HQ 0111372 - Coastwise; Skimmer; Oil Recovery; 46 U.S.C. App. 883. - United States International Trade Commision Rulings

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HQ 111372

March 20, 1991

VES-3-12 CO:R:IT:C 111372 JBW

CATEGORY: CARRIER

Mr. Paul J. Larson
Admiralty Marine Investigations
920 North Avalon Blvd., Suite 2
Wilmington, California 90744

RE: Coastwise; Skimmer; Oil Recovery; 46 U.S.C. App. 883.

Dear Mr. Larson:

This letter is in response to your letter of October 30, 1990, in which you request a ruling on the use of a German- flagged oil skimmer in oil recovery operations.

FACTS:

In your letter, you state that your company has been asked to determine whether a German-flagged skimmer may be used in oil recovery operations in United States waters. You inquire generally, notwithstanding questions of reflagging, whether foreign-flagged skimming vessels may be used in oil recovery operations. You also pose a number of variations on the basic question relating to the operation of skimming vessels: (1) whether recovery operations alone constitute coastwise trade; (2) whether transportation of recovered oil constitutes coastwise trade; (3) whether oil recovered by a non-coastwise-qualified vessel may be transferred to a coastwise-qualified vessel for transportation to the shore; (4) whether recovered oil may be transferred to a non-coastwise-qualified vessel for transporation to a point in the United States; (5) may a non-coastwise- qualified vessel go beyond the limits of the United States exclusive economic zone [EEZ] to avoid the coastwise prohibition; and (6) must the recovered oil have a positive value in order to trigger the coastwise laws. Finally, you inquire whether the use of foreign-flagged vessel in the clean-up operations following the EXXON VALDEZ spill resulted from a one-time waiver or from a determination that oil recovery did not constitute coastwise trade.

ISSUE:

Whether recovery or transportation of oil by a skimming vessel constitutes coastwise trade.

LAW AND ANALYSIS:

The coastwise laws of the United States prohibit the transportation of merchandise between points in the United States embraced within the coastwise laws, either directly or via a foreign port, in any vessel other than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States. 46 U.S.C.A. App. 883 (West Supp. 1990)(referred to as "the Jones Act"). Further, Section 316(a) of Title 46, United States Code Appendix, prohibits the use of a non-coastwise-qualified vessel to tow any vessel, other than a vessel in distress, between ports or places in the United States embraced within the coastwise laws, either directly or by way of a foreign port, or to do any part of such towing, or to tow any such vessel between points in a harbor of the United States. 46 U.S.C. App. 316(a) (West Supp. 1990). Generally, the coastwise and towing laws apply to points within the territorial sea of the United States, 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, in cases where the baseline and the coastline differ. Headquarters Ruling Letter 111275, dated November 13, 1990.

The term merchandise is defined in the coastwise statute to include valueless materials. 46 U.S.C. App. 883. The statute further provides that the transportation of valueless material, regardless of its commercial value, from a point or place in the United States or a point or place on the high seas within the Exclusive Economic Zone, as defined in the Presidential Proclamation of March 10, 1983, to another point or place in the United States or a point or place on the high seas within the Exclusive Economic Zone falls within the ambit of the coastwise statute.

From this statutory framework, the Customs Service has concluded that the coastwise laws prohibit the use of a non- coastwise-qualified mobile vessel for recovery or transportation of oil in waters within the jurisdiction of the coastwise laws. Headquarters Ruling Letter 110386, dated September 29, 1989. However, Customs has held that the use of a non-coastwise- qualified vessel as a stationary facility for lodging, processing, storing, or other activities is not a "transportation" that is prohibited by section 883. Id. If such a stationary vessel is being loaded or unloaded and must be moved to another location temporarily due to stress of weather or other reason involving the safety of the vessel, the coastwise laws are not violated so long as no loading or unloading occurs at any other coastwise point and the vessel is subsequently returned to its original location once the danger has passed. Id.

Only coastwise-qualified vessels may accept the transfer of the recovered oil at a coastwise point for transportation to another coastwise point, regardless of whether the vessel leaves the territorial waters or exclusive economic zone of the United States. Headquarters Ruling Letter 110276, dated June 15, 1989. Transportation by a non-coastwise-qualified vessel is permitted only if the oil is unloaded at a foreign point. Id. However, you should be aware that under 50 U.S.C. App. 2406(d) (1988), the exportation of domestically produced crude oil that has been transported via the Trans-Alaska Pipeline is prohibited, with certain narrow exceptions.

You raise in your letter questions regarding the use of foreign-flagged vessels in the EXXON VALDEZ clean-up operations. Pursuant to the Act of December 27, 1950, 64 Stat. 1120 (note preceding Chapter 1 of Title 46 Appendix, United States Code), the Customs Service, through authority delegated by the Secretary of the Treasury, must waive application of the Jones Act upon the request of the Secretary of Defense in the interest of national defense and to the extent required. Upon his own initiative or upon the written recommendation of the head of any other United States agency, the Secretary of Treasury has the discretion to waive application of the coastwise laws "whenever he deems that such action is necessary in the interest of national defense." The Customs Service makes recommendations to the Assistant Secretary of Treasury for Enforcement on these waivers. The foreign-flagged skimmer vessels used in the EXXON VALDEZ clean-up were operating under waivers issued by the Department of the Treasury.

HOLDING:

A skimming vessel must be coastwise-qualified to engage in mobile recovery or transportation of spilled oil in waters embraced within the coastwise laws. The use of a stationary facility for lodging, processing, storing, or other activities recovery of oil is not a transportation within the prohibitions contained in 46 U.S.C. App. 883. The foreign-flagged vessel used in the EXXON VALDEZ oil clean-up operated under waivers to the coastwise laws issued by the Department of the Treasury.

Sincerely,

B. James Fritz
Chief

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