46 U.S.C. § 55102; 19 C.F.R. § 4.80b; Continuity of Transportation; Coastwise Transportation.

H358624 CATEGORY: Carriers Mr. Constantine G. Papavizas Winston & Strawn LLP 1901 L Street, NW Washington, D.C. 20036 RE: 46 U.S.C. § 55102; 19 C.F.R. § 4.80b; Continuity of Transportation; Coastwise Transportation. Dear Mr. Papavizas: This letter is in response to your correspondence dated March 5, 2026 , on behalf of your client, […………… …………………], in which you inquire about whether your client’s use of a non-coastwise-qualified vessel to transport merchandise between United States (“U.S.”) coastwise points would constitute a violation of the U.S. coastwise laws.1 Our decision follows. FACTS The following facts are from your ruling request, supporting documents, and e-mails to this office dated March 5, 2026. On [……………..], [……………………… ………………… .] entered into a contract of affreightment with [….] for transport aboard the […………… …... ] (“the Vessel”), a U.S.-flag, non-coastwise-qualified vessel, to transport [……………………………………………………… ]. Of the [……………………… 1 You have asked this office for confidential treatment of bracketed information. CBP Regulations at 19 C.F.R. § 177.2(b)(7) provide that the requester of a ruling from our office may ask that privileged or confidential commercial or financial information supplied for purposes of preparing the requested ruling not be disclosed. Such requests will be considered if the information is clearly identified and the reasons for requesting that information not be disclosed are provided. If this office receives a Freedom of Information Act request for your submission, Regulations at 6 C.F.R. § 5.12, et seq. regarding the disclosure of business information provide that the submitter of business information will be advised of receipt of a request for such information whenever the business submitter has in good faith designated the information as commercially or financially sensitive information. We accept your request for confidential treatment as a good faith request. 1 ……………………………………………………………………………………….. ……………………… ………………..]. The bills of lading indicate that the merchandise was intended for the […………………….].2 On [………………………….], advised […] that [………………………………. …….]3 [……………………………………………………………………………………… ……… .4 ……………… ] On [……………………………………………………………….. 5 [……………………………….]].6 …………………………] According to your ruling request the Vessel is expected to arrive at [………………………………………. .]. At this time, [……………….] cannot provide the exact location in […………………….] where the merchandise will be offloaded, but you expect some or all the cargo will be offloaded at a berth other than the one at which it was loaded. ISSUE Whether the transportation of the subject [………………………………… ……………………], two coastwise points, to [……… …………..], another coastwise point, other than the point of lading, constitutes a violation of the coastwise laws. LAW AND ANALYSIS The coastwise law applicable to the transportation of merchandise, known as the Jones Act, is found at 46 U.S.C. § 55102,7 and provides in pertinent part: Except as otherwise provided in this chapter or chapter 121 of this title, 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— (1) is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and (2) has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement. Pursuant to 46 U.S.C. § 55102, 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 2 Exhibit A, […………………………………………………………………………………………………. …….]. 3 […………………………………………………………………………………………………………. …………………………………………………..]. 4 Exhibit B, [……………………………………………]. 5 Your ruling request states that […………………..] is permitted to redirect the shipment under the terms of the contract. 6 Exhibit C, [……………………………………..]. 7 Formerly 46 U.S.C. App. § 883. See Pub. L. 109-304 (Oct. 6, 2006). 2 coastwise laws apply, either directly or via a foreign port, unless the vessel holds a coastwise endorsement. 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. 33 C.F.R. § 2.22(a)(2). The Jones Act specifically prohibits the coastwise transportation of “merchandise” between coastwise points by non-coastwise qualified vessels. 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.” Also, the Jones Act provides, at 46 U.S.C. § 55102(a): “[m]erchandise includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material.” As such, any cargo, regardless of value, is generally considered merchandise for the purpose of the Jones Act. Customs and Border Protection (“CBP”) Regulation 19 C.F.R. § 4.80b(a) provides in relevant part: A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point, regardless of the origin or ultimate destination of the merchandise. In The Bermuda, 70 U.S. 514, 553 (1865), the Supreme Court held that a transportation from one coastwise point to another remains continuous, so long as intent remains unchanged, no matter what stoppages or transshipments intervene. The Court went on to reaffirm the longstanding rule that: [E]ven the landing of goods and payment of duties does not interrupt the continuity of the voyage of the cargo, unless there be an honest intention to bring them into the common stock of the country. If there be an intention, either formed at time of original shipment, or afterwards, to send the goods forward to an unlawful destination, the continuity of the voyage will not be broken, as to the cargo, by any transactions at the intermediate port.8 CBP has held that a break in the continuity of transportation can occur under a variety of circumstances, freeing a non-coastwise-qualified vessel from liability for what would otherwise have been a violation of the coastwise laws for the transportation of merchandise between U.S. coastwise points. In H256883, CBP held that the continuity of transportation was broken when a non-coastwise qualified vessel carrying a shipment of phenol intended for unlading in Argentina was rejected by the consignee due to mistaken contamination and was offloaded at another U.S. coastwise point. HQ H256883 (Sept. 16, 2014). In H167437, CBP held that the continuity of transportation was broken when a shipment of chemicals intended for unlading in Peru was rejected after a bulkhead cracked on the non-coastwise qualified 8 Id. at 554 (1865). 3 vessel during transportation and cross-contaminated the shipment. HQ H167437 (June 17, 2011). In H138236, CBP held that the continuity of transportation was broken when a non- coastwise qualified vessel transporting dry soybeans to China was struck by another vessel, took serious damage, and had to return to a second coastwise point to unlade its cargo to undergo repairs. HQ H138236 (Dec. 15, 2010). Additionally, CBP has consistently held that the continuity of transportation can be broken by the actions of a non-party foreign government in a number of circumstances. For instance, it has been CBP’s longstanding position that a break in the continuity of transportation occurs if merchandise is rejected by a foreign government at the port of destination, if there was an honest intent to introduce the merchandise into the common stock of another country at the time of exportation. In H040478, CBP held that the continuity of transportation was broken when the Dutch authorities rejected a shipment of slurry intended for unlading in the Netherlands, finding that the slurry was hazardous waste. HQ H040478 (Dec. 2, 2008). Additionally, in H295239 CBP held that the continuity of transportation was broken when the Italian government refused entry of a shipment of Number 1 Northern Spring Wheat following a failed vomitoxin test. HQ H295239 (Sept. 4, 2018). Similarly, in HQ 116518 (Aug. 9, 2005), corn seed that was shipped to Japan was rejected by the Japanese government after testing revealed the presence of a trait known as Bt10, which was not approved for importation into Japan. We held that the continuity of transportation was broken when the merchandise failed foreign government inspection. See also HQ 116616 (Feb. 27, 2006), HQ 116557 (Oct. 25, 2005), and HQ 116533 (Sept. 8, 2005). Further, CBP has held that certain documentation constitutes acceptable proof that merchandise was intended to be entered into the common stock of a country. For instance, in HQ H032036 (July 10, 2008), CBP stated, Such acceptable evidence includes, but is not limited to: shipping manifests; foreign country customs and duties receipts; lists containing names of purchasers of merchandise from said vessels indicating type and quantity of such merchandise; auction notices or similar publication documentation evidencing the fact that such goods will be offered on the foreign country’s market; and an affidavit from a foreign purchaser testifying that the goods are indeed intended to be introduced into the common stock of that country. In HQ H114310 (July 13, 2010), corn transported from Louisiana to Venezuela was denied entry by Venezuelan authorities upon discovery that the cargo was wet and humid. The requestor proposed to transport the rejected corn to a point in the United States other than the point of lading. The requestor argued that the continuity of transportation had been broken; therefore, the transportation of the corn to a second coastwise point would not constitute a violation of the coastwise laws. In support of its argument, the requestor provided ample documentation9 evidencing the intent of all parties to enter the corn into the common 9 HQ H114310 (July 13, 2010) (The requestor supplied a berth term grain bill, a “U.S. Department of Agriculture (“USDA”) Official Grain Weight Certificate; a USDA Official Export Inspection Certificate; a Certificate of Origin; Minutes of Orders issued by the Venezuelan authority indicating that the U.S.-origin yellow corn should be exported; and a report from the Venezuelan Ministry of Agriculture and Lands (the 4 stock of Venezuela. CBP found that all parties had intended to enter the corn into the common stock of Venezuela and that the Venezuelan authorities’ rejection of the corn broke the continuity of transportation. CBP held that if the vessel transported the rejected corn to a U.S. coastwise point, other than the point of lading, that transportation would not be in violation of the coastwise laws. As discussed above, the continuity of transportation can be broken by the actions of a non-party foreign government in a number of circumstances. The facts of the present matter are analogous to the legal principle of the “Restraint of Princes.” The “Restraint of Princes” principle in cargo law is understood as, “a phrase used in bills of lading to denote a limitation upon the liability of a shipowner when the ship is detained by governmental authority against the will of the owners vessel.”10 . It covers belligerent acts of states other than that of the owners of the Under this principle, the continuity of transportation would be broken when a restraint is created through the threat or actual “forcible interference with the voyage or adventure” of a vessel “at the hands of the constituted government, or ruling power of any country, whether done by it as an enemy of the State to which the ship belongs, or not.” nd Lekas & Drivas, Inc. v. Goulandris, 306 F.2d 426, 430 (2 Cir., 1962); see also M & Z Trading Corp. v. Hecny Group, 41 Fed. Appx. 141 (9th Cir. 2002) (carrier found immune from liability under Carriage of Goods by Sea Act under principle of “Restraint of Princes” after Latvian customs officer seized goods as counterfeit); see also The Kronprinzessin Cecilie, 244 U.S. 12 (1917) (discussing the application of the principle of “Restraint of Princes” to the threat of attack). In the instant case, the requestor has supplied a berth term bill of lading, terms and conditions of carriage, and email communications ordering changes to the delivery location by [……… …….], the cargo owner. These documents corroborate the facts and support the position that there was intent on the part of all parties to deliver the subject merchandise to a foreign country. The documentation also supports the position that the merchandise is being returned to the United States due to the [………………………………………………… ……………………………………………………………………………………………….. …………...] It is our position that the requestor has provided information and documentation sufficient to evidence an intent to enter the merchandise into the common stock of […….]. We further find that sufficient information is available to show that the [……………….. ………………..] interfered with the parties’ ability to complete shipment of the merchandise to the intended foreign port. Additionally, we find that the continuity of transportation of the merchandise was broken by the [……………………………………………………………… ……………………]. Therefore, it would not be a violation of the coastwise laws for the external quarantine inspector, authorized by the National Institute of Integral Agricultural Health) ordering the exportation of the corn because of dampness resultant from warehousing problems rendering it unsuitable for animal consumption to which it was destined.”). 10 R. de Kerchove, International Maritime Dictionary 250 (2d ed. 1961). 5 vessel to transport the 11 […………….] to a U.S. coastwise point other than the point of lading. HOLDING Under the circumstances of this matter, the transportation of the merchandise from […………………………………………], two coastwise points, to a United States coastwise port, at a point other than the point of lading, does not constitute a violation of the coastwise laws. Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” If the facts of the Customs transaction vary from the facts stipulated to herein, or CBP ascertains discrepancies based upon a review of any other pertinent information, this decision shall not be binding on CBP as provided for in 19 C.F.R. § 177(b)(1), (2) and (4), and § 177.9(b)(1) and (2). Sincerely, W. Richmond Beevers Chief/Supervisory Attorney-Advisor Cargo Security, Carriers and Restricted Merchandise Branch Office of Trade, Regulations and Rulings U.S. Customs and Border Protection 11 Pursuant to 19 C.F.R. § 177.5, you must immediately advise this office in writing of any change in the status of this transaction, including notifying us of the name of the port of unlading. You must also notify us when the prospective transaction described above becomes current, as defined in 19 C.F.R. § 177.1(d)(3). 6