Coastwise Trade; Vessel Sharing Agreement; 46 U.S.C. §§ 55102 and 55107; Empty Cargo Containers; 19 C.F.R. § 4.93(a) and (b)(2008); HQ H011299 (Oct. 4, 2007); HQ 116382 (Jan. 25, 2005); and HQ 116331 (Oct. 13, 2004); HQ 114729 (Aug. 3, 1999); HQ 116382 (Jan. 25, 2005); HQ 115732 (Sept. 23, 2002); HQ 115891 (Dec. 21, 2003); and HQ 115863 (Jan. 9, 2003).

HQ H026819 June 10, 2008 VES-3-17-OT:RR:BSTC:CCI H026819 LLB CATEGORY: Carriers Timothy B. Shea, Esquire Nemirow Hu & Shea, PC 1629 K Street, N.W., Suite 500 Washington, D.C. 20006 RE: Coastwise Trade; Vessel Sharing Agreement; 46 U.S.C. §§ 55102 and 55107; Empty Cargo Containers; 19 C.F.R. § 4.93(a) and (b)(2008); HQ H011299 (Oct. 4, 2007); HQ 116382 (Jan. 25, 2005); and HQ 116331 (Oct. 13, 2004); HQ 114729 (Aug. 3, 1999); HQ 116382 (Jan. 25, 2005); HQ 115732 (Sept. 23, 2002); HQ 115891 (Dec. 21, 2003); and HQ 115863 (Jan. 9, 2003). Dear Mr. Shea: This is in response to your correspondence of April 25, 2008, on behalf of your client, Compagnie Maritime d' Affretement-Compagnie Generale Maritime, S.A. (CMA-CGM), seeking a determination that the parties to the agreement described below qualify as joint vessel operators for purposes of the transportation of empty containers in the U.S. coastwise trade pursuant to 46 U.S.C. § 55107. Our decision follows. FACTS The following facts are from your April 25, 2008, correspondence, and the attachment thereto titled "Maersk Line/CMA CGM TA3 Space Charter Agreement", FMC Agreement No. 012037(dated April 2, 2008) (hereinafter "the Agreement"). CMA-CGM, a French corporation, and Maersk Line (Maersk), a Danish corporation, have entered into the foregoing agreement which provides for the "trade between the ports on the Atlantic Coast of the United States (Eastport, Maine to Key West, Florida range) and ports in France, Germany, the Netherlands and the United Kingdom (the "Trade"). See Art. 4 of the Agreement. The agreement authority of the respective parties is found in Article 5 of the Agreement and is discussed in further detail in the "Law and Analysis" section of this decision. ISSUE Whether under the terms of the agreement entered into by the parties, the parties might at all relevant times be considered to be vessel operators for transporting their owned or leased empty shipping containers for purposes of satisfaction of 46 U.S.C. § 55107. LAW AND ANALYSIS Pursuant to 46 U.S.C. § 55102(b), the merchandise coastwise law commonly referred to as 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 a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States (i.e., a coastwise-qualified vessel). Pursuant to 46 U.S.C. § 55107(a), and the regulations promulgated there under, specifically,19 C.F.R. § 4.93(a)(1)(2008), the prohibition contained within 46 U.S.C. § 55102 does not apply to the coastwise transportation of empty cargo vans, empty lift vans, or empty shipping tanks, and equipment for use with same. Further, the prohibition does not apply to empty barges specifically designed for carriage aboard a vessel and equipment (except propulsion equipment) for use with those barges, and certain empty instruments of international traffic. To qualify for the exemption from § 55102, the articles listed in 46 U.S.C. § 55107(a) and 19 C.F.R. § 4.93(a)(1) must be "owned or leased by the owner or operator of the vessel, and transported for its use in handling its cargo in foreign trade." See 46 U.S.C. § 55107(b)(1). In addition, the prohibition does not apply to stevedoring equipment and material which is "owned or leased by the owner or operator of the vessel or by the stevedoring company having [a] contract for the loading or unloading of the vessel" and the stevedoring equipment and material are "transported without charge for use in the handling of cargo in foreign trade." See id. at § 55107(b)(2), et seq. These exemptions apply to vessels of foreign nations that are found to extend reciprocal privileges to the vessels of the United States. Id. at § 55107(c). Pursuant to 19 C.F.R. § 4.93(b)(2), the nations that are entitled to the privileges provided by 46 U.S.C. § 55107 include France and Denmark. The key issue in our analysis of agreements involving multiple vessel owners or operating companies (also known as "Vessel Consortia", "Vessel Sharing Agreements"(VSAs), and "Joint Service Agreements.") to determine whether such agreements meet the requirements of 46 U.S.C. § 55107 frequently involves the degree of operational control of the vessel. HQ H011299 (Oct. 4, 2007); HQ 116382 (Jan. 25, 2005); and HQ 116331 (Oct. 13, 2004). It has been our long-standing position that slot or space charter arrangements do not fulfill minimal statutory requirements. See HQ 114729 (Aug. 3, 1999); HQ 116382 citing 115732 (Sept. 23, 2002) and 115891 (Dec. 21, 2003); and HQ 115863 (Jan. 9, 2003). In reviewing the VSAs in the foregoing cited ruling decisions, we note that there are several factors under which the agreements are formed, and the parties are governed, that indicate the members shared the operational control of the designated vessels. For example, the VSA members would jointly agree upon when, where and which vessels they would operate. They would also agree to cooperate in such matters as insurance, leases, sailing schedules, port calls, rate policies and the terms of service contracts, among other things. In addition, in some of those cases, the parties also pooled shore-side chassis and made them available for any of the members’ containers. In support of your assertion that the subject Agreement meets the requirements of 46 U.S.C. § 55107, you cite provisions of the Agreement that allow for joint negotiation of terminal operator and stevedore agreements, and for other matters including, port omissions involving cargo claims, insurance, force majeure, joint working procedures, oversized and dangerous cargoes. See Agreement, §§ 5.5 and 5.7. Although the foregoing provisions are indicative of certain provisions found in VSAs, these provisions are de minimus in comparison with the remaining provisions of the Agreement, as discussed below, which gives all of the operational authority to one party, e.g. Maersk. Not only does the Agreement acknowledge that the agreement between the parties is for a "slot charter hire", see § 5.1(a), the provisions in the Agreement support that, in fact, the Agreement is a slot charter agreement and not a vessel sharing agreement. Provision 5.1(b) of the Agreement provides that Maersk has the sole discretion to determine whether CMA CGM may move cargo and containers between ports in North Europe and the United States. Insofar as North Europe and the United States is the entire geographic scope of the Agreement, CMA-CGM has no discretion under the Agreement where it may move its cargo and containers when it uses Maersk vessels. Further, provision 5.2 of the Agreement provides that Maersk is responsible for all operational aspects of the vessel which includes determining port omission, rescheduling, and discharge and load of cargo due to force majeure. Accordingly, upon examining the provisions of the agreement presented in this case, particularly provisions 5.1(a) and (b) and 5.2, we do not find that the basic facets of joint operational control are present in the agreement. Accordingly, we believe that the provisions establish that the parties have a slot or space charter agreement which as stated above, does not fulfill the minimal statutory ownership or operational requirements of a valid vessel sharing agreement. As such, neither party to the Agreement may transport aboard any vessel listed in that agreement empty shipping containers, owned or leased by another party to the agreement, for the purpose of handling the latter’s cargo in the foreign trade without consequence under 46 U.S.C. § 55107. HOLDING The agreement under examination, as described above, does not convey the status of vessel operator on each of the individual signatories and, as such, their empty containers may not be transported coastwise aboard any of the vessels involved without violation of 46 U.S.C. § 55102. Sincerely, Glen E. Vereb Chief Cargo Security, Carriers and Immigration Branch