HQ 0111630 - Coastwise trade; fisheries; U.S.-flag fish processor; exclusive economic zone (EEZ); territorial sea; Nicholson Act; 46 U.S.C. 12101, 12106, 12108; 46 U.S.C. App. 883. - United States International Trade Commision Rulings

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HQ 111630

July 31, 1991

VES-7-03-CO:R:IT:C 111630 KVS

CATEGORY: CARRIER

Cmmr. D.D. Rome
United States Coast Guard
Commanding Officer
Marine Safety Office
2760 Sherwood Lane
Suite 2A
Juneau, AK 99801-8545

RE: Coastwise trade; fisheries; U.S.-flag fish processor; exclusive economic zone (EEZ); territorial sea; Nicholson Act; 46 U.S.C. 12101, 12106, 12108; 46 U.S.C. App. 883.

Dear Commander Rome:

This is in response to your letter dated April 5, 1991, which requests a ruling regarding the use of U.S.-flag fish processing vessels.

FACTS:

Your letter seeks a ruling regarding five different scenarios involving the operation fishing industry vessels off the coast of Alaska to determine whether the situation involves coastwise, fisheries or foreign trade. Although each of the scenarios involves a U.S.-flag fish processing vessel, no information has been provided regarding vessel's place of build. Specifically, your letter asks the following questions:

ISSUES:

1). Whether a U.S.-flag fish processor, which anchors within the three mile limit, brings products on board, processes the product and then moves to a U.S. port while remaining within the three mile limit to offload the product is engaged in coastwise trade.

2). Whether a U.S.-flag fish processor, which anchors within the three mile limit, brings the product on board, processes the product and then moves the vessel to a U.S. port but goes beyond the three mile limit before landing at a U.S. port to offload is engaged in coastwise trade.

3). Whether a U.S.-flag fish processor operating beyond the three mile limit which brings the product on board, moves the vessel within the three mile limit, processes the product and then moves the vessel to a U.S. port to offload the product is engaged in coastwise trade.

4). Whether a U.S.-flag fish processor operating beyond the three mile limit which brings the product on board, processes the product while remaining outside the three mile limit and then moves the vessel to a U.S. port to offload the product is engaged in coastwise trade.

5). Whether a U.S.-flag fish processor operating beyond the twelve mile limit which brings the product on board, processes the product while remaining outside the twelve mile limit and then transfers the product to a foreign vessel is engaged in foreign trade requiring a registry endorsement on the Certificate of Documentation.

6). Whether the answers to the scenarios listed above would be different if the product has been purchased by the fish processor, or if the product has been consigned to them for processing and transport to a U.S. port.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, section 883 (46 U.S.C. App. 883), 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.

Section 4.80b(a), Customs Regulations (19 CFR 4.80b(a)) 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.

The Vessel Documentation Act, 46 U.S.C. 12101 et seq., sets forth the terms under which vessels may be documented for coastwise trade. Under 46 U.S.C. 12106, only vessels eligible for documentation (i.e., vessels over five net tons and owned by a U.S. citizen) which were built in the United States (or
captured as a war prize) may be documented for the coastwise trade. Further, 46 U.S.C. 12106(b) states that, subject to the laws of the United States regulating the coastwise trade, only a vessel for which a certificate of documentation for which a coastwise endorsement has been issued may be employed in the coastwise trade. However, it should be noted that 46 U.S.C. 12106(c) contains certain exceptions for vessel engaging in the coastwise trade of fisheries products between places in Guam, American Samoa, and the Northern Mariana Islands.

Title 19, United States Code, section 1401(c) defines the term "merchandise" as "goods, wares, and chattels of every description, and includes merchandise the importation of which is prohibited, and monetary instruments as defined in section 5312 of Title 31." Moreover, under a recent amendment to 46 U.S.C. App. 883, the term "merchandise" encompasses even "valueless material."

In interpreting section 883, Customs has ruled that a points in the United States embraced within the coastwise laws include points in the territorial sea (defined as the belt, three nautical miles wide, seaward of the territorial sea baseline), and points located in internal waters (those waters landward of the territorial sea baseline, in cases where the baseline and the coastline differ). For purposes of the coastwise laws, then, the high seas are those waters outside the three-mile territorial sea.

We note that, on December 27, 1988, Presidential Proclamation 5923 extended the territorial sea of the United States to 12 nautical miles from the baselines of the United States and included waters adjacent to the coasts of the United States, the U.S. Commonwealth of Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Commonwealth of the Northern Mariana Islands, and any other territory or possession over which the United States exercises sovereignty.

However, the Proclamation contained language limiting the operation of this extension by stating:

Nothing in this Proclamation:

(a) extends or otherwise alters existing
Federal or State law or any jurisdiction, rights, legal interests, or obligations derived therefrom; or

(b) impairs the determination, in accordance with international law, of any maritime boundary of the United States with a foreign jurisdiction.

Thus, the Proclamation extends the territorial sea only for international purposes; existing Federal and State laws are not altered. Accordingly, for purposes of the Customs laws, the territorial sea remains at three miles.

The Commercial Fishing Industry Vessel Anti-Reflagging Act of 1987, (the Anti-Reflagging Act) Pub.L. No. 100-239, section 3, 101 Stat. 1778 (1988), expanded both the geographical boundaries and the scope of activities which constitute "fisheries" previously set forth in 46 U.S.C. 12101 to include the following activities:
processing, storing, transporting (except in foreign commerce), planting cultivating, catching, taking, or harvesting fish, shellfish, marine animals, pearls, shells, or marine vegetation in the navigable waters of the United States or in the exclusive economic zone [EEZ].

46 U.S.C. 12101(a)(1).

The Exclusive Economic Zone [EEZ] was established on March 10, 1983, by Presidential Proclamation 5030, and is defined as "a zone contiguous to the territorial sea, including zones contiguous to the territorial sea of the United States, the Commonwealth of Puerto Rico, the Commonwealth of the northern Mariana Islands (to the extent consistent with the Covenant and the United Nations Trusteeship Agreement), and United States overseas territories and possessions. The Exclusive Economic Zone extends to a distance of 200 nautical miles from the baseline from which the breadth of the territorial sea is measured."

The Vessel Documentation Act, 46 U.S.C. 12101 et seq., sets forth the terms under which vessels may be documented for the fisheries. Under 46 U.S.C. 12108(a), only vessel eligible for documentation (i.e., vessels over five net tons and owned by a U.S. citizen) which were built or rebuilt in the United States (or captured as a war prize may be documented for the fisheries. Furthermore, 46 U.S.C. 12108(b) states that, subject to the laws of the United States regulating the fisheries, only a vessel for which a certificate of documentation with a fisheries endorsement has been issued may be employed in the fisheries. However, 46 U.S.C. 12108(c) provides certain conditions for the issuance of a fishery endorsement for vessels engaged in the fisheries in Guam, American Samoa and the Northern Mariana Islands.

The legislative history of the Anti-Reflagging Act indicates that the primary purpose of the Act was to prohibit the reflagging of foreign-built processing vessels as vessels of the

United States for operation in the domestic fisheries under the Magnuson Fishery Conservation and Management Act (MFCMA), codified at 16 U.S.C. 1801 et seq. (House Report No. 100-423, U.S. Code Congressional and Administrative News at page 3245). The House Report also states that the Anti-Reflagging Act was intended to further "the fundamental purposes of the [MFCMA] by displacing foreign-built with domestically-built fishing industry vessels in U.S. fisheries." Moreover, the House Report states that the Anti-Reflagging Act "harmonizes fisheries and maritime law by imposing similar requirements on the documentation, ownership, manning and construction of fishing, fish tender, and fish processing vessels engaging in the fisheries trade as are imposed on vessels engaged in coastwise transportation under the shipping laws."

Utilizing the definitional framework and applicable statutes detailed above, the analysis of the five issues presented for our determination is as follows:

1). Whether a U.S.-flag fish processor, which anchors within the three mile limit, brings products on board, processes the product and then moves to a U.S. port while remaining within the three mile limit to offload the product is engaged in coastwise trade.

Since the processing of fish is included in the list of activities which constitute "fisheries" under 46 U.S.C. 12101(a)(1), and since this processing is undertaken within the waters of the EEZ, the vessel would be engaged in the fisheries.

Since the fish product to be transported falls within the category of "goods, wares and chattels of every description" within the meaning of 19 U.S.C. 1401, the fish product would be considered to be "merchandise," the transportation of which is subject to the coastwise limitation contained in 46 U.S.C. App. 883.

Since, at the time of product lading, the vessel is located within the three-mile territorial sea, it is located at a coastwise point. Therefore, upon moving the fish product to a U.S. port, there has been a transportation of merchandise from one U.S. coastwise point to another U.S. coastwise point. Since there has been a transportation of merchandise between points in the United States the vessel is engaging in coastwise trade.

2). Whether a U.S.-flag fish processor, which anchors within the three mile limit, brings the product on board, processes the product and then moves the vessel to a U.S. port but goes beyond the three mile limit
before landing at a U.S. port to offload is engaged in coastwise trade.

Since the processing of fish is included in the list of activities which constitute "fisheries" under 46 U.S.C. 12101(a)(1), and since this processing is undertaken within the waters of the EEZ, the vessel would be engaged in the fisheries.

Since the fish product to be transported falls within the category of "goods, wares and chattels of every description" within the meaning of 19 U.S.C. 1401, the fish product would be considered to be "merchandise," the transportation of which is subject to the coastwise limitation contained in 46 U.S.C. App. 883.

Since the vessel was located within the waters of the territorial sea when the fish product was placed on board, the vessel was laden at a U.S. coastwise point. Under 46 U.S.C. App. 883, the limitation placed upon the movement of merchandise in non-qualified vessels is transportation "either directly or by way of a foreign port." Here, although the vessel travels beyond the three-mile territorial sea, it has proceeded directly from one coastwise point to another coastwise point. The continuity of the voyage has not been broken.

Therefore, upon moving the fish product to a U.S. port, there has been a transportation of merchandise from one U.S. coastwise point to another U.S. coastwise point. Since there has been a transportation of merchandise between points in the United States the vessel is engaging in coastwise trade.

3). Whether a U.S.-flag fish processor operating beyond the three mile limit which brings the product on board, moves the vessel within the three mile limit, processes the product and then moves the vessel to a U.S. port to offload the product is engaged in coastwise trade.

Since the processing of fish is included in the list of activities which constitute "fisheries" under 46 U.S.C. 12101(a)(1), and since this processing is undertaken within the waters of the EEZ, the vessel would be engaged in the fisheries.

Since the fish product to be transported falls within the category of "goods, wares and chattels of every description" within the meaning of 19 U.S.C. 1401, the fish product would be considered to be "merchandise," the transportation of which is subject to the coastwise limitation contained in 46 U.S.C. App. 883.

However, since the fish product is placed aboard the vessel while it is beyond the three-mile territorial sea, merchandise has not been laden at a coastwise point. Even if the vessel proceeds to a U.S. port, a transportation of merchandise between coastwise points has not occurred. Thus, the vessel has not engaged in the coastwise trade.

4). Whether a U.S.-flag fish processor operating beyond the three mile limit which brings the product on board, processes the product while remaining outside the three mile limit and then moves the vessel to a U.S. port to offload the product is engaged in coastwise trade.

Since the processing of fish is included in the list of activities which constitute "fisheries" under 46 U.S.C. 12101(a)(1), and since this processing is undertaken within the waters of the EEZ, the vessel would be engaged in the fisheries.

Since the fish product to be transported falls within the category of "goods, wares and chattels of every description" within the meaning of 19 U.S.C. 1401, the fish product would be considered to be "merchandise," the transportation of which is subject to the coastwise limitation contained in 46 U.S.C. App. 883.

However, since the fish product is placed aboard the vessel while it is beyond the three-mile territorial sea, merchandise has not been laden at a coastwise point. Even if the vessel proceeds to a U.S. port, a transportation of merchandise between coastwise points has not occurred. Thus, the vessel has not engaged in the coastwise trade.

5). Whether a U.S.-flag fish processor operating beyond the twelve mile limit which brings the product on board, processes the product while remaining outside the twelve mile limit and then transfers the product to a foreign vessel is engaged in foreign trade requiring a registry endorsement on the certificate of documentation.

Since the processing of fish is included in the list of activities which constitute "fisheries" under 46 U.S.C. 12101(a)(1), and since this processing is undertaken within the waters of the EEZ, the vessel would be engaged in the fisheries.

With regard to the activities of the fish processing vessel, we note that the term "foreign trade" has been described in previous Customs precedent as encompassing a variety of activity, including, "trade between foreign countries", "the exportation and importation of goods, or the exchange of commodities of
different countries," and "trading between a port of the United States and a foreign port, or between two foreign ports, or between the Atlantic and Pacific ports of the United States" (Customs Ruling 106552 (dated March 13, 1984)).

In light of these descriptions, insofar as engagement in foreign trade is concerned, there is such an engagement for Customs purposes. That is not to say, however, that the same must be true for the purposes of the laws enforced by your agency, e.g., for documentation purposes. We believe that question is within the discretion of your legal office.

The scenario presented for our consideration does not indicate what the foreign vessel will do upon receiving the fish product. We note that, under the Nicholson Act (46 U.S.C. App. 251(a)), a foreign-flag vessel may not land in a port of the United States its catch of fish taken on board on the high seas, which, for purposes of this statute, are those waters beyond the three-mile territorial sea.

In the alternative, should the vessel wish to proceed to a foreign port upon receiving the fish product, we note that a permit may be required for it to do so. As the issuance of such permits is not within the purview of the Customs Service, we suggest you contact the National Oceanic and Atmospheric Agency for further information.

6). Whether the answers to the scenarios listed above would be different if the product has been purchased by the fish processor, or if the product has been consigned to them for processing and transported to a U.S. port.

The fact that the fish products may have been purchased or consigned to the fish processing vessel for processing and transport of a U.S. port is of no consequence to the analysis provided above. The fish products meet the definition of "merchandise" provided by 19 U.S.C. 1401(c) and therefore, are subject to the coastwise limitation pursuant to 46 U.S.C. 883.

Finally, we note that this letter addresses only those federal requirements that are administered by the U.S. Customs Service. While we are unaware of any other federal or state agency requirements that might pertain to the issues you present, it is possible that such requirements exist.

HOLDING:

1). A U.S.-flag fish processor anchored within the three mile limit, which brings a fish product on board, processes the
product and then moves to a U.S. port while remaining within the three mile limit to offload the product is engaged both in the fisheries and in coastwise trade.

2). A U.S.-flag fish processor anchored within the three mile limit, which brings a fish product on board, processes the product and then moves the vessel to a U.S. port but goes beyond the three mile limit before landing at a U.S. port to offload is engaged both in the fisheries and in coastwise trade.

3). A U.S.-flag fish processor operating beyond the three mile limit, which brings a fish product on board, moves the vessel within the three mile limit, processes the product and then moves the vessel to a U.S. port to offload the product is engaged in the fisheries but is not engaged in coastwise trade.

4). A U.S.-flag fish processor operating beyond the three mile limit, which brings a fish product on board, processes the product while remaining outside the three mile limit and then moves the vessel to a U.S. port to offload the product is engaged in the fisheries but is not engaged in coastwise trade.

5). A U.S.-flag fish processor operating beyond the twelve mile limit, which brings the product on board, processes the product while remaining outside the twelve mile limit and then transfers the product to a foreign vessel is engaged in foreign trade.

6). The answers to the scenarios listed above would not be different if the product has been purchased by the fish processor, or if the product has been consigned to them for processing and transport to a U.S. port.

Sincerely,

B. James Fritz

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