Coastwise trade; Jones Act; 46 U.S.C. App. § 883; 19 CFR 4.80b

HQ 116690 September 6, 2006 VES-3-07-RR:BSTC:CCI 116690 IDL CATEGORY: Carriers Jason Cantal Account Manager Freight Logistics Services 3440 Carillon Point Kirkland, Washington 98033 Re: Coastwise trade; Jones Act; 46 U.S.C. App. § 883; 19 CFR 4.80b Dear Mr. Cantal: This is in response to your letter, dated June 25, 2006, in which you request a ruling regarding the coastwise transportation of seafood. Our response on this matter is set forth below. FACTS: In the ordinary course of its business, your client utilizes a U.S.-flagged fishing vessel to catch and process seafood (“merchandise”) in the Bering Sea, before offloading in Dutch Harbor, Unalaska, a U.S. territory. Your company coordinates the transportation of the merchandise from Dutch Harbor, as bulk cargo or in containers, to customers on the east coast of the United States, utilizing U.S.-flagged vessels that pass through the Panama Canal. Due to increasing delays and rising costs of transport operations via the Panama Canal, your company is contemplating utilizing foreign-flagged vessels to bypass the Panama Canal via ground transportation routes. Specifically, you propose that a U.S.-flagged fishing vessel would load the merchandise onto a foreign-flagged vessel in U.S. waters, which would then transport the merchandise to San Salvador, El Salvador. The merchandise would then be transported by truck to Santo Tomas, Mexico, and then loaded onto another foreign-flagged vessel for transportation to the east coast of the United States. ISSUE: Whether the proposed use of foreign-flagged vessels to transport merchandise, as described above, would violate 46 U.S.C. App. § 883? LAW AND ANALYSIS: U.S. Customs and Border Protection (CBP) administers the coastwise laws, including 46 U.S.C. App. § 883 (46 U.S.C. App. § 883, the merchandise coastwise law often called the “Jones Act”), which 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). In interpreting section 883, CBP 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, 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. It should be noted, however, that as they pertain to waters such as the Great Lakes, the territorial waters of the United States include those waters adjacent to the coast of the United States extending to the United States-Canada international boundary (See HQ 112023 GEV, dated December 23, 1991). Section 4.80b(a), CBP Regulations (19 CFR 4.80b(a)), promulgated pursuant to the aforementioned statute, provides, in pertinent part, as follows: A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point…” (emphasis added) Accordingly, the proposed transportation of the merchandise from U.S. waters in Alaska to the east coast of the United States would constitute a coastwise transportation, and the use of foreign-flagged vessels for any part of the transportation would violate 46 U.S.C. App. § 883. HOLDING: The proposed use of foreign-flagged vessels to transport merchandise, as described above, would violate 46 U.S.C. App. § 883. Sincerely, Glen E. Vereb Chief Cargo Security, Carriers and Immigration Branch