Coastwise Trade; Cable-Laying; 46 U.S.C. App. § 883

HQ 114637 March 18, 1999 VES-3-01-RR:IT:EC 114637 GEV CATEGORY: Carriers George H. Hearn, J.D. 1 Whitehall Street, Suite 1900 New York, New York 10004 RE: Coastwise Trade; Cable-Laying; 46 U.S.C. App. § 883 Dear Mr. Hearn: This is in response to your letter dated March 11, 1999, on behalf of your client, AT&T, regarding a proposed cable-laying operation. You request confirmation that neither of the scenarios set forth below would require a waiver of 46 U.S.C. App. § 883. Our ruling in this matter is set forth below. FACTS: Scenario 1 The M/V DOCK EXPRESS 20, a Dutch-flag, heavylift, cable-laying vessel would load into on-board pans, 16,000 miles of fiber optic submarine cable at its place of manufacture in New Hampshire, and proceed to a west coast Canadian port where it will spool the shore end of the cable (two hundred kilometers in length) into a pan on-board another cable-laying, U.S.-flag vessel, the M/V GLOBAL SENTINELL. The M/V DOCK EXPRESS 20 will then sail to a point just beyond the territorial waters of the State of Oregon and commence laying a trans-Pacific cable. As soon thereafter as the State of Oregon issues the necessary environmental clearances, the M/V GLOBAL SENTINELL would proceed to lay the two hundred kilometers of shore end cable from Brandon, Oregon, to the point beyond the territorial waters of Oregon where it would be joined to the trans-Pacific cable being layed by the M/V DOCK EXPRESS 20. Scenario 2 Same factual situation as above, except that the M/V DOCK EXPRESS 20 places the two hundred kilometers of cable in a warehouse in a west coast Canadian port where it would remain until the necessary environmental clearances are received. The cable would then be loaded on-board the M/V GLOBAL SENTINELL to be layed and joined to the trans-Pacific cable.  - 2 - ISSUE: Whether the use of a non-coastwise-qualified vessel in either of the above-described scenarios is violative of 46 U.S.C. App. § 883. LAW AND ANALYSIS: Title 46, United States Code Appendix, § 883 (46 U.S.C. App. § 883, the merchandise coastwise law often called the "Jones Act"), provides in part, that no merchandise shall 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 one that is coastwise-qualified (i.e., U.S.-built, owned and documented). Pursuant to title 19, United States Code, § 1401(c) (19 U.S.C.§1401(c)), the word "merchandise" is defined as "...goods, wares and chattels of every description, and includes merchandise the importation of which is prohibited." The coastwise laws generally apply to points in the territorial sea, 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, in cases where the baseline and the coastline differ. With respect to the laying of cable, the Customs Service has long-held that the sole use of a non-coastwise-qualified vessel to lay cable between points in the United States or in international waters does not violate 46 U.S.C. App. § 883. The rationale for this holding is that such cable is not only laid, and not "transported," between points in the United States, but it is also being used in furtherance of the primary mission of the cable-laying vessel and is therefore similar to vessel equipment. (Customs ruling letter 110402, dated April 18, 1989) In regard to the two scenarios under consideration, neither has Jones Act implications. The cable-laying activities of both vessels not only do not constitute coastwise trade as discussed above, in neither scenario is there a laying of cable between United States points. In addition, the use of the M/V DOCK EXPRESS 20 to transport two hundred kilometers of fiber optic submarine cable between New Hampshire and a west coast Canadian port (where it would either be off-loaded onto the M/V GLOBAL SENTINELL or placed in a warehouse) is not a transportation of merchandise between points embraced within the coastwise laws. Consequently, whether that vessel is coastwise-qualified or not (we note it is U.S.-flagged) is irrelevant. Furthermore, the subsequent movement of the aforementioned cable on-board the M/V GLOBAL SENTINELL to Oregon does not involve an unloading at a coastwise point for purposes of the Jones Act but rather a commencement of the aforementioned cable-laying operations.  - 3 - HOLDING: The use of a non-coastwise-qualified vessel in either of the above-described scenarios is not violative of 46 U.S.C. App. § 883. Sincerely, Jerry Laderberg Chief Entry Procedures and Carriers Branch