Coastwise trade; Trade with Guam; Registry endorsement; Military cargoes; 46 U.S.C. 12105(b), 12112(b); 46 U.S.C. App. 883

HQ 112561 June 25, 1993 VES-3-CO:R:IT:C 112561 LLB CATEGORY: Carriers Mr. Willis R. Deming Matson Navigation Company 333 Market Street, 30th Floor San Francisco, California 94105-2190 RE: Coastwise trade; Trade with Guam; Registry endorsement; Military cargoes; 46 U.S.C. 12105(b), 12112(b); 46 U.S.C. App. 883 Dear Mr. Deming: Reference is made to your letter of December 17, 1992, which poses certain questions regarding the use of a foreign-built, United States-documented vessel in the transportation of merchandise between Hawaii or the 48 contiguous states, and Guam. FACTS: Matson Navigation Company is a United States citizen corporation for the purpose of documenting commercial vessels under the laws of this country. It is proposed that Matson purchase a vessel that has been built or rebuilt outside of the United States and which has been registered in a foreign country. Matson intends to document the vessel under United States law with a registry endorsement. Specifically, Customs is asked: (1) do the provisions of 12105(b) (46 U.S.C.) permit transportation between the 48 contiguous states or Hawaii and Guam of both commercial cargo and equipment, materials, commodities or supplies bought by or for the Army, Navy, Air Force or Marine Corps with either appropriated funds or nonappropriated funds? (2) Does 12112(b) of 46 U.S.C. permit such a vessel to carry commercial or military cargo identified in (1) above from Guam to the contiguous 48 states on the initial voyage from a foreign country to a port in the contiguous 48 states under the certificate of documentation and endorsement authorized by 12112(a) 46 U.S.C.? - 2 - ISSUES: 1. Whether a vessel documented under United States law with a registry endorsement may be utilized in trade between the 48 contiguous states or Hawaii and Guam, and whether the answer to that question might be altered depending upon whether the transportation involves either commercial cargo, or supplies bought by or for elements of the Department of Defense with appropriated or nonappropriated funds. 2. Whether a vessel operated under a certificate issued pursuant to 46 U.S.C. 12112(a) may, on its first arrival in the United States, land cargo taken aboard in Guam. LAW AND ANALYSIS: Section 27 of the Act of June 5, 1920, as amended (41 Stat. 999; 46 U.S.C. App. 883, often called the Jones Act), provides, in pertinent part, that: No merchandise, including merchandise owned by the United States Government, a State (as defined in section 2101 of...Title 46), or a subdivision of a State, shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the transportation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to be transported), between points in the United States * * * embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation in any other vessel 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 * * *. Pursuant to 46 U.S.C. App. 877, the coastwise laws are applicable to Guam. Under 46 U.S.C. 12105(b), however, a vessel for which a registry is issued by the United States Coast Guard may be employed in trade with Guam. Under that statute and 46 U.S.C. 12102, a foreign-built, United States-owned vessel may, under certain circumstances, be issued a registry. In inter- preting these statutes, the Customs Service has ruled that foreign- built, United States-registered vessels may be used for transport to and between points in Guam. Section 12112 of title 46, United States Code (46 U.S.C. 12112), provides for the issuance of provisional certificates in advance of the formal documentation of vessels under United States law. The statute is in place in order to enable vessels - 3 - purchased abroad to legally engage in trade over the course of their first voyage to the United States, so long as the certificate specified in subsection (a) of the statute has been issued. So long as a vessel is legally operating with either a registry endorsement issued under section 12105, or a certificate issued under section 12112, we find no requirement that its service be limited according to the character of its cargo, whether commercial merchandise or United States Government property. Further, a vessel proceeding on its initial voyage to the United States and sailing under a provisional certificate, may transport cargo from Guam to a port in the United States. HOLDINGS: 1. Vessels documented under United States law with a registry endorsement may trade between the 48 contiguous states or Hawaii and Guam. Such vessels may transport either commercial or United States Government-owned merchandise. 2. Vessels issued a provisional certificate under 46 U.S.C. 12112 may, on their initial voyage to the United States, transport and land in the United States, materials (commercial or United States Government-owned) which were taken aboard in Guam. Sincerely, Acting Chief Carrier Rulings Branch