Coastwise Transportation; 46 U.S.C. § 55102

HQ H046797 December 12, 2008 VES-3-02-OT:RR:BSTC:CCI H046797 JLB CATEGORY: Carriers Mr. Martin F. Casey Casey & Barnett, LLC 317 Madison Avenue, 21st Floor New York, New York 10017 RE: Coastwise Transportation; 46 U.S.C. § 55102 Dear Mr. Casey: This letter is in response to your correspondence dated December 12, 2008, withdrawing your letter of December 10 and requesting a ruling on behalf of your client, Alcan, on whether the proposed scenarios for unlading off-specification petroleum coke constitute a violation of the Jones Act, 46 U.S.C. § 55102. Our ruling on your request follows. FACTS Alcan loaded calcined delayed petroleum coke onboard the non-coastwise-qualified M/V ONEGO FORESTER (“the vessel”) in late August 2008 in Chalmette, Louisiana. The vessel was supposed to proceed to Blyth, United Kingdom to discharge the cargo, however, Hurricane Gustav struck and caused damage to the vessel. Since that time, the vessel has been in Charleston, South Carolina undergoing repairs. Additionally, after the cargo was loaded onboard, it was determined that the petroleum coke was off-specification and the purchaser in Blyth, United Kingdom rejected the cargo. The parties have now agreed to return the cargo to the original seller and wish to discharge the cargo at the original dock in Chalmette, Louisiana on or about December 14, 2008. Given that the dock does not contain the equipment necessary to discharge the cargo from the vessel, you wish to utilize floating cranes. You present two different alternatives for discharging the cargo. The first alternative you present is to unlade the cargo directly onto the original dock using the floating cranes. Your second alternative is to unlade the cargo onto a barge in the harbor by use of the floating cranes and then to subsequently unlade the cargo from the barge onto the dock. ISSUE Whether the transportation of merchandise by a non-coastwise-qualified vessel as described in the above scenarios constitutes a violation of 46 U.S.C. § 55102? LAW AND ANALYSIS The Jones Act, former 46 U.S.C. App. § 883 recodified as 46 U.S.C. § 55102, pursuant to P.L. 109-304 (October 6, 2006), states that “a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via a foreign port” unless the vessel was built in and documented under the laws of the United States and owned by persons who are citizens of the United States. See also 19 C.F.R. §§ 4.80, 4.80b. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise-qualified.” Pursuant to 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, and monetary instruments as defined in section 5312 of Title 31.” The coastwise laws generally apply to points in the territorial sea, which is 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. U.S. Customs and Border Protection (“CBP”) has long held that the use of a stationary, non-coastwise-qualified crane vessel to load and unload cargo is not coastwise trade and does not violate the coastwise laws provided that any movement of merchandise is effected exclusively by the operation of the crane and not by movement of the vessel, except for necessary movement which is incidental to a lifting operation while it is taking place. See Headquarters Ruling Letter 116302, dated September 15, 2004; Headquarters Ruling Letter 116225, dated May 6, 2004; Headquarters Ruling Letter 113858, dated April 4, 1997. Accordingly, the use of stationary floating cranes merely to unlade the merchandise from the vessel to either the dock or the barge does not constitute a violation of 46 U.S.C. § 55102. The CBP Regulations promulgated under the authority of 46 U.S.C. § 55102 provide that a coastwise transportation of merchandise takes place when merchandise laden at a coastwise point is unladen at another coastwise point, regardless of origin or ultimate destination. See 19 C.F.R. § 4.80b(a). These regulations further clarify the term coastwise points as “including points within a harbor.” See 19 C.F.R. § 4.80(a). In addition, CBP has narrowly construed what constitutes the same coastwise point. In Headquarters Ruling Letter W115601, dated February 28, 2002, CBP found merchandise can be laden and unladen at the same location without violating 46 U.S.C. § 55102 but if the merchandise was unladen even a vessel width from the dock where it is laden (with no contact with the dock at any point) then a violation of 46 U.S.C. § 55102 has occurred. You have presented two scenarios to return the merchandise to the original receiver’s premise in Chalmette, Louisiana using the subject vessel. Your first proposal would be to return the cargo to the dock, from which it was originally laden, through the use of the floating cranes. Given that the merchandise was originally laden at this dock, it may be unladen directly onto the same dock without violating 46 U.S.C. § 55102. The second proposal would be to use a barge to facilitate the movement of the cargo onto the original dock by using floating cranes to unlade the merchandise from the subject vessel onto the barge and then to subsequently unlade the merchandise from the barge onto the dock. This would result in a violation of 46 U.S.C. § 55102 since the cargo would be unladen onto the barge and not the original point of lading. The navigation laws (including the Jones Act) can only be waived under the authority provided by 46 U.S.C. § 501. This statute provides, in pertinent part, that: [w]hen the head of an agency responsible for the administration of the navigation or vessel-inspection laws considers it necessary in the interest of national defense, the individual may waive compliance with those laws to the extent, in the manner, and on the terms the individual prescribes. [Emphasis added] As it is readily apparent that the case in question is not related to national defense, a waiver is unavailable. Consequently, the second proposed coastwise transportation of the subject merchandise is in violation of 46 U.S.C. § 55102. HOLDING The transportation of merchandise by a non-coastwise-qualified vessel as described in the above scenarios constitutes a violation of 46 U.S.C. § 55102 with respect to Scenario Two but not Scenario One. Sincerely, Glen E. Vereb, Chief Cargo Security, Carriers and Immigration Branch