargo from barges traveling down the Mississippi River. The transfer vessel will load the cargo using its own cranes. At the time of lading, the cape vessel or transfer vessel will be moored midstream. After receiving the bulk cargo, the cape vessel or transfer vessel will proceed to a dock along the Mississippi River for mooring to await further cargo. The cape vessel or transfer vessel would later be moved back to the midstream location to receive additional bulk cargo and then return to the dock again for mooring. This cycle would continue until the vessel is fully laden, but no cargo would be discharged by the cape vessel or transfer vessel during this process. Once filled, the vessel may travel from the midstream location or the dock to the Gulf of Mexico, beyond U.S. territorial waters, where the cape vessel would be “topped off” with the bulk cargo in the transfer vessel, and then proceed to a foreign destination.
This scenario essentially represents multiple iterations of the partial loading scenario discussed in Scenario 2, above, with the vessel used as a floating storage facility until full loading is achieved. As discussed above, a violation of the Jones Act, 46 U.S.C. § 55102, only occurs 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). In HQ 116007, dated July 25, 2003, we stated that CBP has consistently held that the use of a foreign-flag vessel as a storage facility in United States territorial waters does not violate the coastwise laws, or any other law administered by CBP, provided that the vessel remains stationary. CBP also has held that if the vessel is being loaded or unloaded and must be moved to another location because of stress of weather or other reason involving the vessel’s safety, subsequently is returned to the same point to continue its loading or unloading, and loads or unloads no merchandise at any other point in the United States, the coastwise laws are not violated. Similarly, in HQ 110127, dated April 5, 1989, we examined the use of a foreign-flag barge towed by a U.S.-flag tug used as a stationary chemical storage facility. In that matter, the barge was laden, then anchored or docked within United States territorial waters. A U.S.-flag tug would then tow the barge to a point outside the territorial waters of the United States and a foreign-flag vessel would lighter the chemicals for a voyage to a foreign port. With respect to the scenario under consideration, we are of the opinion that, provided the transfer vessel or the cape vessel unload no United States-laden merchandise at any other point in the United States, the coastwise laws would not be violated.
Scenario No. 4:
Under any of the above three scenarios, the transfer vessel may not be able to offload all of the bulk cargo into the cape vessel at the location beyond U.S. territorial waters. In those situations, the transfer vessel would return with the residual bulk cargo to the location at midstream in the Mississippi River or to the dock where the residual bulk cargo was initially loaded. The residual bulk cargo would either be unloaded or remain in the transfer vessel where additional bulk cargo will be added to it for the next trip for offloading at the cape vessel. It is presumed that if the residual bulk cargo is unloaded, it will be placed back into a barge but the barge will not always be the same barge from which the cargo was originally loaded. Alternatively, the residual bulk cargo will be discharged to the stockpile at the terminal from which it was originally loaded.
CBP has previously determined that such movement by vessel does not constitute a violation of 46 U.S.C. § 55102. In Headquarters Ruling Letter 115217, dated December 7, 2000, we determined that a transshipment vessel which carried merchandise and passengers to a Floating Offshore Service Facility could return to a coastwise point to discharge residual cargo without violating 46 U.S.C. § 55102, provided it did so at the same coastwise point where the cargo was originally loaded. Similarly, in Headquarters Ruling Letter HQ 116007, dated July 25, 2003, we ruled that a non-coastwise-qualified vessel could be used to store a bulk cargo, specifically butane, provided that the vessel subsequently returned to the same coastwise point to unlade as the coastwise point of lading, and loaded or unloaded no merchandise at any other point in the United States. Also, in Headquarters Ruling Letter H152956, dated August 10, 2011, we determined that a transfer vessel could discharge residual cargo at the same point in the same U.S. port where the cargo had been originally loaded by the transfer vessel without violating 46 U.S.C. § 55102. As we discussed in H015481, supra, should the transfer vessel return to a coastwise point to unload residual cargo, it must do so at the same coastwise point where the cargo was originally loaded in order to avoid a violation of 46 U.S.C. § 55102. The same determination is in effect here.
HOLDING
The proposed operations as described above do not constitute engagement in the coastwise trade for purposes of 46 U.S.C. § 55102.
Sincerely,
George Frederick McCray
Supervisory Attorney-Advisor/Chief
Cargo Security, Carriers and Immigration Branch
Office of International Trade, Regulations & Rulings
U.S. Customs and Border Protection