OT:RR:BSTC:CCR H325990 DMK
Jorge Romero, Esq.
K&L Gates
1601 K Street, NW
Washington, DC 20006
RE: 46 U.S.C. §§ 55102, 55103; 19 C.F.R. §§ 4.80a, 4.80b; Coastwise Transportation; Merchandise; Passengers; Small Craft; Oceanographic Research; Limnological Research; Tendering.
Dear Mr. Romero:
This is in response to your correspondence of June 30, 2022, in which you requested a ruling determining whether certain oceanographic research activities proposed to be conducted from onboard small craft launched from a foreign-flagged, non-coastwise-qualified cruise vessel would violate 46 U.S.C. §§ 55102 and 55103.0F Our decision follows.
FACTS:
[ ] (“the Company”) operates two non-coastwise qualified expedition-type passenger vessels, [ ] (the “Expedition Vessel” or “Expedition Vessels”), which are equipped with research facilities, in addition to the normal amenities of a cruise vessel. The Company has entered into an agreement with the National Oceanographic and Atmospheric Administration (“NOAA”) to conduct research as part of NOAA’s International Great Lakes Opportunistic Observations project, as well as similar arrangements with other federal and state governmental agencies and academic institutions. These research projects will be conducted at the same time as the Expedition Vessels are used to carry traditional cruise passengers. Accordingly, the Expedition Vessels’ proposed itineraries take the Expedition Vessels to various points within the Great Lakes, including multiple points within U.S. territorial waters. You have provided us with the proposed itineraries and stopping points.
In addition to the research facilities onboard the Expedition Vessels, each Expedition Vessel is equipped with [ ] (“Small Craft”) which are carried aboard the Expedition Vessels in a marina hangar. The Company intends to use the Small Craft to allow the Company’s scientists and visiting scientists to embark from the Expedition Vessel on excursions for the purpose of oceanographic or limnological research. You have provided a list of contemplated research projects, and research activities to be performed onboard the Small Craft. The Small Craft will be laden with research materials from the Expedition Vessel’s laboratory while onboard the Expedition Vessel and will launch with the equipment as well as able-bodied seamen to operate the Small Craft and the scientists who will be doing the research. No cruise passengers will board the Small Craft during these research excursions.
The research conducted aboard the Small Craft is contemplated to consist of observing small organisms, microplastics, algae, etc., as well as collecting water samples. Collected samples will be destroyed aboard the Expedition Vessel in a zero-emissions incinerator. This may produce pellets of dry compressed waste which the Company intends to dispose of when the Expedition Vessels call at ports throughout their journey. Company has expressed no intent to collect samples from the lake bottom or engage in dredging activities. The Small Craft will not come to shore to unlade the research materials, and the able-bodied seamen and scientists will not disembark the Small Craft during these excursions. At the end of the excursion the Small Craft will return to the Expedition Vessel, where the individuals onboard will disembark and the research materials unladed.
Between excursion sites, the scientists will conduct research in the Expedition Vessel’s laboratory, including continuous monitoring and analysis of samples and observations from Small Craft excursions. The scientists may also give lectures about their research, including to cruise passengers. You have expressed that the Small Craft may be used for occasional tendering duties, during which time there will not be scientific research conducted aboard the Small Craft.
The Company expects the scientists on board the Expedition Vessels to be certified to the Standards of Training and Certification of Watchkeeping as determined by the International Maritime Organization, as well as a valid seafarer’s medical certificate. The scientists will be manifested on the crew list and sign on like other crew members. The Expedition Vessels will additionally carry traditional cruise passengers who may at times observe scientific research or attend lectures given by scientists onboard the Expedition Vessels, but will not actively engage in scientific research.
ISSUES:
Whether the Expedition Vessels carrying the Small Craft from one research location to another in the Great Lakes constitutes coastwise transportation of merchandise, in violation of 46 U.S.C § 55102?
Whether the oceanographic research activities proposed to be conducted from the Small Craft violates the coastwise laws, including 46 U.S.C. §§ 55102 and 55103?
Whether using the Small Craft as tenders in addition to their oceanographic research uses violates the coastwise laws, including 46 U.S.C. §§ 55102 and 55103?
LAW AND ANALYSIS:
Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise qualified.” Specifically, pursuant to 46 U.S.C. § 55102 (“the Jones Act”), 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 has a coastwise endorsement.1F
The CBP regulations promulgated under the authority of 46 U.S.C. § 55102(a), provide that “[a] coastwise transportation of merchandise takes place. . . 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.”2F 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. The Supreme Court discussed the nature of the United States’ jurisdiction over internal waters in United States v. Louisiana, saying, in pertinent part:
Under generally accepted principles of international law, the navigable sea is divided into three zones, distinguished by the nature of the control which the contiguous nation can exercise over them. Nearest to the nation’s shores are its inland, or internal waters. These are subject to the complete sovereignty of the nation, as much as if they were a part of its land territory, and the coastal nation has the privilege even to exclude foreign vessels altogether. Beyond the inland waters, and measured from their seaward edge, is a belt known as the marginal, or territorial, sea. Within it, the coastal nation may exercise extensive control, but cannot deny the right of innocent passage to foreign nations.3F
The coastwise laws apply to the United States, including the island territories and possessions of the United States, with the exception of American Samoa, the Northern Mariana Islands, and the Virgin Islands.4F By statute, the United States extends its territorial jurisdiction in Great Lakes waters all the way to the international boundary between the United States and Canada, holding that Great Lakes waters are coastal waters “within the territorial jurisdiction of the United States.”5F U.S. Customs and Border Protection, and its predecessor, the U.S. Customs Service (hereinafter collectively “CBP”), have previously determined that, as they pertain to the Great Lakes, the territorial waters of the United States include those waters adjacent to the coast of the United States extending to the U.S.-Canada international boundary.6F Accordingly, it has been the longstanding position of CBP that the coastwise laws are also applicable to the waters of the Great Lakes.7F
Pursuant to 46 U.S.C. § 55102(a), “[m]erchandise, 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. § 55102.8F
Regarding passengers, pursuant to 46 U.S.C. § 55103 only coastwise-qualified vessels may transport passengers in the navigable waters in the United States, specifically:
[…] 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-
is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and
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 applicable regulation at 19 CFR § 4.50(b) defines a passenger as “any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business.”
In accordance with previous CBP rulings, individuals transported between coastwise points are not classified as “passengers” within the meaning of 46 U.S.C. § 55103 and 19 CFR § 4.50(b) if they are required to be onboard to contribute to the accomplishment of the operation or navigation of the vessel during the voyage or are onboard because of a necessary vessel ownership or business interest during the voyage.9F
CBP has long held that vessels engaged in oceanographic research are not engaged in coastwise trade, so long as the vessels are utilized in a research role. While not controlling CBP’s determinations in this area, CBP looks to the Oceanographic Research Vessel Act,10F as amended (including 46 U.S.C. § 2101; 46 U.S.C. § 50503) as instructive. Specifically, CBP considers 46 U.S.C. § 2101(24) for guidance on whether a vessel is engaged in oceanographic research. That statutory provision defines an “oceanographic research vessel” as
a vessel that the Secretary finds is being employed only in instruction in oceanography or limnology, or both, or only in oceanographic or limnological research, including studies about the sea such as seismic, gravity meter, and magnetic exploration and other marine geophysical or geological surveys, atmospheric research, and biological research.11F
Moreover, CBP considers as informative for Jones Act purposes 46 U.S.C. § 50503, which provides that “[a]n oceanographic research vessel (as defined in section 2101 of this title) is deemed not to be engaged in trade or commerce.” Thus, if the proposed vessel is employed solely for oceanographic research, it is CBP’s position that such use would not violate the coastwise laws found at 46 U.S.C. §§ 55102 and 55103.
As a preliminary matter, we determine that the Expedition Vessels are not oceanographic research vessels pursuant to CBP’s interpretation, guided by 46 U.S.C. § 50503 and 46 U.S.C. § 2101(24). Regardless of whether scientists aboard the Expedition Vessels are engaged in oceanography or limnology, the Expedition Vessels are also carrying traditional cruise passengers who will not be engaged in the research. Because the Expedition Vessels will not be employed solely for oceanographic research, the Expedition Vessels are not excepted from the coastwise laws in this manner. This comports with our previous rulings wherein performing non-research activities aboard a vessel would remove it from the oceanographic research vessel exception.12F Accordingly, we determine that the Expedition Vessels are engaged in coastwise trade for the purposes of 46 U.S.C §§ 55102 and 55103.
Issue One: Whether the Expedition Vessels carrying the Small Craft from one research location to another in the Great Lakes constitutes coastwise transportation of merchandise, in violation of 46 U.S.C § 55102?
First, we determine whether carrying the Small Craft aboard the Expedition Vessels between research sites and/or offloading and returning the Small Craft at different points within the Great Lakes constitutes coastwise transportation of merchandise, in violation of 46 U.S.C § 55102. CBP has interpreted merchandise not to include “vessel equipment,” that is, items which are “necessary and appropriate for the navigation, operation or maintenance of a vessel and for the comfort and safety of the persons on board.”13F Necessary and appropriate items are those that are integral to the function of the vessel and are carried by the vessel, including items that aid in the “installation, inspection, repair, maintenance, surveying, positioning, modification, construction, decommissioning, drilling, completion, workover, abandonment or other similar activities or operations of wells, seafloor or subsea infrastructure, flow lines, and surface production facilities.”14F
Whether articles constitute vessel equipment is a fact-specific, case-by-case determination. CBP has consistently held that vessel equipment consists of articles necessary to carry out a vessel’s function.15F However, if the goods are intended to perform a function separate from that of the vessel, it may be considered merchandise.16F The fact that an item is returned to the vessel and is not left behind is a factor that weighs in favor of an item being classified as vessel equipment, but is not a sole determinative factor.17F A vessel that is transported on another vessel can still be merchandise, regardless of coastwise qualification status.18F There is no question that, as noted above, points on the U.S. side of the Great Lakes international boundary are considered coastwise points for the purposes of the Jones Act. Accordingly, the issue as it relates to the Jones Act is whether the Small Craft are merchandise or vessel equipment.
The Small Craft in this case are kept on board the Expedition Vessels in stowage bays used exclusively for the Small Craft. In between excursions the Small Craft return to the stowage bays on the Expedition Vessels. The Small Craft are contemplated to be used either for research excursions or for tendering duties, after either of which the Small Craft return to the Expedition Vessels. The Company has expressed that the Small Craft are integral to the cruising experience on the Expedition Vessels. There is no indication that the Small Craft are ever intended to permanently leave the Expedition Vessels. The Small Craft, launched from and returning to the Expedition Vessels, perform the role of gathering samples for research purposes, and as such they are akin to tools (vessel equipment) for the research activity. Alternatively, if used for tendering, the Small Craft, again launched from and returning to the Expedition Vessels, perform the tendering role and thus are akin to the equipment of the Expedition Vessel.
We determine that the Small Craft are vessel equipment for the purposes of the Jones Act. Therefore, the proposed transportation of the Small Craft by the Expedition Vessels between coastwise points would not constitute coastwise transportation of merchandise under 46 U.S.C. § 55102.
Issue Two: Whether the oceanographic research activities proposed to be conducted from the Small Craft violate the coastwise laws, including 46 U.S.C. §§ 55102 and 55103?
Next, we turn to whether the proposed research activities to be conducted from the Small Craft violate the Jones Act and the PVSA. As regards the Jones Act, during research activities the items to be transported on the Small Craft consist of items to assist the scientists with conducting their intended research. This could include laboratory items, computers, cameras, and bait. These items will be laded onboard the Small Craft while on the Expedition Vessels, used while the Small Craft are on a research excursion, and returned to the Expedition Vessels at the end of the excursion. The role that these items play are necessary and appropriate to carry out the research objective of the Expedition Vessels and Small Craft.
Accordingly, we determine that the laboratory items, computers, cameras, and bait items to be transported on the Small Craft during research activities are vessel equipment for the purposes of the Jones Act. Therefore, the proposed transportation of this equipment by the Small Craft to and from the Expedition Vessels between coastwise points would not constitute coastwise transportation of merchandise under 46 U.S.C. § 55102.
Some of the research done aboard the Small Craft involves the collection of water samples. Collected water samples will be transported from the Small Craft to the Expedition Vessels, where they are analyzed. After analysis, the water samples will be destroyed in your zero-emission incinerator, which may generate waste.
To determine whether transportation between coastwise points occurs, CBP examines the points at which merchandise is laden and unladen. HQ H316313 (Feb. 4, 2021). As regards the Small Craft collecting samples, you contemplate that both the location where the Small Craft collect the water samples and the location where the Small Craft rejoins the Expedition Vessel to unlade the water samples may be coastwise points. However, when the Small Craft embark on the excursions which involve water sample collection, the function of the Small Craft is to perform scientific research by, amongst other things, collecting the water samples. You have provided examples of the scientific research to be performed on these excursions, and have not indicated that any functions of the Small Craft while they are engaged in these excursions will be for any purposes other than scientific research.
We determine that on these scientific research excursions, the Small Craft will be presently employed only in oceanographic or limnological research as defined in 46 U.S.C. § 2101(24), and therefore are deemed not to be engaged in trade or commerce pursuant to 46 U.S.C. § 50503. Accordingly, when the Small Craft are on excursions only for the purpose of scientific research, the transportation of water samples from a coastwise point of collection to a secondary coastwise point, an Expedition Vessel, would not constitute a violation of the Jones Act, 46 U.S.C. § 55102.
This comports with our prior rulings in HQ H216579 (May 15, 2012), HQ H200704 (Feb. 8, 2012), and HQ 113461 (Jun. 8, 1995) in which we determined that vessels could be considered oceanographic research vessels even if they were not registered as such, or were previously employed in activities outside of oceanographic research. Provided that at the time and for the duration of the excursion the vessel is employed only in oceanographic research, then the oceanographic research exclusion found in 46 U.S.C. § 50503 applies.
As regards the transportation of water samples once onboard the Expedition Vessels, we first reiterate that the Expedition Vessels are not exclusively employed in oceanography or limnology, and therefore are not excluded from engagement in trade or commerce under 46 U.S.C. § 50503. The water samples will be laded on the Expedition Vessels at what may constitute a coastwise point, the location at which the Small Craft rejoins the Expedition Vessel and transfers the water samples. However, the water samples will never be unladed from the Expedition Vessels, and instead will be destroyed in your zero-emission incinerator. Accordingly, the water samples are not transported between coastwise points and there would not be a violation of the Jones Act, 46 U.S.C. § 55102. To the extent there is any waste product, however, remaining on board the Expedition Vessel, that waste product, if laden at a coastwise point, must be unladen only at a non-coastwise point (e.g., a point in Canada or other non-U.S. coastwise point).
We find that the proposed activities described in your request would not constitute transportation between coastwise points, because regardless of whether the samples are considered merchandise, the Small Craft are considered oceanographic research vessels while on scientific research excursions, and the water samples are destroyed and accordingly never unladed to a coastwise point by the Expedition Vessels. To the extent that waste product is either not laden at a coastwise point or is unladen at a non-coastwise point, we determine that there is no coastwise transportation of merchandise within the meaning of 46 U.S.C. § 55102 and 19 CFR § 4.80. This would not be true, however, if the samples were laden at a coastwise point, waste was generated, and the waste was then unladen at a coastwise point (e.g. a U.S. port of call). This would also not be true if the Small Craft were to transport items other than necessary research items and samples, or persons other than necessary crew and scientists, or to engage in additional activities other than oceanography and/or limnology while on these excursions.
As regards the PVSA, during research activities, the individuals transported onboard the Small Craft consist of able-bodied seamen to crew and navigate the vessels, and of scientists to conduct research. The Company has clarified that no traditional cruise passengers will be aboard the Small Craft during research excursions. We determine that in this case the able-bodied seamen will contribute to the accomplishment of the operation or navigation of the Small Craft during the voyage, and that the scientists are onboard because of a necessary business interest – in this case, the scientific research they are engaged to perform. Accordingly, during the Small Craft excursions, the able-bodied seamen and scientists to be transported onboard the Small Craft do not constitute “passengers” under 46 U.S.C § 55103.
When onboard the Expedition Vessels, between Small Craft excursions, the able-bodied seamen will be assigned crewing and navigation duties. The scientists will also continue to perform scientific research, and some scientists may be used for vessel safety purposes. We determine that in this case the able-bodied seamen aboard the Expedition Vessels will contribute to the accomplishment of the operation or navigation of the Expedition Vessels, and that the scientists are onboard because of a necessary business interest. Accordingly, between Small Craft excursions, the able-bodied seamen and scientists to be transported onboard the Expedition Vessels do not constitute “passengers” under 46 U.S.C § 55103.
Issue 3: Whether using the Small Craft as tenders in addition to their oceanographic research uses violates the coastwise laws, including 46 U.S.C. §§ 55102 and 55103?
Finally, we turn to whether using the Small Craft as tenders in addition to their oceanographic research use violates the Jones Act and the PVSA. CBP has consistently held that the use of non-coastwise qualified vessels as tenders in U.S. territorial waters is permissible under four conditions:
the tenders must arrive in U.S. territorial waters on board the cruise vessel;
the tenders must be used solely to carry the passengers between the shore and the cruise vessel;
the tenders must be used solely in such carriage where the CBP Port Director is satisfied that it is not safe or feasible for the cruise vessel to berth at a pier; and
the tenders must depart U.S. territorial waters on board the cruise vessel.19F
In HQ 112039, we held that “[a]bsent any one of these conditions, the transportation of passengers by a non-coastwise-qualified lifeboat between the cruise vessel in U.S. territorial waters and a point on shore would be in violation of 46 U.S.C. App. 289 [now 46 U.S.C. § 55103].” (citations omitted). Furthermore, CBP has strictly construed the use of non-coastwise qualified vessels as tenders to be limited to use only as a tender for the entirety of the cruise vessel’s voyage within U.S. territorial waters.20F
Therefore, assuming the four conditions above are satisfied, we determine that any Small Craft which are used as a tender in the above contemplated voyages must be used solely as a tender for the entirety of the Expedition Vessels’ time within U.S. territorial waters. Specifically, while the Expedition Vessels are in U.S. territorial waters, using a Small Craft at some point for oceanographic research prohibits that same Small Craft from being used as a tender until the Expedition Vessel exits U.S. territorial waters with the Small Craft on board and re-enters U.S territorial waters.
Accordingly, we determine that, strictly under the facts as presented, the Small Craft can be used as tenders without violating 46 U.S.C. §§ 55102 and 55103, but only if the Small Craft satisfy the four requisite conditions and are never used for any other purpose during the entirety of the time the Expedition Vessels are in U.S. territorial waters. Using the Small Craft for oceanographic research, only to use the same Small Craft as a tender at a later point, would violate either the Jones Act, 46 U.S.C. § 55102, or the PVSA, 46 U.S.C. § 55103, or both, depending on what is tendered.
If a Small Craft has already been used as an oceanographic research vessel and is intended to be used as a tender, the Expedition Vessel must depart U.S. waters with the Small Craft on board, re-enter U.S. waters with the Small Craft on board, and use the Small Craft only as a tender until such time as the Expedition Vessel departs U.S. waters again, likewise with the Small Craft on board. Similarly, if a Small Craft has been used as a tender and is intended to be used for oceanographic research, the Expedition Vessel must depart U.S. waters with the Small craft on board and re-enter U.S. waters with the Small Craft on board, at which time the Small Craft may be used for purposes other than tendering.
HOLDING:
The Expedition Vessels carrying the Small Craft from one research location to another in the Great Lakes does not constitute coastwise transportation of merchandise, and accordingly does not violate 46 U.S.C § 55102.
The oceanographic research activities proposed to be conducted from the Small Craft and on the Expedition Vessels between excursion sites do not constitute coastwise transportation of merchandise or passengers, and accordingly does not violate 46 U.S.C. §§ 55102 and 55103.
The use of Small Craft for tendering purposes, if the same Small Craft is also used for oceanographic research on the Expedition Vessels’ same voyage into U.S. territorial waters, violates 46 U.S.C. §§ 55102 and 55103.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a CBP field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” If the facts at hand vary from the facts stipulated to herein, this decision shall not be binding on CBP as provided for in 19 C.F.R. § 177(b)(1), (2) and (4), and § 177.9(b)(1) and (2).
Sincerely,
W. Richmond Beevers
Chief, Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade, Regulations and Rulings
U.S. Customs and Border Protection