Coastwise Trade; 46 U.S.C. App. 883

HQ 111767 October 25, 1991 VES-3-07-CO:R:IT:C 111767 GEV CATEGORY: Carriers Captain C.R. Leitch Brunterm Limited Post Office Box 70 Saint John, N.B., Canada E2L 3X1 RE: Coastwise Trade; 46 U.S.C. App. 883 Dear Captain Leitch: This is in response to your facsimile transmission dated June 20, 1991, requesting a ruling regarding the possible use of a foreign-flag vessel in the coastwise trade. Our ruling on this matter is set forth below. FACTS: Brunterm Limited ("Brunterm") is a Canadian corporation located in the Port of Saint John, New Brunswick, Canada. Brunterm is considering operating a container feeder operation from Saint John to ports located on the East Coast of the United States. The intention is to feeder Canadian import and export traffic to and from the load centers of New York, Philadelphia, Norfolk and Jacksonville. The main-line carriers have in recent years elected to stop service to the smaller ports and concentrate on load centers as a means to capitalize on costs and save ship's time. This has been to the detriment of shippers in areas like eastern Canada who are faced with problems in ensuring that their products reach world markets at competitive rates. Brunterm is of the opinion that with the departure of the last of the Far East main-line carriers from Halifax it may now be beneficial for a feeder service to operate from Saint John. In order for the proposed feeder service to operate efficiently domestic U.S./Canada traffic should be sourced as a means to ensure regular traffic and attempt to flatten out the peaks and valleys of the export/import trades. As part of this proposed service Brunterm inquires as to the legality of using a foreign-flag vessel to transport products from Maine to various ports on the East Coast of the United States via Saint John. - 2 - ISSUE: Whether the use of a foreign-flag vessel to transport merchandise between two United States ports via a Canadian port constitutes a violation of 46 U.S.C. App. 883. 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. (emphasis added) 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. Accordingly, the use of a foreign-flag vessel to transport merchandise from Maine to ports located on the East Coast of the United States via Canada is prohibited by 46 U.S.C. App. 883. Whether, as you suggest, Maine products are "re-exported" from the U.S. port of unloading or directed to the U.S. domestic market in that port's hinterland is of no consequence regarding our position in this matter. There would still be an illegal coastwise movement. HOLDING: The use of a foreign-flag vessel to transport merchandise between United States ports via a Canadian port constitutes a violation of 46 U.S.C. App. 883. Sincerely, B. James Fritz Chief Carrier Rulings Branch