VES-3-18-OT-RR:BSTC:CCR H310940 AMW
Mr. Matt Bauer, Esq.
Associate General Counsel, Austal USA, LLC
100 Addsco Road
Mobile, AL 36633
RE: Applicability of U.S. Coastwise Laws to a Floating Dry Dock; 1 U.S.C. § 3; 46 U.S.C. § 55102
Dear Mr. Bauer:
This letter is in response to your letter dated April 28, 2020, in which you request a ruling regarding whether a floating dry dock would be subject to the U.S. coastwise laws. Our decision follows.
FACTS:
The following facts are from your ruling request and supporting information submitted on August 12, 2020, September 3, 2020, and October 30, 2020. You state that Austal USA, LLC (“Austal”) has recently purchased a floating dry dock (the “dry dock”) from World Marine of Alabama, LLC. Austal is an Alabama Limited Liability company and its sole member is Austal Holdings, Inc., an Alabama corporation; the sole shareholder of Austal Holdings, meanwhile, is Austal Ltd., an Australian company. Accordingly, although the dry dock was built in the United States and previously possessed a coastwise endorsement, it would not be eligible for a coastwise endorsement by virtue of its ownership by Austal.
Your request and follow-up submissions provide a detailed description of the subject dry dock. Specifically you state that the dry dock is a floating, dual hull rectangular structure that is “used for the purpose of raising vessels from the water for inspection, maintenance, repairs, and refurbishment and may be used for launching vessels….” The dry dock contains ballast tanks for stability and will have attachment points to facilitate towing. The dry dock will not be permanently moored, and is capable of becoming free floating. The dry dock is also equipped with a generator capable of powering the dry dock when it is not connected to land, although it will typically utilize shore power as its source of electrical power. The maximum draft of the dry dock when not laden with a vessel is 12 feet; the maximum draft when laden with a vessel is 49.5 feet. In addition, you state that the dry dock will not be manned by a “navigation or marine engineering crew,” but will instead be operated by land-based crewmembers. The dry dock is not equipped with navigational lights, positioning equipment, radar, marine radio equipment, wheel house, propellers, or rudders. The dry dock’s hulls are unraked (i.e., a straight bow shaped in a flat line at an angle of less than 45 degrees).
Your request notes that the dry dock may be periodically used to transport vessels between Austal facilities on the Mobile River. Specifically, you state that Austal may utilize the dry dock to raise vessels for inspection, maintenance, repairs, refurbishment, and launching at the “Austal West Campus,” which is located on the west bank of the Mobile River. In addition, you state that Austal may use the dry dock approximately four times a year to load and launch vessels from its “Final Assembly” shipyard on the east bank of the Mobile River, approximately one-and-a-half miles from the Austal West Campus. Under this contemplated use, coastwise-qualified tugs will move the drydock from the Austal West Campus to Final Assembly, where a vessel will be laden onboard the dry dock; the dry dock will then be towed back to its original location at the Austal West Campus where the dry dock will be lowered and the vessel launched.
ISSUE:
Whether the subject dry dock is a “vessel” such that its operations, as described in the FACTS section, will be subject to the Jones Act.
LAW AND ANALYSIS:
The Jones Act, at 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 the United States, documented under the laws of the United States, and owned by United States citizens. The only issue in this matter is whether the subject dry dock is a “vessel” for purposes of the Jones Act.
Although the Jones Act does not define the term “vessel,” the Rules of Construction Act provides a definition of “vessel” for all federal laws. See 1 U.S.C. § 3; Stewart v. Dutra Constr., 543 U.S. 481, 490 (2005). Under 1 U.S.C. § 3, “[t]he word ‘vessel’ includes every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water.” The subject dry dock will thus be considered a “vessel” for purposes of the Jones Act if it is either “actually used” or “capable of being used” as a means of transportation over water.
The Supreme Court has clarified that a watercraft need not be primarily used for maritime transportation in order to qualify as a vessel under 1 U.S.C. § 3. To the contrary, the statutory phrase “capable of being used . . . as a means of transportation over water” merely requires a “practical,” rather than “theoretical,” capability of maritime transport. For example, in Stewart v. Dutra Constr., 543 U.S. 481, 490 (2005), the Court held that a dredge that was capable of limited self-propulsion through manipulation of its anchors and cables was a “vessel.” Although the primary purpose of the dredge was to dig a trench underneath Boston Harbor for the Ted Williams tunnel, it moved itself and the workers aboard it every two hours by manipulating its anchors and cables. The dredge also had “a captain and crew, navigational lights, ballast tanks, and a crew dining area.” Id. at 484. The dredge was thus “not only ‘capable of being used’ to transport equipment and workers over water—it was used to transport those things.” Id. at 495.
The Court distinguished the dredge in Stewart from watercraft that had been permanently moored or that were “otherwise rendered practically incapable of maritime transport.” Id. at 494. For example, in Cope v. Valette Dry Dock Co., 119 U.S. 625 (1887), the Court held that a floating dry-dock that had been moored in the same place for 20 years was not a “vessel.” The floating dry-dock was instead a “‘fixed structure’ that had been ‘permanently moored,’ rather than a vessel that had been temporarily anchored.” Cope, 119 U.S. at 627. Similarly, in Evansville & Bowling Green Packet Co. v. Chero Cola Bottling Co., 271 U.S. (1926), the Court held that a “wharfboat” that was used as an office, warehouse, and wharf was not a “vessel.” The wharfboat’s connection to the shore “evidence[d] a permanent location” through four or five cables securing it in place and connections with the city’s water, electric light, and telephone systems. Evansville, 271 U.S. at 22.
Unlike the dredge in Stewart, the watercraft in both Cope and Evansville were not practically capable of transporting people, freight or cargo from place to place. Neither the dry dock in Cope nor the wharfboat in Evansville moved “from place to place” or was “used to carry freight from one place to another.” Evansville, 271 U.S. at 22. “Simply put, a watercraft is not ‘capable of being used’ for maritime transport in any meaningful sense if it has been permanently moored or otherwise rendered practically incapable of transportation or movement.” Stewart, 543 U.S. at 495.
While Supreme Court precedent made it clear that watercraft that actually transport people and things over water are vessels, and that permanently moored structures are not, the Court in 2013 offered additional guidance for “borderline cases where ‘capacity’ to transport over water is in doubt.” Lozman v. City of Riviera Beach, 133 S. Ct. 735 (2013). The Court held that a “a structure does not fall within the scope of this statutory phrase unless a reasonable observer, looking to the [structure’s] physical characteristics and activities, would consider it designed to a practical degree for carrying people or things over water.” Id. at 741. Under this test, the owner’s subjective intent to use the structure for maritime transport is irrelevant. The analysis focuses instead on the “objective manifestations” of the structure’s “purpose,” namely, the “physical attributes and behavior of the structure.” Id. at 744-45.
The Court in Lozman applied this reasonable-observer test to a “house-like plywood structure with French doors on three sides” and concluded that it was not a “vessel” under 1 U.S.C. § 3. In relevant part, the Court stated:
But for the fact that it floats, nothing about Lozman’s home suggests that it was designed to any practical degree to transport persons or things over water. It had no rudder or other steering mechanism. Its hull was unraked, and it had a rectangular bottom 10 inches below the water. It had no special capacity to generate or store electricity but could obtain that utility only through ongoing connections with the land. Its small rooms looked like ordinary nonmaritime living quarters. And those inside those rooms looked out upon the world, not through watertight portholes, but through French doors or ordinary windows. Although lack of self-propulsion is not dispositive, it may be a relevant physical characteristic. And Lozman’s home differs significantly from an ordinary houseboat in that it has no ability to propel itself. Lozman’s home was able to travel over water only by being towed. Prior to its arrest, that home’s travel by tow over water took place on only four occasions over a period of seven years. And when the home was towed a significant distance in 2006, the towing company had a second boat follow behind to prevent the home from swinging dangerously from side to side. The home has no other feature that might suggest a design to transport over water anything other than its own furnishings and related personal effects. In a word, we can find nothing about the home that could lead a reasonable observer to consider it designed to a practical degree for “transportation on water.”
Id. at 741.
In addition to the “reasonable observer” test, however, the Supreme Court in Lozman reiterated that structures that are actually used to transport merchandise or passengers over water are vessels. In doing so, the Court conceded that the reasonable observer criterion “is not always a necessary condition,” particularly in circumstances where floating structures are regularly used to transport passengers or merchandise. Id. at 745 (“Nor is satisfaction of the criterion always a necessary condition…. It is conceivable that an owner might actually use a floating structure not designed to any practical degree for transportation as, say, a ferry boat, regularly transporting goods and persons over water.”). Indeed, the Court explained that the “basic difference” between the dredge in Stewart, which was found to be a vessel, and the wharfboat in Evansville, which was not a vessel, “is that the dredge was regularly, but not primarily used (and designed in part to be used) to transport workers and equipment over water while the wharfboat was not designed (to any practical degree) to serve a transportation function and did not do so.” Id. at 743.
At least two federal district courts have applied Lozman in finding that a dry dock is not a vessel. In Fireman’s Fund Ins. Co. v. Great Am. Ins. Co. of N.Y., 2013 U.S. Dist. LEXIS 11114 (S.D.N.Y. 2012), the court reasoned that a regular observer would not consider the subject dry dock designed or regularly used to transport persons or things over water because, in relevant part, the dry dock lacked the ability to propel itself; possessed no steering mechanism; lacked navigational lights, life boats, a wheelhouse or “other equipment that would allow it to be used for the transportation of passengers,” and had been “more or less” permanently moored for several years. Similarly, in Catlin v. San Juan Towing & Marine Servs., 2013 LEXIS 52307 (D.P.R. 2013) (vacated on other grounds), the court found that a floating dry dock was not a vessel because the subject dry dock lacked the capacity to propel itself over water without being towed, possessed no steering system, and lacked navigation lights or other equipment allowing it to be used for transporting passengers or cargo, was unable to generate electricity without a connection to land, and was not “regularly or actually used to transport persons or goods over water.”
In the present matter, however, you state that the dry dock will regularly participate in the transportation of merchandise. The request states that the dry dock would be used approximately four times a year to lade merchandise (e.g., a vessel under repair or construction) at one location on the Mobile River and transport that merchandise to another location approximately a mile and a half away were it will be unladen. Similar to the dredge used in Stewart and discussed in Lozman, the subject dry dock would be “regularly, but not primarily, used” to transport merchandise over water.
Indeed, this matter differs from both Fireman’s Fund Ins. Co. and Catlin, in which the lower courts separately determined that floating dry docks were not vessels where those dry docks were not actually used to transport merchandise or passengers. In Fireman’s Fund Ins. Co., for instance, the court noted that the dry dock was “never used to transport cargo or people,” and had been permanently moored in one place for several years. See Fireman’s Fund Ins. Co., 14-15. In Catlin, meanwhile, the subject dry dock would “occasionally move ten to fifteen feet up and down” its pier, but had remained “virtually stationary” for the prior four years. See Catlin at 35. In doing so, the court in Catlin wrote that Lozman included within the definition of “vessel” those structures “actually” used for transportation, but that the movements of the subject dry dock did not satisfy the criteria for regular or actual movement of cargo or passengers. Id at 34-35. Because both dry docks were not actually used to transport cargo or passengers, the courts then examined the physical characteristics of each dry dock before determining that a “reasonable observer” would not determine that the structures were designed for carrying people or things over water.
Based on the foregoing, we find that the subject dry dock is a vessel under the Jones Act. Based on the proposed pattern of use described in the request (i.e., use approximately four times a year to transport merchandise between coastwise points), it is clear that the subject dry dock would actually be used for transportation under 1 U.S.C. § 3. As such, the present request does not invoke the question of whether the subject dry dock is “capable of being used” for transportation over water. The present request is, therefore, not one of the “borderline cases where ‘capacity’ to transport over water is in doubt.” Lozman v. City of Riviera Beach, 133 S. Ct. 735 (2013). As a result, we decline to consider the physical characteristics of the dry dock in determining whether “a reasonable observer, looking to the [structure's] physical characteristics and activities,” would find that the dry dock is “designed to a practical degree for carrying people or things over water.” See Lozman, 133 S. Ct. at 741. Instead, the proposed, regular pattern of use for the dry dock is sufficient for a determination that the dry dock would be a vessel pursuant to 1 U.S.C. § 3.
HOLDING:
The floating dry dock is a “vessel” as defined by 1 U.S.C. § 3. Therefore, its operations, as describe in the FACTS section above, will be subject to the Jones Act.
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