VES-3-01-OT:RR:BSTC:CCI H213099 WRB
Randall J. Ezick, Esq.
Maguire Cardona, P.C.
Attorneys-at-Law
16 Sage Estate
Albany, NY 12204
RE: Coastwise Transportation; Research; 46 U.S.C. § 55102
Dear Mr. Ezick:
This letter is in response to your letter dated March 28, 2012, in which you inquire about whether a non-coastwise-qualified vessel may be used to transport stone from the Port of Albany down the Hudson River to the Port of New York, without violating 46 U.S.C. § 55102. Our ruling on your request follows.
FACTS
Your client, P&M Brick, LLC, (hereinafter P&M) owns freight barge PM2102 (O/N 646827). On October 22, 2010, the Deputy Commander, Coast Guard Sector, New York, advised P&M that the use of the aforementioned barge to transport stone from the Port of Albany to the Port of New York/New Jersey appeared to violate Federal law and regulations. The basis for this opinion was that, although the barge holds a valid Certificate of Documentation issued in accordance with Title 46 Code of Federal Regulations (CFR), Part 67, it does not possess a coastwise endorsement and is not eligible for such an endorsement because the vessel had at one time been registered with a foreign country.
Accordingly, the Coast Guard ordered that P&M cease and desist using the barge to transport stone from the Port of Albany to the Port of New York/New Jersey. A copy of the Coast Guard correspondence was attached to your letter for reference. The subject barge was built in the United States by Bergeron Industries, Inc., in 1982. P&M
purchased the barge pursuant to a Bill of Sale dated April 19, 2009. Copies of the Bill of Sale, the Declaration of Citizenship dated November 20, 2009, showing P&M Brick, LLC, a New York corporation, to be the owner, and the Certificate of Documentation for the vessel issued on December 31, 2009, were also attached to your correspondence.
ISSUE
Whether the proposed operation constitutes an engagement in coastwise trade for purposes of 46 U.S.C. § 55102?
LAW AND ANALYSIS
The Jones Act, 46 U.S.C. § 55102, 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 CFR §§ 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.
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 CFR § 4.80b(a). Pursuant to 19 U.S.C. § 1401(c), the word “merchandise” is defined as “goods, wares, and chattels of every description, and includes merchandise the importation of which is prohibited, and monetary instruments as defined in section 5312 of Title 31.”
It is noteworthy that the proposed use of the subject barge is between two coastwise points; these being Port of Albany, New York, and the Port of New York. The Hudson River is an internal waterway of the United States, landward of the territorial sea baseline. Also, the stone which you propose to transport qualifies as merchandise pursuant to 19 U.S.C. § 1401. Accordingly, this transportation is one which requires that the transporting vessel be coastwise qualified pursuant to 46 U.S.C. § 55102 and 19 CFR § 4.80b.
Title 46 United States Code § 12132, entitled “Loss of coastwise trade privileges,” provides, in pertinent part, that a vessel of more than 200 gross tons, eligible to engage in the coastwise trade, and later sold foreign in whole or in part or placed under foreign registry may not thereafter engage in the coastwise trade. See 46 U.S.C. § 12132. We note that the certificate of documentation you provided indicates that the subject vessel measures 4,850 gross tons.
Interpreting the predecessor of 46 U.S.C. § 12132, the First Proviso to 46 U.S.C. App. § 883, the United States Court of Appeals for the Second Circuit remarked on the permanent nature of the loss of coastwise privileges for foreign sale in Marine Carriers Corp. v Fowler . In that matter, the Court stated:
“A proviso added to this section in 1935 (hereinafter the first proviso), however, provided that certain vessels, although American-built and American-owned, were nevertheless disqualified from engaging in the coastwise trade. (Citation Omitted.) Specifically, this proviso seems to exclude from coastwise trade vessels built in the United States, then sold foreign, and later reacquired by American owners. The import of the statute is that once the right to engage in coastwise trade was forfeited by reason of foreign ownership, that right could not be regained.”
Implementing the provisions of 46 U.S.C. § 12132, 46 CFR § 67.19(c) provides: “A vessel otherwise eligible for a coastwise endorsement under paragraph (b) of this section permanently loses that eligibility if: … (2) It is thereafter registered under the laws of a foreign country.”
Title 46 United States Code § 12112 provides that a coastwise endorsement may be issued for a vessel that otherwise qualifies under the laws of the United States to engage in the coastwise trade. It further provides that subject to the laws of the United States regulating the coastwise trade, a vessel for which a coastwise endorsement is issued may engage in the coastwise trade.
Your client states that, pursuant to the provisions of 46 CFR § 67.19(c), the barge is not eligible for the issuance of a coastwise endorsement because it was at one time registered under the laws of a foreign country. Your client argues that the barge meets the eligibility requirements of 46 U.S.C. §§ 12103 and 12112 to engage in coastwise trade and, that given the characteristics of the barge and the limited nature of the proposed activity, transporting rock on the Hudson River, that the barge is exempt from the requirement to be documented with a coastwise endorsement.
Your client bases its argument on the provisions of 46 U.S.C. § 55102 and 46 CFR § 67.9. Title 46 U.S.C. § 55102(b) provides that a vessel may transport merchandise by water if it is wholly owned by citizens of the United States and either has been issued a coastwise endorsement or is exempt from that requirement. Title 46 CFR § 67.9(c), provides that a non-self propelled vessel, qualified to engage in coastwise trade is exempt from the requirement to be documented with a coastwise endorsement when engaged in coastwise trade within a harbor; on the rivers or lakes of the United States; or on the internal waters or canals of any State. Your client further argues that the use of the barge, which is non-self-propelled, falls within the scope of the 46 CFR § 67.9(c) exemption due to its proposed use within a harbor; on the rivers or lakes of the United States; or on the internal waters or canals of any State. Accordingly, P&M argues that a coastwise endorsement is not required to use its barge to transport stone from the Port of Albany down the Hudson River to the Port of New York and that such use in the absence of the endorsement would not be a violation of 46 U.S.C. § 55102.
P&M argues that it does not believe that the requirement under·46 CFR § 67.9 (c) that the vessel be “qualified to engage in coastwise trade” means that it must necessarily be “eligible for a coastwise endorsement” and therefore the fact that it is not “eligible” for the endorsement because of the foreign registry does not preclude the applicability of the exemption. Indeed, P&M asserts that equating eligibility for the endorsement with being qualified to engage in coastwise trade would render the exemption for use on internal waters of a state and harbors virtually meaningless. Further, P&M argues that the intent of the exemption appears to be recognition that certain limited and restricted activities simply do not require a coastwise endorsement. P&M argues that this interpretation is supported by the language of 46 CFR § 67.1 (d) which contemplates that a vessel is entitled to the benefit of the exemption even though it might not be able to apply for a coastwise endorsement because it does not “meet the other requirements of the part.” Thus the fact that a vessel may not be “eligible” for a coastwise endorsement does not mean it is not qualified to engage in coastwise trade or entitled to the benefit of the exemption. We disagree.
Title 46 U.S.C. § 12112(a)(3) requires that a vessel “otherwise qualify under the laws of the United States to engage in the coastwise trade” in order to be issued a coastwise endorsement. Your client admits that the vessel had at one time been registered with a foreign country. The certificate of documentation provided by P&M supports this admission, bearing as it does the restriction, “No Coastwise – Registered with a Foreign Country.” As our discussion of 46 U.S.C. § 12132 supra indicates, the subject barge may not engage in the coastwise trade after having been placed under foreign registry. We are, therefore, of the opinion that the vessel does not qualify under the laws of the United States to engage in the coastwise trade. As 46 U.S.C. § 12112(b) requires a coastwise endorsement in order to engage in the coastwise trade, the barge, lacking a coastwise endorsement, may not engage in the coastwise trade.
Also, 46 CFR § 67.9(c), requires that a vessel be “qualified to engage in coastwise trade” in order to receive the benefit of being excluded from or exempt from documentation, when engaged in coastwise trade within a harbor; on the rivers or lakes of the United States; or on the internal waters or canals of any State. In accordance with the provisions of 46 U.S.C. § 12132, having been placed under foreign registry, the barge may not thereafter engage in the coastwise trade. As discussed in Marine Carriers, as a coastwise trade vessel built in the United States, then sold foreign, and later reacquired by American owners, the subject barge has forfeited the right to engage in the coastwise trade by reason of foreign ownership, a right which cannot be regained. Therefore, we are of the opinion that the subject barge is no longer “qualified to engage in coastwise trade” as contemplated by 46 CFR § 67.9(c). It is therefore not excluded from or exempt from the requirement of documentation.
HOLDING:
In accordance with the Law and Analysis section of this ruling, the proposed use of the subject vessel as described above to transport stone from the Port of Albany down the Hudson River to the Port of New York constitutes an engagement in the coastwise trade in violation 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