VES-3-CO:R:IT:C 112023 GEV
M. Martha Ries, Esq.
Bogle & Gates
Two Union Square
601 Union Street
Seattle, Washington 98101-2346
RE: Coastwise Trade; Territorial Waters; 46 U.S.C. App. 883
Dear Ms. Ries:
This is in response to your letter dated December 10, 1991,
on behalf of your client, American Seafoods, requesting an
expedited ruling on the proposed transportation of hake surimi
processed on board two non-coastwise-qualified, U.S.-flag vessels
outside the three-mile U.S. territorial sea but within the U.S.
200 mile Exclusive Economic Zone (EEZ). Our ruling is set forth
below.
FACTS:
American Seafoods is a U.S. corporation engaged in the
business of catching and processing fish. It owns several
vessels which are specially designed to process fish in the same
manner as a shore-side fish processing plant. All of the vessels
are U.S.-flag vessels, however, they are not documented for the
coastwise trade.
Recently, two of American Seafood's processors loaded
Pacific Whiting ("hake") in United States waters in the Strait of
Georgia off the northern coast of the State of Washington, more
than three miles from the nearest U.S. point of land. The point
of loading was at 49 degrees N., 123 degrees, 19' W. (counsel
enclosed Chart #18400, 36 Ed., 3/90, U.S. Department of Commerce,
National Oceanic and Atmospheric Administration, for reference)
The vessels then processed the whole hake into surimi, a fish
paste, outside the three-mile territorial sea of the U.S. After
processing the fish, the vessels have been fishing in Soviet
waters for several weeks. During that time, the surimi has not
been offloaded and has not undergone any further processing.
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The method by which whole hake is processed into surimi fish
paste is a three-step process. First, the whole fish are
deheaded and gutted, the fins and tails are removed, their meat
is cut into fillets, and the fish are washed. Second, after
completion of this pre-treatment phase, the dressed fish then
undergoes further processing by a fish meat separator. This
equipment rolls or stamps the fish into minced meat patties which
are 5 to 7 mm in diameter. Third, this minced meat then
undergoes additional processing to become kneaded meat or
"surimi." In processing the kneaded meat from the minced meat,
the minced meat is first soaked with a large quantity of water.
The soaked meat is hydroextracted by means of a rotary sieve or
screw process. Thereafter, the hydroextracted meat is uniformly
mixed with sugar, phosphates and other additives. The resulting
mixture may be used as a raw kneaded meat or shaped and frozen.
ISSUES:
1. Whether the loading of fish on a vessel in the Strait of
Georgia at 49 degrees N., 123 degrees, 19' W., is considered to
be a loading at a coastwise point for purposes of 46 U.S.C. App.
883.
2. Whether the processing of hake into surimi on board a
vessel at a point outside the three-mile territorial sea but
within the 200 mile U.S. EEZ, is sufficient to create a "new and
different product" within the meaning of 19 CFR 4.80b(a).
LAW AND ANALYSIS:
Title 46, United States Code Appendix, 883 (the merchandise
coastwise law often called the "Jones Act") prohibits the
transportation of merchandise between United States coastwise
points, either directly or via a foreign port, or for any part of
the transportation, in any vessel other than a vessel built in
and documented under the laws of the United States and owned by
persons who are citizens of the United States.
In interpreting 883, Customs has ruled that a point in
United States territorial waters is a point in the United States
embraced within the coastwise laws. The territorial waters of
the United States consist of the territorial sea, defined as the
belt, 3 nautical miles wide, seaward of the territorial sea
baseline, and to points located in internal waters, landward of
the territorial sea baseline, in cases where the baseline and the
coastline differ. It should be noted, however, that as they
pertain to waters such as the Great Lakes, the territorial waters
of the United States include those waters adjacent to the coast
of the United States extending to the United States-Canada
international boundary (ruling 110056 GV, dated February 13,
1989).
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Section 4.80b(a), Customs Regulations, provides, in part,
that:
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.
However, merchandise is not transported
coastwise if at an intermediate port or
place other than a coastwise point (that
is, at a foreign port or place, or at a
port or place in a territory or posses-
sion of the U.S. not subject to the
coastwise laws), it is manufactured or
processed into a new and different pro-
duct, and the new and different product
thereafter is transported to a coastwise
point.
In applying 4.80b(a), Customs has held that merchandise
manufactured or processed into a new and different product must
be landed and processed at an intermediate port or place other
than a coastwise point. The manufacturing or processing may not
take place on board a vessel. (ruling 109233 LLB, dated November
20, 1987)
In regard to the facts under consideration, the hake were
loaded on board the vessels in the Strait of Georgia at 49
degrees N., 123 degrees, 19' W. Notwithstanding the fact that
this location is more than three miles from the nearest U.S.
point, it is nonetheless within U.S. territorial waters as is
evidenced by the U.S.-Canada international boundary clearly
demarcated on Department of Commerce (NOAA) map enclosed by
counsel. Although Customs does, as stated above, recognize the
three-mile territorial sea as the limits to which the coastwise
laws extend, such limits do not override a recognized
international boundary. Accordingly, the hake in question are
considered to have been loaded at a U.S. coastwise point.
As to whether the hake were processed into a "new and
different product" within the meaning of 19 CFR 4.80b(a), we note
that the sufficiency of the processing need not be addressed. As
stated above, the article in question must be landed prior to
undergoing any manufacturing or processing. (see ruling 105319
JM, dated October 27, 1991, cited by counsel, where the
processing of crab took place after it was landed in Canada) The
manufacturing or processing may not take place on board a vessel,
which is what occurred in the facts under consideration.
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Therefore, the processing of hake into surimi in this case was
not sufficient to comply with the provisions of 19 CFR 4.80b(a).
Accordingly, the transportation of hake by the vessels in
question (which were not documented for the coastwise trade),
from the point of loading in the Strait of Georgia to a point
outside the three-mile territorial sea but within the U.S. EEZ
where they were processed on board the vessels into surimi, and
the subsequent transportation of the surimi to a U.S. port
constitutes a violation of 46 U.S.C. App. 883.
HOLDINGS:
1. The loading of fish on a vessel in the Strait of Georgia
at 49 degrees N., 123 degrees, 19' W., is considered to be a
loading at a coastwise point for purposes of 46 U.S.C. App. 883.
2. The processing of hake into surimi on board a vessel at
a point outside the three-mile territorial sea but within the 200
mile U.S. EEZ is not sufficient to create a "new and different
product" within the meaning of 19 CFR 4.80b(a).
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch