HQ 0111403 - Coastwise Trade; 46 U.S.C. App. 883 - United States International Trade Commision Rulings

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HQ 111403

November 20, 1990

VES-3-06/07-CO:R:P:C 111403 GEV

CATEGORY: CARRIER

John J. Fay, Jr., Esq.
O'Neil, Eichin, Miller & Breckinridge
One Poydras Plaza, 26th Floor
638 Loyola Avenue
New Orleans, Louisiana 70113

RE: Coastwise Trade; 46 U.S.C. App. 883

Dear Mr. Fay:

This is in reference to your telefax to Mr. William G. Rosoff, Chief, Entry Rulings Branch, U.S. Customs Service, dated November 15, 1990, a copy of which was sent to me regarding the applicability of 46 U.S.C. App. 883. Our ruling on this matter is set forth below.

FACTS:

A consignment of Paraguayan sugar was loaded aboard the M/V GOLDEN CHARIOT, a foreign-flag, foreign-built vessel, at Buenos Aires, Argentina, for carriage to Savannah, Georgia. Upon the vessel's arrival in Savannah, approximately 790,000 pounds of sugar was unladed when the importer of record, Savannah Foods & Industries, Inc., ("Savannah Foods") discovered broken glass bottles in one of the two cargo holds which carried this consignment. A single unbroken soft drink bottle was found in the second of these holds. As a result of these findings, Savannah Foods refused to take delivery of the remaining sugar (approximately 8,700 MT) aboard the vessel. The sugar which is now on the vessel has never been unladed from it and the approximate 790,000 pounds, which had been discharged, have not been reloaded, but have been retained by Savannah Foods or destroyed. Consequently, all cargo presently on the vessel is sugar that was originally laded at Buenos Aires.

As a result of Savannah Foods' rejection of this sugar, your client, Cargill Incorporated, and its insurer have been forced to locate another buyer for the portion of the consignment remaining on the vessel. In all likelihood the vessel will be directed to Reserve, Louisiana, or another U.S. port. In addition to the Customs entry requirements within the purview of Mr. Rosoff's
branch, you inquire as to whether the diversion of the sugar remaining on board the subject vessel from Savannah to another U.S. port constitutes a violation of 46 U.S.C. App. 883.

ISSUE:

Whether the transportation of sugar on a foreign-flag, foreign-built vessel from the foreign port at which it was laded, to a U.S. port where a portion of the sugar was unladed, and the subsequent transportation of the sugar remaining on board the vessel to a different U.S. port where it is unladed 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), the merchandise coastwise law often called the "Jones Act", provides in 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 persons who are citizens of the United States (i.e., a coastwise- qualified vessel).

Pursuant to 4.80b(a), Customs Regulations (19 CFR 4.80b(a)), 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.

Points embraced within the coastwise laws discussed above include all points within the territorial waters of the United States, including points within a harbor, as well as artificial islands, installations, and devices permanently or temporarily attached to the seabed of the outer continental shelf for the purpose of exploring for, developing or producing resources therefrom. The territorial seas of the United States consist of the territorial sea, defined as the belt, 3 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline.

It should be noted that pursuant to 4.33(a)(1), Customs Regulations (19 CFR 4.33(a)(1)), a vessel may unlade cargo at an alternative port of entry to the port of original destination if it is compelled by any cause to put into the alternative port and the district director to the port issues a permit for the unlading of such cargo. In addition, 4.33(c), Customs Regulations (19 CFR 4.33(c)) provides that after entry, the cargo declaration of a vessel (Customs Form 1302) of a vessel may be changed at any time to permit discharge of manifested cargo at
any domestic port in lieu of any other port shown on the cargo declaration, if: (1) A written application for the diversion is made on an amended cargo declaration by the master, owner, or agent of the vessel to the district director or the port where the vessel is located, after entry of the vessel at that port; (2) An amended cargo declaration, under oath, covering the cargo, which it is desired to divert, is furnished in support of the application and is filed in such numbers of copies as the district director shall require for local Customs purposes; and (3) The certified traveling manifest is not altered or added to in any way by the master, owner, or agent of the vessel.

In regard to the facts under consideration, the consignment of sugar was laden at a point not embraced within the coastwise laws (Buenos Aires) and unladen at points embraced within the coastwise laws (Savannah and Reserve, Louisiana, or another U.S. port). Accordingly, notwithstanding the applicable Customs entry and quota requirements, the transportation of sugar as described above does not constitute a coastwise movement of merchandise within the meaning of 46 U.S.C. App. 883.

HOLDING:

The transportation of sugar on a foreign-flag, foreign-built vessel from the foreign port at which it was laded, to a U.S. port where a portion of the sugar was unladed, and the subsequent transportation of the sugar remaining on board the vessel to a different U.S. port where it is unladed does not constitute a violation of 46 U.S.C. App. 883.

Sincerely,

B. James Fritz

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