VES-3-02-OT:RR:BSTC:CCR H303322 ASZ
Mr. Matt Bauer
Austal USA
100 Addsco Road
Mobile, Alabama 36602
RE: 46 U.S.C. §§ 55102, 55103, and 55111; Coastwise Transportation; Towing.
Dear Mr. Bauer:
This letter is in response to your correspondence dated April 2, 2019, on behalf of Austal USA, LLC (“Austal”), in which you inquire about whether Austal’s use of a foreign-built floating drydock to transport vessels within U.S. territorial waters constitutes a violation of the U.S. coastwise laws. Our decision follows.
FACTS
The following facts are from your ruling request and your April 2, 2019, April 3, 2019, and April 5, 2019 e-mails to this office. Austal seeks to purchase a foreign-built floating drydock to moor at a shipyard facility in San Diego, California. Upon delivery, the drydock will be flagged under a foreign flag. The drydock will be used exclusively for the purpose of raising vessels from the water for inspection, maintenance, repairs, and refurbishment at the shipyard. The proposed operation is anticipated to commence in 2022.
The drydock will be towed by coastwise-qualified tugs from its original location in the pier a short distance into deeper water within the territorial waters of the United States, where it will be attached to spuds on two dolphins, referred to as dolphins B and C. The drydock will be submerged and a vessel will be floated onto the drydock. The drydock will be de-ballasted, raising the vessel from the water. Once the drydock is detached from the spuds on dolphins B and C, the tugs will tow the drydock, with the vessel laden aboard, to its original location where work will be performed on the laded vessel. While the work is being performed, the drydock will be secured to dolphins A and B, and the vessel will remain aboard the drydock the entire time. Upon completion of the work, the drydock will detach from dolphins A and B, and the tugs will tow the drydock back to the same location where the vessel was laden. The drydock will be reattached to the spuds on dolphins B and C, and the vessel will be unladen. The drydock will then be towed back to its original location. You state that the drydock will remain stationary during those times it is attached to the dolphins.
During the operation, certain individuals will be transported aboard the drydock between points in San Diego Bay. These individuals are the dock master, assistant dock master, the harbor pilot for San Diego Bay, and line handlers. They will monitor the drydock during its movements, handle lines, and assist in attaching the drydock to the spuds on the dolphins. You propose two scenarios. In the first scenario, the individuals will embark the drydock at its original location at the pier and will disembark when the drydock returns to its original location. In the second scenario, some individuals will embark the drydock at its original location but others will embark after the vessel is laden onto the drydock but before the drydock is towed back to its original location. All individuals will disembark upon the drydock’s return to its original location in the pier.
ISSUE
Whether the proposed operation described in the FACTS section above would constitute a violation of 46 U.S.C. §§ 55102, 55103, and/or 55111?
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.
19 C.F.R. § 4.80b(a).
Similarly, the coastwise law applicable to the carriage of passengers is found in 46 U.S.C. § 55103 which provides:
(a) In General. Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not transport passengers between ports or places 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 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 CBP regulations, promulgated under the authority of 46 U.S.C. § 55103, provide, “[a] passenger within the meaning of this part is any person carried on a vessel who is not connected with the operation of the vessel, her navigation, ownership, or business.”
A. Transportation of Merchandise under 46 U.S.C. § 55102
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 same point of lading. See HQ H269478 (Jan. 11, 2016); HQ H084098 (Nov. 20, 2009); HQ H047936 (Dec. 30, 2008); HQ H054167 (Mar. 17, 2009); and HQ 110127 (Apr. 5, 1989).
In this case, the vessels laden aboard the drydock are merchandise within the meaning of 46 U.S.C. § 55102. The drydock will lade and unlade the vessels at the same coastwise point in the territorial waters of the United States located in San Diego Bay. Because the lading and unlading of the vessels will occur at the same coastwise point, the proposed use of the drydock does not constitute a transportation of merchandise between coastwise points. Therefore, the proposed transportation is not a violation of 46 U.S.C. § 55102.
B. Towing under 46 U.S.C. § 55111
The coastwise towing statute, 46 U.S.C. § 55111, provides that except when towing a vessel in distress, only a coastwise-qualified vessel may do any part of any towing between coastwise points.
You state that all movements of the drydock will be completed with the aid of coastwise-qualified towing vessels. Provided all towing of the drydock between coastwise points is performed by coastwise-qualified tugs, there will be no violation of 46 U.S.C. § 55111.
C. Transportation of Passengers under 46 U.S.C. § 55103
You state that the vessel will transport the dock master, assistant dock master, the harbor pilot for San Diego Bay, and line handlers between coastwise points. The individuals will monitor the drydock during its movements, handle lines, and assist in attaching the drydock to the spuds on the dolphins.
The coastwise laws prohibit a non-coastwise-qualified vessel from transporting passengers between ports or places in the United States. Pursuant to CBP regulations, “[a] passenger…is any person carried on a vessel who is not connected with the operation, navigation, ownership, or business of the vessel.” 19 C.F.R. § 4.50(b).
Insofar as the subject individuals are providing the skills necessary for the successful operation and navigation of the vessel, they are not passengers for purposes of 46 U.S.C. § 55103. Insofar as the subject individuals are not passengers, the transportation of the subject individuals is not in violation of 46 U.S.C. § 55103.
HOLDING
The proposed operation described in the FACTS section above would not constitute a violation of 46 U.S.C. §§ 55102, 55103, and/or 55111.
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