HQ 0112023 - Coastwise Trade; Territorial Waters; 46 U.S.C. App. 883 - United States International Trade Commision Rulings

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HQ 112023

December 23, 1991

VES-3-CO:R:IT:C 112023 GEV

CATEGORY: CARRIER

M. Martha Ries, Esq.
Bogle & Gates
Two Union Square
601 Union Street
Seattle, Washington 98101-2346

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

Dear Ms. Ries:

This is in response to your letter dated December 10, 1991, on behalf of your client, American Seafoods, requesting an expedited ruling on the proposed transportation of hake surimi processed on board two non-coastwise-qualified, U.S.-flag vessels outside the three-mile U.S. territorial sea but within the U.S. 200 mile Exclusive Economic Zone (EEZ). Our ruling is set forth below.

FACTS:

American Seafoods is a U.S. corporation engaged in the business of catching and processing fish. It owns several vessels which are specially designed to process fish in the same manner as a shore-side fish processing plant. All of the vessels are U.S.-flag vessels, however, they are not documented for the coastwise trade.

Recently, two of American Seafood's processors loaded Pacific Whiting ("hake") in United States waters in the Strait of Georgia off the northern coast of the State of Washington, more than three miles from the nearest U.S. point of land. The point of loading was at 49 degrees N., 123 degrees, 19' W. (counsel enclosed Chart #18400, 36 Ed., 3/90, U.S. Department of Commerce, National Oceanic and Atmospheric Administration, for reference) The vessels then processed the whole hake into surimi, a fish paste, outside the three-mile territorial sea of the U.S. After processing the fish, the vessels have been fishing in Soviet waters for several weeks. During that time, the surimi has not been offloaded and has not undergone any further processing.

The method by which whole hake is processed into surimi fish paste is a three-step process. First, the whole fish are deheaded and gutted, the fins and tails are removed, their meat is cut into fillets, and the fish are washed. Second, after completion of this pre-treatment phase, the dressed fish then undergoes further processing by a fish meat separator. This equipment rolls or stamps the fish into minced meat patties which are 5 to 7 mm in diameter. Third, this minced meat then undergoes additional processing to become kneaded meat or "surimi." In processing the kneaded meat from the minced meat, the minced meat is first soaked with a large quantity of water. The soaked meat is hydroextracted by means of a rotary sieve or screw process. Thereafter, the hydroextracted meat is uniformly mixed with sugar, phosphates and other additives. The resulting mixture may be used as a raw kneaded meat or shaped and frozen.

ISSUES:

1. Whether the loading of fish on a vessel in the Strait of Georgia at 49 degrees N., 123 degrees, 19' W., is considered to be a loading at a coastwise point for purposes of 46 U.S.C. App. 883.

2. Whether the processing of hake into surimi on board a vessel at a point outside the three-mile territorial sea but within the 200 mile U.S. EEZ, is sufficient to create a "new and different product" within the meaning of 19 CFR 4.80b(a).

LAW AND ANALYSIS:

Title 46, United States Code Appendix, 883 (the merchandise coastwise law often called the "Jones Act") prohibits the transportation of merchandise between United States coastwise points, 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.

In interpreting 883, Customs has ruled that a point in United States territorial waters is a point in the United States embraced within the coastwise laws. The territorial waters of the United States consist of the territorial sea, defined as the belt, 3 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. It should be noted, however, that as they pertain to waters such as the Great Lakes, the territorial waters of the United States include those waters adjacent to the coast of the United States extending to the United States-Canada international boundary (ruling 110056 GV, dated February 13, 1989).

Section 4.80b(a), Customs Regulations, provides, in part, that:

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. However, merchandise is not transported coastwise if at an intermediate port or place other than a coastwise point (that is, at a foreign port or place, or at a port or place in a territory or posses- sion of the U.S. not subject to the coastwise laws), it is manufactured or processed into a new and different pro- duct, and the new and different product thereafter is transported to a coastwise point.

In applying 4.80b(a), Customs has held that merchandise manufactured or processed into a new and different product must be landed and processed at an intermediate port or place other than a coastwise point. The manufacturing or processing may not take place on board a vessel. (ruling 109233 LLB, dated November 20, 1987)

In regard to the facts under consideration, the hake were loaded on board the vessels in the Strait of Georgia at 49 degrees N., 123 degrees, 19' W. Notwithstanding the fact that this location is more than three miles from the nearest U.S. point, it is nonetheless within U.S. territorial waters as is evidenced by the U.S.-Canada international boundary clearly demarcated on Department of Commerce (NOAA) map enclosed by counsel. Although Customs does, as stated above, recognize the three-mile territorial sea as the limits to which the coastwise laws extend, such limits do not override a recognized international boundary. Accordingly, the hake in question are considered to have been loaded at a U.S. coastwise point.

As to whether the hake were processed into a "new and different product" within the meaning of 19 CFR 4.80b(a), we note that the sufficiency of the processing need not be addressed. As stated above, the article in question must be landed prior to undergoing any manufacturing or processing. (see ruling 105319 JM, dated October 27, 1991, cited by counsel, where the processing of crab took place after it was landed in Canada) The manufacturing or processing may not take place on board a vessel, which is what occurred in the facts under consideration.

Therefore, the processing of hake into surimi in this case was not sufficient to comply with the provisions of 19 CFR 4.80b(a).

Accordingly, the transportation of hake by the vessels in question (which were not documented for the coastwise trade), from the point of loading in the Strait of Georgia to a point outside the three-mile territorial sea but within the U.S. EEZ where they were processed on board the vessels into surimi, and the subsequent transportation of the surimi to a U.S. port constitutes a violation of 46 U.S.C. App. 883.

HOLDINGS:

1. The loading of fish on a vessel in the Strait of Georgia at 49 degrees N., 123 degrees, 19' W., is considered to be a loading at a coastwise point for purposes of 46 U.S.C. App. 883.

2. The processing of hake into surimi on board a vessel at a point outside the three-mile territorial sea but within the 200 mile U.S. EEZ is not sufficient to create a "new and different product" within the meaning of 19 CFR 4.80b(a).

Sincerely,

B. James Fritz

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