HQ 0111892 - Coastwise transportation; Vessel fenders; Vessel equipment; Merchandise; 46 U.S.C. App. 883 - United States International Trade Commision Rulings

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HQ 111892
September 16, 1991

VES-3-07-CO:R:IT:C 111892 LLB

CATEGORY: CARRIER

Mr. Chris Hurst
Transmarine Navigation Corporation
301 East Ocean Blvd., Suite 570
Long Beach, California 90802

RE: Coastwise transportation; Vessel fenders; Vessel equipment; Merchandise; 46 U.S.C. App. 883

Dear Mr. Hurst:

Reference is made to your request for a ruling, submitted by facsimile transmission, dated September 10, 1991. The matter under consideration concerns the proposed coastwise transportation of "Yokohama fenders" from California to Washington State, and back to California.

FACTS:

It is proposed that three so-called "Yokohama fenders" be either rented or purchased at the port of San Francisco and loaded aboard the foreign-flag tanker PALMSTAR POPPY at that location. The tanker would carry the fenders to the port of Anacortes, Washington, where the PALMSTAR POPPY would meet the foreign-flag tanker WEI SHAN HU. Both vessels would be subject to charter agreements with a company known as Westport Petroleum during the period in question.

While at the port of Anacortes, the PALMSTAR POPPY (carrying fuel oil laden at an unnamed port on the United States West Coast), will engage in ship-to-ship lightering operations with the WEI SHAN HU, by taking on board a cargo of foreign-laden fuel oil from that vessel. The ten-foot diameter Yokohama fenders would be utilized to provide the necessary buffer between the two vessels during the proposed lightering operation.

Upon completion of the lightering operations, the PALMSTAR POPPY would unlade the three Yokohama fenders in Anacortes. The further transportation of the fenders would depend upon whether they had been rented or had been purchased by Westport Petroleum. If rented, the fenders would be transported back to San Francisco from Anacortes by a United States trucking company. If they were to be purchased, the fenders would be transported by an unnamed Westport-chartered foreign-flag tanker to the company facility in Long Beach, California, for the company's use in that port.

ISSUE:

Whether the transportation of vessel fenders between coastwise points by a vessel which intends to utilize them prior to their discharge at the second coastwise point, constitutes a transportation of merchandise under the provisions of the merchandise transportation statute (46 U.S.C. App. 883), also known as the Jones Act.

Further, following use of the fenders as described, whether either their land transportation as cargo back to the original coastwise port or vessel transportation as cargo to a third coastwise port would be a violation of section 883.

LAW AND ANALYSIS:

The coastwise law pertaining to the transportation of merchandise, section 27 of the Act of June 5, 1920, as amended (41 Stat. 999; 46 U.S.C. App. 883, often called the Jones Act), provides that:

No merchandise shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the trans- portation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to 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 other vessel 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...

The coastwise laws generally apply to points in the territorial sea, defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in the internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ. These laws have also been interpreted to apply to transportation between points within a single harbor. Merchandise, as used in section 883, includes any article, including even materials of no value (see the amendment to section 883 by the Act of June 7, 1988, Pub. L. 100-329; 102 Stat. 588).

Not included within the general meaning of merchandise, however, is the equipment of a vessel. Such materials have been defined as articles, "...necessary and appropriate for the navigation, operation or maintenance of the vessel and for the comfort and safety of the persons on board." (Treasury Decision 49815(4), March 13, 1939). Customs has specifically ruled that, "Vessel equipment placed aboard a vessel at one United States port may be removed from the vessel at another United States port at a later date without violation of the coastwise laws." (Customs Ruling Letter 102945, November 8, 1978). The remaining questions are, whether the fenders in question are such equipment, and for which portions of the proposed itinerary they may be so considered.

The Yokohama fenders in question are to be utilized by the first carrying vessel in order to provide a buffer between itself and the second tanker vessel involved in the proposed lightering operation. This is clearly a use in furtherance of the operation of the vessel as well as the safety of the crew. As such, they meet the definition of vessel equipment as stated above.

We turn now to the matter of the carriage of the fenders back to California from Anacortes, Washington. If not in the status of vessel equipment, the fenders must be considered merchandise. Their carriage between United States points by a United States-owned and based trucking concern would not be considered a violation of the regulations concerning point-to- point truck transportation. The same is not the case, however, if the subsequent transportation of the fenders is accomplished by vessel. Since the fenders not in use as vessel equipment are considered merchandise, their carriage between coastwise points must be accomplished by a coastwise-qualified vessel.

HOLDING:

Vessel fenders laden at one coastwise point and used as necessary equipment of the transporting vessel during the course of a voyage, may be unladen at a second coastwise point without violating 46 U.S.C. App. 883. Subsequent carriage of the fenders to a coastwise point by vessel would, however, be considered to be coastwise trade when the fenders revert to the status of merchandise. Such water transportation must be accomplished by a coastwise-qualified vessel.

Sincerely,

B. James Fritz
Chief

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