VES-3-06-OT:RR:BSTC:CCR H280574 PF
Robert B. Stoddard
GWave LLC
28 Monument Square
Portland, Maine 04101
RE: 46 U.S.C. §§ 55102, 55111, 55112; 19 C.F.R. §§ 4.80 and 4.92; Coastwise Transportation; Towing.
Dear Mr. Stoddard:
This is in response to your October 4, 2016, ruling request on behalf of your client, in which you request a ruling determining whether the proposed transportation would constitute a violation of 46 U.S.C. § 55102. Our decision follows.
FACTS
The following facts are from your ruling request and emails to this office, dated October 4, 2016, November 9, 2016, February 10, 2017 and February 16, 2017. GWave LLC (“GWave”) is constructing and testing a Power Generation Vessel (“PGV”). On or about March or April 2017, GWave intends to lade the PGV onboard a non-coastwise-qualified, submersible barge at Houma, Louisiana. A coastwise-qualified tugboat, will then tow the barge, with the PGV onboard the barge to a point either within the U.S. territorial sea or outside the U.S territorial sea as set forth in the scenarios below. The barge will not move under its own power at any point during the transportation and towing of the PGV. The barge will be unmanned except during the lading and unlading of the PGV when the barge will be stationary. You propose four scenarios involving the transportation of the PGV.
Scenario One: The PGV is laden on a foreign-flag barge in Houma, Louisiana and then towed by a coastwise-qualified tugboat to a shallow point within the U.S. territorial sea, where it is unladen and towed by a coastwise-qualified tug to a deeper point within the U.S. territorial sea and tested for a month or more. The tugboat disconnects from the barge to assist in deploying the PGV from the barge at the test site and the tugboat disconnects from the PGV once testing is conducted. The PGV is then wet towed by a coastwise-qualified tugboat back to the shallow point within the U.S. territorial sea, re-laden on the barge at the shallow point, and towed to the same coastwise point in Houma, Louisiana. The barge will either remain on station or return (empty) to its home port.
Scenario Two: The PGV is laden on a foreign-flag barge in Houma, Louisiana and then towed by a coastwise-qualified tugboat to a shallow point within the U.S. territorial sea, where it is unladen and towed by a coastwise-qualified tug to a deeper point within the U.S. territorial sea and tested for a month or more. The tugboat disconnects from the barge to assist in deploying the PGV from the barge at the test site and the tugboat disconnects from the PGV once testing is conducted. The PGV is then wet and towed by a coastwise-qualified tugboat back to the shallow point within the U.S. territorial sea, re-laden on the barge at the shallow point, and towed to a port in England. The barge will either remain on station or return (empty) to its home port.
Scenario Three: The PGV is laden on a foreign-flag barge in Houma, Louisiana and then towed by a coastwise-qualified tugboat to a shallow point outside the U.S. territorial sea, where it is un-laden and towed by a coastwise-qualified tugboat to a deeper point outside the U.S. territorial sea and tested for a month or more. The tugboat disconnects from the barge to assist in deploying the PGV from the barge at the test site and the tugboat disconnects from the PGV once testing is conducted. The PGV is then wet towed and the coastwise qualified tugboat assists with lading the PGV onto the barge at a shallow point outside the U.S. territorial sea, and towed to the same coastwise point in Houma, Louisiana. The barge will either remain on station or return (empty) to its home port.
Scenario Four: The PGV is laden on a foreign-flag barge in Houma, Louisiana and then towed by a coastwise-qualified tugboat to a point outside the U.S. territorial sea, where it is unladen. The coastwise-qualified tugboat disconnects from the barge to assist in deploying the PGV at the drop site outside the U.S. territorial sea and subsequently disconnects from the PGV. A coastwise-qualified tugboat connects to the PGV and tows the PGV back into the U.S. territorial sea for testing for a month or more. The PGV is then wet and, following testing, a coastwise-qualified tugboat tows the PGV to a point outside the U.S. territorial sea, where it is re-laden on the submersible barge with assistance by a coastwise qualified tugboat which disconnects once the PGV is positioned correctly. Following the lading of the PGV, the coastwise qualified tug connects to the barge, which is towed to the same coastwise point in Houma, Louisiana. The barge will either remain on station or return (empty) to its home port.
ISSUE
Whether the proposed transportation in the four scenarios in the FACTS section constitute a violation of 46 U.S.C. §§ 55102, 55111, and/or 55112?
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 towing statute, 46 U.S.C. § 55111, provides, in pertinent part:
(a) IN GENERAL.—Except when towing a vessel in distress, a vessel may not do any part of any towing described in subsection (b) unless the towing 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 of this title or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
(b) APPLICABLE TOWING.—Subsection (a) applies to the towing of—
(1) a vessel between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port or place;
(2) a vessel from point to point within the harbors of ports or places to which the coastwise laws apply; ….
CBP Regulations at 19 C.F.R. § 4.92 provide, in pertinent part:
No vessel other than a vessel documented for the coastwise trade, or which would be entitled to be so documented except for its tonnage (see § 4.80), may tow a vessel other than a vessel in distress between points in the U.S. embraced within the coastwise laws, or for any part of such towing.
The vessel escort operations and towing assistance statute, codified at 46 U.S.C. § 55112, provides, in pertinent part:
(a) IN GENERAL.—Except in the case of a vessel in distress, only a vessel of the United States may perform the following escort vessel operations within the navigable waters of the United States:
(1) Operations that commence or terminate at a port or place in the United States.
(2) Operations required by United States law or regulation….
(b) ESCORT VESSELS.—For purposes of this section, an escort vessel is—
(1) any vessel that is assigned and dedicated to assist another vessel, whether or not tethered to that vessel, solely as a safety precaution to assist in controlling the speed or course of the assisted vessel in the event of a steering or propulsion equipment failure, or any other similar emergency circumstance, or in restricted waters where additional assistance in maneuvering the vessel is required to ensure its safe operation; and
(2) in the case of a vessel being towed under section 55111 of this title, any vessel that is assigned and dedicated to the vessel being towed in addition to any towing vessel required under that section.
…
(c) RELATIONSHIP TO OTHER LAW.—This section does not affect section 55111 of this title.
In the subject transportation, coastwise-qualified and non-coastwise qualified tugboats will tow the barge, with the PGV on the barge, from a coastwise point to a point in U.S. or international waters. A vessel transported on another vessel is merchandise for purposes of 46 U.S.C. § 55102. “When a vessel is carried aboard another vessel, it assumes the character of merchandise whose carriage is governed by the same requirements applicable to any other category of goods.” HQ 113176 (Sept. 6, 1994). Therefore, the subject PGV is “merchandise” as contemplated by 46 U.S.C. § 55102.
Scenarios One and Two
In scenarios one and two, the first leg of the transportation involves the PGV being laden in Houma, Louisiana and being unladen at a point within U.S. territorial waters. Insofar as a non-coastwise-qualified barge will transport the PGV between U.S. points to which the coastwise laws apply, the transportation violates 46 U.S.C. § 55102.
With respect to the applicability of 46 U.S.C. §§ 55111 and 55112, in scenario one you state that a coastwise-qualified tugboat will assist with the transit of the PGV from Houma, Louisiana to two different points in U.S. territorial waters and subsequently back to the same coastwise point in Houma, Louisiana. Insofar as a coastwise-qualified tugboat will assist with the transit of the PGV to coastwise points and the transit commences and terminates at a coastwise point, the transportation would not constitute a violation of 46 U.S.C. §§ 55111 and 55112.
With respect to the applicability of 46 U.S.C. §§ 55111 and 55112, in scenario two you state that a coastwise-qualified tugboat will assist with the transit of the PGV from Houma, Louisiana to two different points within the U.S. territorial waters and then will tow the PGV to a port in England.
Scenarios Three and Four
In scenario three, you state that a foreign-flag barge, with a coastwise-qualified tugboat, will transport the PGV from Houma, Louisiana to a shallow point outside the U.S. territorial sea, where it is unladen and towed by a coastwise-qualified tugboat to a deeper point outside the U.S. territorial sea, tested for a month or more, re-laden on the barge, and towed to the same coastwise point in Houma, Louisiana.
In scenario four, you state that a foreign-flag barge, with a coastwise-qualified tugboat, will transport the PGV from Houma, Louisiana to a point outside the U.S. territorial sea, where it is unladen. A coastwise-qualified tugboat tows the PGV back into the U.S. territorial sea for testing for a month or more. The PGV is then wet towed and, following testing, a coastwise-qualified tugboat tows the PGV to a point outside the U.S. territorial sea, where it is re-laden on the submersible barge with assistance by a coastwise-qualified tugboat which disconnects once the PGV is positioned correctly. Following the lading of the PGV, the coastwise-qualified tug connects to the barge, which is towed to the same coastwise point in Houma, Louisiana.
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. In scenario three, there will be no coastwise transportation between two U.S. points and, as a result, there is no violation of 46 U.S.C. § 55102. With respect to scenario four, since the PGV will be unladen outside of the U.S. territorial sea, there is no violation of 46 U.S.C. § 55102.
With respect to the applicability of 46 U.S.C. §§ 55111 and 55112, in scenario three, you state that a coastwise-qualified tugboat will tow the PGV from Houma, Louisiana to two points outside the U.S. territorial sea and towed to the same coastwise point in Houma, Louisiana. Insofar as there is no towing between two coastwise points and the tug is coastwise-qualified, there is no violation of 46 U.S.C. §§ 55111 and 55112.
With respect to the applicability of 46 U.S.C. §§ 55111 and 55112, in scenario four, you state that in Houma, Louisiana a coastwise-qualified tug will connect with a foreign-flag barge which will be laden with the PGV which will tow the PGV to a point outside of the U.S. territorial sea, disconnect from the PGV at the point outside of the U.S. territorial sea, subsequently connect to the PGV and tow the PGV to a site within the U.S. territorial sea, and following testing, the coastwise-qualified tug tows the PGV to a site outside of the U.S. territorial sea and assists in loading the PGV onto the barge and disconnects once the PGV is positioned correctly, connects to the barge, and tows the PGV back to the same coastwise point in Houma, Louisiana. Insofar as the towing is conducted by a coastwise-qualified tug, there is no violation of 46 U.S.C. §§ 55111 and 55112.
HOLDING
The proposed transportation in scenarios one and two would constitute a violation of 46 U.S.C. § 55102, but not a violation of 46 U.S.C. § 55111 or 55112. The proposed transportation in scenarios three and four would not violate 46 U.S.C. §§ 55102, 55111 or 55112.
Sincerely,
Lisa L. Burley
Chief/Supervisory Attorney-Advisor
Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade, Regulations and Rulings
U.S. Customs and Border Protection