HQ 0110960 - Applicability of the coastwise laws to the towing of a foreign-flag barge by a foreign-flag tug boat between coastwise points - United States International Trade Commision Rulings

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HQ 110960
April 4, 1990

VES-3-15/10-3 CO:R:P:C 110960 LLB

CATEGORY: CARRIER

Mr. R. S. Bessette
Division Engineering Supervisor
Tennessee Gas Pipeline
485 Sunset Drive
Hamburg, New York 14075

RE: Applicability of the coastwise laws to the towing of a foreign-flag barge by a foreign-flag tug boat between coastwise points

Dear Mr. Bessette:

Reference is made to your letter of April 2, 1990, in which you ask that we rule upon your proposed use of a Canadian-flag tug and barge to haul a drilling rig from the United States to three drilling sites on the Niagara River.

FACTS:

The Tennessee Gas Pipeline Company, a division of Tenneco, has entered into a joint venture with another company to design and construct a 30-inch natural gas pipeline from Canada to the United States. The initial stage of the project requires that three holes be bored into the bed of the Niagara River. One hole would be drilled in U.S. territory, one in Canadian, and the third would be "near the international boundary."

To accomplish this project, the services of a Canadian-flag barge and tug boat have been engaged. It is proposed that the tug and barge arrive from Canada and load a U.S.-built drill rig aboard the barge in a U.S. port. The tug would then proceed to the three drill sites. For environmental reasons, a very short window of opportunity is available to accomplish the operation. Drilling must be completed by April 13, 1990, in order to protect the fish population during spawning, with the prohibition on drilling extending until October 16, 1990.

ISSUE:

Whether a U.S. drilling rig may be towed from the U.S. to working sites on the Niagara River, both American and Canadian, with the assistance of a foreign-flag tug and barge combination. LAW AND ANALYSIS:

Generally speaking, the coastwise laws (46 U.S.C. App. 289 and 883, and 46 U.S.C. 12106 and 12110) prohibit the transport- ation of passengers and merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States.

The statute governing towing, title 46, United States Code Appendix, section 316(a), as amended by the Act of May 19, 1986 (Pub. L. 99-307), prohibits the towing between coastwise points of any vessel except a vessel in distress, by any but qualified vessels of the United States. This restriction extends to certain territories and possessions of the United States, to towing between points within the same harbor, and to direct, indirect, or partial towing operations.

As we understand the proposed operation, the drill rig will be laden aboard the Canadian barge at a coastwise point and thence towed to the various drill sites. A violation of section 883 is triggered when a lading takes place at one coastwise point and an unlading at another. The ruling request does not specify where the drill rig is to be unladen at the completion of the operation, but if in foreign territory or at the same spot as originally laden, there would be no violation of section 883, the Jones Act merchandise statute.

The towing statute (46 U.S.C. App. 316(a)) does, however, present an obstacle to accomplishment of the proposal. We understand that the barge with drill rig aboard will be towed from a U.S. port to a site on the Niagara River in U.S. territory. That is a movement which would be prohibited under the towing statute. The operation could proceed legally only by use of a qualified U.S.-flag tug boat.

HOLDING:

A drill rig may be moved aboard a foreign-flag barge from its point of lading in the U.S. to another U.S. point, so long as it is not unladen at any U.S. point other than that at which it was originally placed aboard. The vessel towing the barge from point to point in the U.S. must, however, be a coastwise- qualified U.S.-flag tug boat.

Sincerely,

B. James Fritz
Chief

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