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

HQ H187237 January 6, 2012 VES-3-24-OT:RR:BSTC:CCI H187237 DAC CATEGORY: Carriers Mr. Alex F. Lankford III Hand Arendall LLC RSA Tower 11 North Water Street, Suite 30200 Mobile, Alabama 36602 RE: Coastwise Transportation; lightering; coal; 46 U.S.C. § 55102 Dear Mr. Lankford III: This letter is in response to your correspondence dated September 23, 2011, on behalf of your client, Drummond Coal Sales, Inc. (“Drummond”), in which you inquire about whether a non-coastwise-qualified foreign flagged “deep sea” vessel may engage in a “topping off” operation whereby the vessel would transport cargo from a U.S. point to a point well outside the three nautical mile territorial line, i.e. outside U.S. territorial waters, and then be “topped off” with coal lightered from a non-coastwise qualified foreign flagged “shuttle” vessel. This “shuttle” vessel transportation to the “deep sea” vessel will be performed several times so that the “deep sea” vessel may be fully loaded to optimum capacity for carriage to foreign ports. You ask whether this operation may be conducted without violating 46 U.S.C. § 55102. Our ruling on your request is set forth below. FACTS Drummond Coal Sales, Inc. (“Drummond”), requests a ruling as to whether a non-coastwise-qualified foreign flagged “deep sea” vessel may engage in a “topping off” operation whereby the vessel would transport cargo from a U.S. point to a point well outside the three nautical-mile line seaward of the territorial sea baseline and then be “topped off” with coal lightered from a non-coastwise qualified foreign flagged “shuttle” vessel, without a violation of 46 U.S.C. § 55102. The transportation by the “shuttle vessel” will take approximately four deliveries to the “deep sea” vessel in order to load the “deep sea” vessel up to its optimum cargo carrying capacity. In this manner, the “deep sea” vessel may be fully loaded for carriage to foreign ports. We note that none of the cargo carried by the “shuttle” vessel is to be carried to coastwise points, and none of the cargo carried by the “deep sea” vessel is to be 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 relevant section of the Jones Act, 46 U.S.C. § 55102, (formerly codified at 46 U.S.C. App. § 883), 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 CFR §§ 4.80, 4.80b; 46 CFR § 67.19). 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). See also 46 U.S.C. § 55105. 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 CFR § 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 (HQ) H015481, dated October 12, 2007, pertaining to substantially similar 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 HQ 110127, (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). See also HQ H057821, (May 18, 2009). Accordingly, the transportation described above in the coal lightering operation currently under consideration does not constitute a violation of 46 U.S.C. § 55102. HOLDING The proposed transportation operation described above does not constitute an engagement in the coastwise trade for purposes of 46 U.S.C. § 55102, and therefore would not violate 46 U.S.C. § 55102. Sincerely, George Frederick McCray Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Immigration Branch Office of International Trade, Regulations & Rulings U.S. Customs and Border Protection