Coastwise trade; 46 U.S.C. App. § 883; Third Proviso

HQ 114012 July 29, 1998 VES-3-17-RR:IT:EC 114012 CC CATEGORY: Carriers C. Bruce DiLuzio, Esq. Attorney & Corporate Secretary Cominco American Incorporated P.O. Box 3087 Spokane, WA 99220 RE: Coastwise trade; 46 U.S.C. App. § 883; Third Proviso Dear Mr. DiLuzio: This is in response to your letter of June 18, 1997, on behalf of Cominco Alaska Incorporated, requesting a ruling on the applicability of the third proviso of 46 U.S.C. App. § 883 to the transportation of metal concentrates. FACTS: According to your submission, Cominco Alaska mines and produces zinc and lead concentrates at the Red Dog mine in Alaska. The concentrates are moved from the mine site to an Alaskan port near Kivalina by a U.S. trucking company. At the Alaskan port, the concentrates are loaded into barges, operated by a U.S. company, for transport 3 to 4 miles off shore in the Chukchi Sea, where the concentrates are transferred to foreign-flag vessels. The vessels then transport the metal concentrates to Vancouver, British Columbia, where they will be stored and subsequently transferred to railcars. The concentrate will be transported by Canadian rail lines to one of several U.S. locations, which are East Helena, Montana; Glover, Missouri; Clarksville, Tennessee; and Sauget, Illinois. ISSUE: Whether transportation of the metal concentrates is in violation of 46 U.S.C. App. § 883. LAW AND ANALYSIS:  46 U.S.C. App. § 883, the coastwise merchandise statute often called the “Jones Act,” provides in pertinent part the following: No merchandise...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 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. The third proviso to 46 U.S.C. App. § 883 provides the following: [T]his section shall not apply to merchandise transported between points within the continental United States, including Alaska, over through routes heretofore or hereafter recognized by the Surface Transportation Board for which routes rate tariffs have been or shall hereafter be filed with the Board when such routes are in part over Canadian rail lines and their own or other connecting water facilities. We have held that “over Canadian rail lines” means over rail trackage in Canada and that “their own or other connecting water facilities” means water facilities covered by a through route regardless of whether those facilities connect directly with the Canadian rail line covered by that through route. In addition we have found that the legality of a proposed movement is not defeated merely because a statutory element is the filing of a rate tariff with the Interstate Commerce Commission (now the Surface Transportation Board) and the commodity to be transported is exempted under Agency rules from such rate requirements. See Headquarters Ruling (HQ) 112085, dated March 10, 1992. You have provided letters from Canadian Pacific Railway and Burlington Northern Santa Fe, which state that the commodities to be transported have been deregulated, and that the Surface Transportation Board no longer requires the rate filing for such commodities. Assuming that this information is correct, the transportation falls within the scope of the third proviso to 46 U.S.C. App. § 883, and thus would not violate the coastwise merchandise statute. HOLDING: Transportation of the metal concentrates is not in violation 46 U.S.C. App. § 883 since it falls within the scope of the third proviso to that statute. Sincerely, Jerry Laderberg Chief Entry Procedures and Carriers Branch