HQ 0110402 - Applicability of coastwise merchandise law, 46 U.S.C. App. 883, to proposed carriage of cable by a foreign-built vessel - United States International Trade Commision Rulings

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HQ 110402

August 18, 1989

VES-3-06-CO:R:P:C 110402 GV

CATEGORY: CARRIER

Shant J. Harootunian, Esq.
American Telephone and Telegraph Company
295 North Maple Avenue
Basking Ridge, New Jersey 07920

RE: Applicability of coastwise merchandise law, 46 U.S.C. App. 883, to proposed carriage of cable by a foreign-built vessel

Dear Mr. Harootunian:

This is in response to your letter of August 2, 1989, requesting a ruling or a waiver regarding the permissibility of the proposed carriage of cable by a foreign-built vessel.

FACTS:

Transoceanic Cable Ship Company ("Transoceanic"), a wholly owned subsidiary of American Telephone and Telegraph Company ("AT&T"), proposes to use two of its vessels, the C.S. BROWN and the C.S, LONG LINES, for the transportation and installation of telecommunications cable. Both of the aforementioned vessels are foreign-built. Under the proposal, approximately 41 km. of SL telecommunications cable would be laded at its site of manufacture, Newington, New Hampshire, aboard the C.S. LONG LINES which would transport the cable to Honolulu, Hawaii. Upon arrival in Honolulu it is contemplated that the cable would be directly transferred from the C.S. LONG LINES to the C.S. BROWN and then be laid between the Loihi Seamount and the Island of Hawaii by the C.S. BROWN. Because the C.S. BROWN is assigned to cable repair duties in the Pacific Ocean, it is possible that the C.S. BROWN may be engaged in a repair when the C.S. LONG LINES arrives at Honolulu on August 19, 1989, its present estimated time of arrival. In such event, the cable would be temporarily off-loaded into a storage depot for subsequent loading aboard the C.S. BROWN upon its availability.

The installation of this cable is being offered by AT&T to the Hawaii Institute of Geophysics ("HIG") of the University of Hawaii, Manoa, as a part of the Hawaii Undersea Geo-Observatory Project ("project Hugo"). Project Hugo involves the design, construction, installation, testing and operation of a permanent 2
deep-ocean scientific laboratory on the Loihoi underwater volcano. Project Hugo will permit the study of submarine volcanic, biologic and oceanographic processes. By establishing the observatory on the Loihi Seamount, HIG will be able to add significantly to its knowledge of the morphology, eruptive characteristics, lava volatile, water chemistry, seismicity, internal structure, life processes at volcanic vents and slope stability. Project Hugo would become part of the larger Hawaiian Volcanic Observatory seismic network and would add continuity to the snapshots of information obtained by short Ocean seismic studies, submergible dives and surface mapping studies.

Project Hugo has been submitted by HIG to the National Science Foundation ("NSF") for support. As part of that process, AT&T has conducted a peer review in which it has concluded that the conceptual design of Project Hugo is feasible. AT&T is willing to support Project Hugo by supplying the SL cable and installing it by the C.S. BROWN, thereby reducing the cost support required from NSF by over $320,000. AT&T would not charge any sum for freight, or the value of the cable or its services in installing the cable. Rather, AT&T would be donating its services as a part of Project Hugo in the interest of furthering submarine volcanic research and the gathering of scientific data.

ISSUE:

Whether the carriage of cable by a foreign-built cable laying and repair vessel from its point of lading in the United States to a second point in the United States where it will be either temporarily unladed into an onshore storage depot or unladed directly onto another foreign-built cable-laying and repair vessel located within U,S. territorial waters which will subsequently install the cable constitutes a violation of 46 U.S.C. App. 883.

LAW AND ANALYSIS:

Title 46, United States Code, Appendix 883 (46 U,S,C. App. 883), provides, in pertinent part, that no merchandise shall be transported between points in the United States embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any vessel other than a vessel built in and documented under the laws of the United States and owned by citizens of the United States (i.e., a coastwise qualified vessel).

For purposes of section 883, a point in the United States territorial waters is considered a point embraced within the coastwise laws. The territorial waters of the United States consist of the territorial sea, defined as the belt, 3 nautical 3
miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline.

The Customs Service has held that the sole use or a non coastwise-qualified vessel to lay cable between points in the United States or in international waters does not violate the coastwise laws. Such cable is not only laid, and not "transported," between points in the United States, but is also being used in furtherance of the primary mission of the cable laying vessel and is therefore similar to vessel equipment. The Customs Service has ruled that equipment laden on a non coastwise-qualified vessel at a coastwise point and used by the vessel for reasons relating to the operation of the vessel may be later unladen at a second coastwise point without violation of 46 U.S.C. App. 883. The use of the equipment between American ports will have broken the continuity of the transportation between American ports. This rule applies to any small amount of similar equipment that was laden for use but was not in fact needed during the operation of the vessel.

While the use of cable in connection with the operation of a cable-laying vessel does not violate the coastwise laws, the transportation and landing of cable that was not placed on the vessel to be used in a cable-laying operation, other than cable retrieved to be repaired, at a port in the United States other than at the port at which the cable was laden aboard the vessel constitutes a violation of 46 U.S.C. App. 883.

Accordingly, the transportation of cable from Newington, New Hampshire (the point of lading) to Honolulu, Hawaii (the point of unlading) by the C.S. LONG LINES (a non-coastwise-qualified vessel) constitutes a violation of 46 U.S.C. App. 883 in view of the fact that it was not laden for use on board that particular vessel. The transportation is merely a movement of merchandise between two coastwise points not in furtherance of the primary mission of the vessel so transporting (i.e., cable-laying). The fact that AT&T is providing its services free of charge is irrelevant. We emphasize that a violation of section 883 occurs in both alternatives presented (either when the unlading is to an onshore storage facility in Hawaii or directly onto the C.S. BROWN located within U.S, territorial waters).

Counsel cites three prior Customs rulings in support of his position to permit the operation described above. All three rulings are distinguishable from the case now under consideration. In ruling 103217 we held that no violation of section 883 occurs when repair cable is laden at a coastwise point on a cable-laying and repair vessel not qualified to engage in the coastwise trade, carried on the vessel for a substantial period as part of its cable repair inventory, and offladen at a second coastwise point. In that particular case the cable in question was aboard the vessel under consideration for 4
approximately 3 years, a period deemed sufficient to break the continuity of the transportation between coastwise points. In rulings 108985 and 105644 we held that a small percentage of the total amount of cable laded aboard a non-coastwise-qualified cable-laying and repair vessel and unladed at a second coastwise point did not constitute a violation of section 883 in view of the fact that such cable was laded in anticipation of actual need and treated at the time of unlading as equipment of the vessel doing the transporting in question.

In all three of the cases cited above by counsel, the cable in question was originally laded aboard the particular vessels in anticipation of actual need of the vessels in order to further their primary mission of cable-laying and repair. In the case now under consideration, the lading of cable aboard the C.S. LONG LINES is not in furtherance of its primary mission as a cable laying and repair vessel. The sole purpose of the lading is to transport merchandise between two different coastwise points, a violation of section 883.

We recognize that the proposed use of the C.S. LONG LINES appears to be indirectly related to Project Hugo. Although the Customs Service has ruled that the use of a vessel in oceanographic research and survey, or teaching courses such as oceanography is not coastwise trade, the C.S. LONG LINES is not itself being used for that purpose. Accordingly, the exemption from the coastwise laws recognized by Customs in this area does not apply.

You request, as an alternative to a ruling permitting this transportation, a waiver of the coastwise laws. Other than legislation enacted by Congress to explicitly exempt a particular vessel from the application of the navigation laws, the only other waiver authority is that contained in the Act of December 27, 1950 (64 Stat. 1120), under which the navigation laws may be waived by the Secretary of the Treasury in the interest of national defense. This Act, among other things, directs the granting of a waiver upon the request of the Secretary of the Defense and permits such a waiver upon the written recommendation of the head of any other United States Government agency.

Although we are not of the opinion that the proposed use of the C.S. LONG LINES would justify a waiver of section 883, should you wish to pursue this matter further we suggest you direct your request to the following:

The Honorable
Jack Katzen
Assistant Secretary of Defense (P&L)
Pentagon, Room 3E808
Washington, D.C. 20301-8000
5

HOLDING:

The carriage of cable by a foreign-built cable-laying and repair vessel from its point of lading in the United States to a second point in the United States where it will be either temporarily unladed into an onshore storage depot or unladed directly onto another foreign-built cable-laying and repair vessel located within U.S. territorial waters which will subsequently install the cable constitutes a violation of 46 U.S.C. App. 883 in view of the fact that the cable was not laded for the purpose of furthering the primary mission of the transporting vessel but merely for the transportation of such cable between coastwise points.

Sincerely,

B. James Fritz

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