HQ 0111987 - Applicability of the third proviso of 46 U.S.C. App. 883 - United States International Trade Commision Rulings

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HQ 111987

December 2, 1991

VES-3-17-CO:R:IT:C 111987 MLR

CATEGORY: CARRIER

Vince Addington
Alaska Maritime Agencies, Inc.
Suite 315
300 Elliott Avenue West
Seattle, Washington 98119-4151

RE: Applicability of the third proviso of 46 U.S.C. App. 883

Dear Mr. Addington:

This is in response to your letter of November 11, 1991, concerning the applicability of the coastwise merchandise law to the proposed transportation of ore concentrate by foreign-flag vessel from Alaska to Vancouver B.C. and then by rail from Vancouver B.C. to Montana.

FACTS:

The proposed transportation involves shipping ore concentrates by a vessel which is not built in and documented under the laws of the United States and owned by United States citizens (i.e., a non-coastwise-qualified vessel), from Hawke Inlet, Alaska, U.S.A., to Vancouver B.C. The ore will then be transferred onto rail cars and moved to Montana, U.S.A.

ISSUE:

Whether, by virtue of the third proviso to 46 U.S.C. App. 883, merchandise may be transported from a point in Alaska to a point within the continental United States, accomplished in part by the service of a non-coastwise-qualified vessel and in part by rail transport in Canada.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, section 883 (46 U.S.C. App. 883, the coastwise merchandise statute, often called the "Jones Act") provides, in pertinent part, 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 transportation, 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 ....

One exception to the prohibition in section 883 against the transportation of merchandise between coastwise points is contained in the third proviso. It provides:

[T]his section shall not apply to merchandise transported between points within the continental United States, including Alaska, over through routes heretofore or hereafter recognized by the Interstate Commerce Commission [I.C.C.] for which route rate tariffs have been or shall hereafter be filed with said Commission when such routes are in part over Canadian rail lines and their own or other connecting water facilities...

Simply stated, section 883 would not prohibit the transportation of merchandise if all the conditions to the third proviso are met, that is:
a) through routes, recognized by the I.C.C., are utilized;
b) routes rate tariffs have been or shall hereafter be filed with the I.C.C., and have not subsequently been rejected for filing, have become effective according to their terms, and have not been subsequently suspended, or withdrawn by the Commission; and
c) the routes utilized are in part over Canadian rail lines and their own or other connecting water facilities.

The Customs Service has held that "over Canadian rail lines" means over rail trackage in Canada and that "their own or other connecting water facilities" means water facilities covered by a through route whether or not those facilities connect directly with the Canadian rail line covered by that through route. Customs Ruling Letter 105721 dated July 23, 1982. Accordingly, the proposed service will qualify under the third proviso and will not constitute a violation of the coastwise laws of the United States provided the through route is recognized by the I.C.C. as set forth in the preceding paragraph.

For your information, if the I.C.C does not recognize the through route or approve the route rate tariff, or if the movement from Vancouver to Montana is by truck, the third proviso would not apply and the transportation would be prohibited by section 883. Further, the Act of December 27, 1950 (64 Stat. 1120) provides that the navigation laws (such as section 883) may only be waived when deemed necessary in the interest of national defense. A waiver of the provisions of the coastwise laws cannot be issued solely for economic reasons. In the absence of grounds to invoke a waiver in the interest of national defense, the only other method by which a waiver may be granted would be through Congressional action.

HOLDING:

Under the above-stated facts, the proposed transportation would be permitted under the third proviso to 46 U.S.C. App. 883, provided that all the requirements set forth above have been met.

Sincerely,

B. James Fritz

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