Tugboat; User Fees; 19 CFR 24.22

HQ H027568 September 5, 2008 VES-3-02:OT:RR:BSTC:CCI H027568 ALS CATEGORY: Carriers Mr. Jesse Ruth Boarding Agent B.R. Anderson & Company 1011 S.W. Klickitat Way, Suite 203 Seattle, Washington 98134 RE: Tugboat; User Fees; 19 CFR 24.22 Dear Mr. Ruth: This is in response to your correspondence, dated May 6, 2008, requesting clarification as to whether a vessel that is constructed as a tugboat is at all times subject to user fees assessed by Customs and Border Protection (CBP) on behalf of the Agricultural Quarantine Inspection (AQI) program of the Animal and Plant Health Inspection Service (APHIS) under the Department of Agriculture (USDA). Our ruling is set forth below. FACTS: The vessel in question is owned and operated by a tugboat business, and is constructed and generally used as a tugboat, as that term is used in 46 CFR 174. The vessel is rated at 125 net tons. On a recent voyage, the vessel departed Seattle, Washington with a barge in tow for arrival in Canada. Upon arrival in Canada, the vessel was summoned to return to Tacoma, Washington to tow another barge to Canada. Upon arrival at Tacoma by itself without a tow, CBP officials informed the master of the vessel that he would be liable for user fees pursuant to 7 CFR 354.3(b)(1) and 19 CFR 24.22(b)(1). You state that CBP officials told the vessel master that since the vessel was not towing a barge at the time of arrival it was not considered a tugboat. ISSUE: Whether a vessel that is constructed and generally operated as a tugboat is exempted from user fees assessed pursuant to 7 CFR 354.3(b)(1) and 19 CFR 24.22(b)(1) in instances when it arrives by itself in the United States. LAW AND ANALYSIS: Pursuant to 7 CFR 354.3(b)(1), the master, licensed deck officer, or purser of a commercial vessel of 100 net tons or more that is either subject to inspection and required to make entry, or is a United States-flag vessel proceeding coastwise under 19 CFR 4.85, is required to proceed to CBP and pay an AQI user fee upon arrival in the United States. The requirement to pay the AQI user fee is also provided for under 19 CFR 24.22(b)(1), which specifically notes that a fee in the amount of $437 shall be tendered. As a vessel arriving from a foreign port, the vessel at issue would be required to make formal entry. See 19 CFR 4.3(a)(1). Pursuant to 7 CFR 354.3(b)(2)(ii), any vessel that is being used solely at the time of arrival as a tugboat is exempted from paying the AQI user fee. This exemption is also provided for under 19 CFR 24.22(b)(4)(ii), which includes the exact same language as section 354.3(b)(2)(ii). Under 46 CFR 174.140 and 174.145, special rules pertaining to tugboats and towboats are provided. However, neither of these provisions provides a definition of “tugboat.” While the term “tugboat” itself does not appear to be specifically defined under law, pursuant to 46 U.S.C. § 2101(40), the term “towing vessel” is defined as “a commercial vessel engaged in or intended to engage in the service of pulling, pushing, or hauling along side , or any combination of pulling, pushing, or hauling along side.” A United States District Court has recognized the term “towing vessel” as interchangeable with the term “tugboat.” See United States v. American Waterways Operators International Association of Independent Tank Owners, et. al, 440 F. Supp. 2d 24 (D. Mass. 2006). As noted above, you state that the vessel at issue, assuming that it meets the definition of “towing vessel” in the previous paragraph, will arrive in the United States while not engaged in any towing activities. While we recognize that the definition of “towing vessel” includes the mere intention to engage in towing activities, we must focus our analysis on the plain meaning of section 354.3(b)(2)(ii) and section 24.22(b)(4)(ii) with respect to the assessment of the user fees in question. To be eligible for the exemption, these provisions require that a tugboat be used solely as such at the time of arrival. To the extent that there is any question about the meaning of this qualifier, CBP (as the former “Customs Service”) clarified this matter in responding to a comment received from a notice of proposed rulemaking published in the Federal Register. As part of the final rule that promulgated section 24.22 as a regulation, CBP in its response stated that “[i]t should be noted that, as stated in the Tax [Reform Act of 1986] Conference Report, this exemption applies only when the tugboat is actually propelling a barge or accompanying a vessel (because the barge or vessel would be subject to an arrival fee) and thus does not apply to a tugboat which arrives alone.” (Emphasis added.) 58 Fed. Reg. 54271, 54274 (October 21, 1993). Therefore, notwithstanding the definition of “towing vessel” and a vessel’s construction and general function as a tugboat, the master of any such vessel that is not being used as stated above at the time of arrival in the United States does not qualify for the exemption and must pay the AQI user fee. HOLDING: A tugboat that arrives in the United States alone not propelling a barge or accompanying a vessel does not qualify for the exemption provided for under 7 CFR 354.3(b)(2)(ii) and 19 CFR 24.22(b)(4)(ii), and is required to pay AQI user fees upon arrival as specifically provided for in 7 CFR 354.3(b)(1) and 19 CFR 24.22(b)(1). Sincerely, Glen E. Vereb Chief Cargo Security, Carriers and Immigration Branch