VES-3-02-OT:RR:BSTC:CCR H298029 ASZ
John E. Holloway
Troutman Sanders LLP
222 Central Park Avenue, Suite 2000
Virginia Beach, Virginia 23462
RE: 46 U.S.C. § 55102; Coastwise Transportation.
Dear Mr. Holloway:
This letter is in response to your correspondence dated May 16, 2018, on behalf of your client [] in which you inquire about whether your client’s use of a foreign-built floating drydock constitutes a violation of the U.S. coastwise laws. Our decision follows.
FACTS
The following facts are from your ruling request and your July 10, 2018, July 25, 2018, and August 14, 2018 e-mails to this office. Your client seeks to purchase a foreign-built floating drydock (FDD) to moor at its shipyard facility located at []. Once purchased, the FDD will be registered in the United States.
The FDD will be used exclusively for the purpose of raising vessels from the water for inspection, maintenance, and repairs at the shipyard. The FDD is non-self-propelled and will be moored to concrete dolphins. It will operate in its fixed location and will be free to move vertically to receive and launch vessels from the same point. It will be unable to move laterally or transit out to deeper waters during its operations.
The FDD may be moved approximately once every five years for maintenance purposes with the aid of coastwise-qualified towing vessels. No passengers or merchandise will be transported on the drydock when it is moved for maintenance.
ISSUE
Whether the proposed operation described in the FACTS section above would constitute a violation of 46 U.S.C. § 55102?
LAW AND ANALYSIS
Pursuant to 46 U.S.C. § 55102, which provides, in pertinent part:
Except as otherwise provided in this chapter or chapter 121 of this title, 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 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 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
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 46 U.S.C. § 55102(a), “merchandise, includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material.” As such, any cargo, regardless of its value or ownership, would be considered merchandise for the purpose of 46 U.S.C. § 55102. The regulations promulgated under the authority of 46 U.S.C. § 55102(a), provide in pertinent part:
A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point, regardless of the origin or ultimate destination of the merchandise.
The coastwise laws prohibit a non-coastwise-qualified vessel from transporting merchandise between points in the United States to which the coastwise laws apply, either directly or via a foreign port.
We have previously held that the use of a moored drydock in hauling vessels out of the water for repairs and subsequently replacing the vessels back in the water at the same point from which they were elevated is not considered the transportation of merchandise between two coastwise points. See HQ 116312 (Sept. 21, 2004), HQ 114439 (Aug. 21, 1998), HQ 113208 (Sept. 19, 1994), and HQ 110283 (Nov. 17, 1989).
In this case, we find that the use of a moored drydock in hauling vessels out of the water for repairs and subsequently replacing the vessels back in the water at the same point from which they were elevated is not considered transportation of merchandise between two coastwise points. Therefore, the proposed transportation is not a violation of 46 U.S.C. § 55102.
You also state that FDD may be moved approximately once every five years for maintenance purposes with the aid of coastwise-qualified towing vessels. During those movements, no passengers or merchandise will be transported by the drydock. The coastwise laws prohibit a non-coastwise-qualified vessel from transporting merchandise between points in the United States to which the coastwise laws apply, either directly or via a foreign port. Insofar as the vessels conducting the towing are coastwise-qualified, and insofar as the drydock itself will neither transport merchandise or passengers, the proposed transportation is not a violation of 46 U.S.C. § 55102.
HOLDING
The proposed operation described in the FACTS section above would not constitute a violation of 46 U.S.C. § 55102.
Sincerely,
Lisa L. Burley
Chief/Supervisory Attorney-Advisor
Cargo Security, Carriers and Restricted Merchandise Branch
Office of International Trade, Regulations and Rulings
U.S. Customs and Border Protection