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

HQ H047936 December 30, 2008 VES-3-02-OT:RR:BSTC:CCI H047936 JLB CATEGORY: Carriers Mr. Jeremy S. McBride Southport Agencies, Inc. 2700 Lake Villa Drive, Suite 180 Metairie, Louisiana 70002 RE: Coastwise Transportation; 46 U.S.C. § 55102 Dear Mr. McBride: This letter is in response to your correspondence dated December 29, 2008, requesting a ruling on whether off-specification ethylene glycol may be unladen at its original point of lading without violating the Jones Act, 46 U.S.C. § 55102. Our ruling on your request follows. FACTS On October 28, 2008, the M/T BOW ENGINEER loaded 6,596.868 MT of ethylene glycol at Dow Taft in St. Charles, Louisiana. The cargo was supposed to be discharged at Santos, Brazil, however, upon arrival in Brazil, it was determined that the cargo was off-specification. The seller, Dow Chemical, requested that the cargo be returned to their Taft facility where they wish to discharge the cargo at the original dock where it was laden in St. Charles, Louisiana on January 5, 2009. ISSUE Whether the transportation of merchandise by a non-coastwise-qualified vessel as described above 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.” 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. 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.” For purposes of the Jones Act, merchandise also includes “valueless material.” See 46 U.S.C. § 55102(a)(2). The U.S. Customs and Border Protection (“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 state that you will unlade the merchandise at the dock from which it was originally laden. Accordingly, given that the merchandise was originally laden at this dock, it may be unladen at the same dock without violating 46 U.S.C. § 55102. HOLDING The transportation of merchandise by a non-coastwise-qualified vessel as described above does not constitute a violation of 46 U.S.C. § 55102. Sincerely, Glen E. Vereb, Chief Cargo Security, Carriers and Immigration Branch