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

HQ H057821 May 18, 2009 VES-3-24-OT:RR:BSTC:CCI H057821 JLB CATEGORY: Carriers Mr. Russell R. Williams Gaspich & Williams PLLC 1809 Seventh Ave, Suite 609 Seattle, Washington 98101 RE: Coastwise Transportation; lightering; 46 U.S.C. § 55102 Dear Mr. Williams: This letter is in response to your correspondence dated April 16, 2009, on behalf of your client, Teck Alaska Barges, Inc. (“TAB”), in which you inquire about whether non-coastwise-qualified barges may engage in a lightering operation whereby the barges transport cargo from a U.S. point to ocean-going vessels anchored outside the U.S. territorial water for carriage to foreign ports without violating 46 U.S.C. § 55102. Our ruling on your request follows. FACTS TAB is a wholly-owned subsidiary of Teck Alaska, Inc., a cargo exporter. TAB wishes to purchase two barges, the NOATAK and KIVALINA (“the barges”), which currently have coastwise endorsements. However, since TAB does not qualify as a U.S. citizen for purposes of obtaining a coastwise endorsement, it intends to purchase the barges and document them in the United States with registry endorsements only. The barges are utilized, in the summer months, to lighter zinc and lead concentrates from a pier in Kivalina, Alaska to ocean-going freighters anchored beyond the U.S. territorial sea. The ocean-going freighters deliver the concentrates to ports in Asia and Canada. None of the concentrate lightered by the barges is carried to coastwise points. ISSUE Whether the proposed operation constitutes an engagement in coastwise trade for purposes 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). 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). CBP has previously determined that the movement described in this case does not constitute a violation of 46 U.S.C. § 55102. In Headquarters Ruling Letter H015481, dated October 12, 2007, pertaining to the same facts as presented in the current case, merchandise was laden on a non-coastwise-qualified vessel in Kivilina, Alaska, a coastwise point, and unladen at a point outside of the U.S. territorial waters onto a non-coastwise-qualified vessel destined for various points in Asia and Canada, where the merchandise was unladen. This movement was not in violation of 46 U.S.C. § 55102 since the merchandise was not unladen at a U.S. coastwise point. See also Headquarters Ruling Letter 110127, dated April 5, 1989 (the towing of a barge to a point outside U.S. territorial waters and the subsequent lightering by a foreign-flag vessel is not a movement in the coastwise trade). Consequently, the movement of the barges in the lightering operation currently under consideration does not constitute a violation of 46 U.S.C. § 55102. HOLDING The proposed operation described above does not constitute an engagement in the coastwise trade for purposes of 46 U.S.C. § 55102. Sincerely, Glen E. Vereb, Chief Cargo Security, Carriers and Immigration Branch