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HQ 109879


January 10, 1989

VES-7-CO:R:P:C 109879 LLB

CATEGORY: CARRIER

James B. Ellis II, Esq.
Dyer, Ellis, Joseph, and Mills
600 New Hampshire Avenue, NW.
Washington, D.C. 20037

RE: Applicability of the coastwise trade laws to fish loading, processing, and transporting activities by foreign-flag United States built vessels, soon to be re-documented under United States law

Dear Mr. Ellis:

This is in response to your letter of November 17, 1988, in which you request a ruling on the applicability of the coastwise merchandise transportation statute to various fisheries-related activities proposed to be engaged in by your client.

FACTS:

It is proposed that two United States-built, foreign-flag vessels will be purchased for the purpose of having them rebuilt in United States shipyards to make them suitable to operate as fish processing vessels, documented under the U.S.- flag with fisheries licenses. It is contemplated that they will be operated off the coast of Alaska, and while in that service will engage in one or more of the following activities:

1. Receive and process fish in either international waters or in waters within the Exclusive Economic Zone

2. Receive and transport fish from international waters or from the EEZ, to a point within U.S. territorial waters or to a U.S. port.

3. Receive and process fish in territorial waters, while moving, and unload the processed fish at the same point at which the unprocessed fish were initially received. 2

ISSUE:

May a vessel built in the United States currently documented under foreign-flag and to be documented for the fisheries engage in the above-described activities without violating the coastwise laws of the United States.

LAW AND ANALYSIS:

Title 46, United States Code App., section 883 (46 U.S.C. App. 883), provides that only coastwise-qualified vessels may transport merchandise between coastwise points. Such points include points within the territorial waters of the United States.

Vessels which are eligible for coastwise documentation are those which have been built in the United States, are owned by citizens of the United States, and pursuant to the first proviso to section 883, have never been sold to foreign interests or documented under a foreign flag. The incoming letter requesting a ruling in this matter acknowledges that the vessels presently under consideration are not entitled to be documented to engage in coastwise activities by virtue of their having been documented under the laws of a foreign country. This fact does not, however, affect the ability of the vessels to be documented for the fisheries.

The EEZ is defined in Presidential Proclamation 5030 of March 10, 1983 (48 FR 10605), as extending outward for 200 nautical miles from the baseline from which the breadth of the territorial sea is measured.

Of the three earlier enumerated activities, the first two take place, at least in relevant part, outside the territorial waters of the United States. In the first case, fish are received and processed outside the territorial waters. In the second, fish are received outside territorial waters and transported to a point within those waters. Neither of these situations contemplate transportation between two or more coastwise points.

In the third example given, it is contemplated that fish will be received at a point within the territorial waters and processed while the vessel is in motion. It is stated that the processed fish would be unloaded at the same point at which the unprocessed fish were originally received. This is a critical
point since the fish are considered merchandise for purposes of section 883. As such, they may not be transported by an unqualified vessel between coastwise points. If, however, loading and unloading occur at the same point, there will have been no transportation between two or more coastwise points, and no violation of section 883. (We note, however, that the United States District Court for the District of Columbia has held, in a case involving the lading of merchandise - a drilling vessel - at a point in territorial waters, movement of the merchandise to a second point in the United States where it was worked on while on the carrying vessels, and movement back to the original point in territorial waters where the merchandise was unladen, that section 883 would be violated, notwithstanding that the merchandise was not unladen at a second coastwise point; see Shipbuilders Council of America, et al. v. United States, Civil Action No. 87-0972 (D.D.C. January 13, 1988, Judge George H. Revercomb presiding). This case is on appeal in the Court of Appeals for the District of Columbia. If Judge Revercomb's decision is upheld, an operation such as that under consideration could be determined to violate section 883 even if the fish is laden at the same point in territorial waters where the processed product is unladen.) To the extent that fish are picked up at various coastwise points, processed, and delivered back to the points of original loading, it is incumbent upon a person engaged in such activities to segregate the fish and to devise a system which demonstrates to the satisfaction of the District Director of Customs that fish are not being transported between coastwise points.

HOLDING:

A vessel documented for the fisheries only may:

1. Receive and process fish in either international waters or within the EEZ (as defined in Presidential Proclamation 5030 of March 10, 1983).

2. Receive and transport fish from international waters or from the EEZ, to a coastwise point.

3. Receive and process fish in territorial waters, so long as the processed fish are discharged at the same coastwise point at which they are received, and so long as (to the extent 4
such may be necessary) fish received at different coastwise points are kept segregated to the satisfaction of the District Director of Customs (but see Shipbuilders Council v. United States, Civil Action Number 87-0972, D.D.C. January 13, 1988, currently under appeal).

Sincerely,

B. James Fritz

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