Coastwise Trade; Jones Act; 46 U.S.C. §§ 55102 and 55107; Intermodal Chassis; 19 C.F.R. § 4.93(a) and (b)(2008); Stevedoring Equipment

HQ H029635 September 2, 2008 VES-3-17-OT:RR:BSTC:CCI H029635 LLB CATEGORY: Carriers U.S. Customs and Border Protection Attn: Julian D. Warren, Port Director 5707 Huntsman Road, Suite 104 Richmond, Virginia 23250 RE: Coastwise Trade; Jones Act; 46 U.S.C. §§ 55102 and 55107; Intermodal Chassis; 19 C.F.R. § 4.93(a) and (b)(2008); Stevedoring Equipment Dear Mr. Warren: This is response to your electronic correspondence dated May 30, 2008, in which you forwarded the May 20, 2008, electronic mail of Mr. John Gillies, Equipment/Claims Manager, International Container Line (ICL). In his electronic mail, Mr. Gillies requested your office to determine whether it is legal to transport intermodal chassis, which the requestor and your office refer to as "stevedoring equipment," between Richmond, Virginia and Eddystone, Pennsylvania. Based on the foregoing, we are construing Mr. Gillies’ electronic mail as a request for internal advice pursuant to 19 C.F.R. § 177.11(b)(2) regarding the application of the coastwise laws to the proposed transaction; however, because Mr. Gillies’ request is not based on a current transaction, we are construing your electronic correspondence as a request for internal advice pursuant to 19 C.F.R. § 177.11(a). Our decision follows. FACTS The following facts are from your May 30, 2008, electronic mail and supplemental information provided by ICL in its August 18 and 20, 2008, electronic mail to this office. ICL proposes to use its Liberian-flagged vessels to lade and unlade intermodal chassis, by crane, for transport between Richmond, Virginia and Eddystone, Pennsylvania. ICL owns some the intermodal chassis; however, most of the chassis are leased. Some of ICL’s customers are charged a chassis surcharge. ISSUE Whether the coastwise transportation of intermodal chassis by foreign-flagged vessels violates 46 U.S.C. § 55102. 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)(5), and the regulations promulgated thereunder, specifically,19 C.F.R. § 4.93(a)(2)(2008), the prohibition contained within 46 U.S.C. § 55102 does not apply to stevedoring equipment and material. To qualify for the exemption from § 55102, the stevedoring equipment and material must be "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 must be "transported without charge for use in the handling of cargo in foreign trade." See 19 U.S.C. § 55107(b)(2), et seq. and 19 C.F.R. § 4.93 (a)(2). These exemptions apply to vessels of foreign nations that are found to extend reciprocal privileges to the vessels of the United States. See 19 U.S.C. § 55107(c) and 19 C.F.R. § 4.93 (a)(2), n. 125. 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 Liberia. CBP has determined that items qualifying as stevedoring equipment are limited to equipment that is necessary to unlade cargo from its place of stowage aboard a vessel to its first place of rest on the shore, or to lade cargo from its last place of rest on shore to its place of stowage aboard a vessel. See HQ 115587 (Feb. 26, 2002), citing Treas. Dec. 91-87; see also e.g. HQ 109629 (July 21, 1988) (holding that cranes used in the loading and unloading of cargo in foreign trade have been held to be stevedoring equipment); HQ H011462 (Aug. 29, 2007) (holding that equipment necessary to remove residue cargo so that cargo holds are suitable for future loads is stevedoring equipment). The intermodal chassis in question are not being used to lade or unlade cargo to and from vessels, rather, the chassis themselves are cargo. In fact, in order for the chassis to be laden and unladen from the vessels, a crane must be used. As such, the intermodal chassis are not stevedoring equipment pursuant to 46 U.S.C. 55107 and would be considered merchandise the movement of which by foreign-flagged vessels would be in violation of 46 U.S.C. 55102. HOLDING The coastwise transportation of intermodal chassis by foreign-flagged vessels violates 46 U.S.C. § 55102. Sincerely, Glen E. Vereb Chief Cargo Security, Carriers and Immigration Branch