HQ 0112693 - Coastwise Trade; Jones Act; 46 U.S.C. app. 883; Dredging; Construction; Passengers - United States International Trade Commision Rulings

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HQ 112693

July 14, 1993

VES-3-17-CO:R:IT:C 112693 DEC

CATEGORY: CARRIER

Ms. Linda J. MacDonald
Contract Specialist
Saint Lawrence Seaway Development Corporation P.O. Box 520
Massena, New York 13662-0520

RE: Coastwise Trade; Jones Act; 46 U.S.C. app. 883; Dredging; Construction; Passengers

Dear Ms. MacDonald:

This ruling is in response to your May 12, 1993, inquiry concerning the eligibility of a Canadian-built vessel to be engaged in various maintenance operations along the Saint Lawrence Seaway.

FACTS:

The Saint Lawrence Seaway Development Corporation is in the process of procuring a multi-purpose crane barge. The barge will be used for maintenance dredging as well as for construction, repair, and maintenance of the corporation's fixed navigational aids and docking facilities. In addition, the barge will serve as a back up to the corporation's buoy barge during the fall and spring buoy runs to commission and de-commission the floating buoys during which the buoys will be transported and placed in storage during the winter and taken out to be re-positioned in the spring. The barge will be equipped with a crawl crane and the crew will consist of the corporation's marine and trade personnel as well as a crane operator.

ISSUES:

1. Whether a non-coastwise qualified vessel may engage in maintenance dredging operations in the United States.

2. Whether a non-coastwise qualified vessel may engage in maintenance operations that involve the construction, repair, and maintenance of navigational aids and docking facilities at various coastwise points.

3. Whether a non-coastwise qualified vessel may be used to load and to drop off buoys at various coastwise points.

4. Whether a non-coastwise qualified vessel may use a crane to move items between coastwise points.

5. Whether a non-coastwise qualified vessel can transport individuals who are connected to its navigation, ownership, or business.

LAW AND ANALYSIS:

Title 46, United States Code, appendix, section 292(a), states that

Except as provided in subsection (b) of this section, a vessel may engage in dredging in the navigable waters of the United States only if- . . .
(3) for a vessel that is at least 5 net tons, the vessel is documented under chapter 121 of Title 46 with a coastwise endorsement.

46 U.S.C. app. 292 (1993).

Since a foreign-built vessel is ineligible to obtain a coastwise endorsement (46 U.S.C. app. 12106), it may not engage in dredging operations within U.S. territory. Consequently, a Canadian-built vessel engaging in dredging operations in U.S. territorial waters would be in violation of 46 U.S.C. app. 292 even if the vessel did not transport the dredged material. The penalty for knowingly violating this statute is "seizure by and forfeiture to the United States Government" of the vessel in violation. 46 U.S.C. app. 292(c)(1993).

The issue of whether a non-coastwise qualified vessel may engage in operations involving the construction, repair, and maintenance of navigational aids and docking facilities depends on the nature of the particular operation. Pursuant to Title 19, Code of Federal Regulations, section 4.80b, "[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." 19 C.F.R. 4.80b (1993).

Therefore, your contemplated use of a non-coastwise qualified vessel that will lade various items at a coastwise point for use in the construction, repair, or maintenance of navigational aids and docking facilities that results in the unlading of various items at other coastwise points would be a violation of the coastwise laws. Only the items laded at one coastwise point and unladed at another coastwise point would be the subject of the coastwise law violation. The tools and equipment aboard the vessel that are used to carry- out the construction, repair, and maintenance would be the source of a coastwise violation only if they are unladen at the worksite. The mere transport and use of the vessel's supplies at the various sites would not violate the coastwise law.

Additionally, the spring and fall buoy runs to commission and de-commission the floating buoys may constitute a coastwise violation if performed with a non-coastwise qualified vessel. Whether a violation occurs depends on the location of the buoys when they are laded and unladed. Based on the information provided to Customs, it appears that the buoys will be deployed from a coastwise point (e.g. a nearby storage facility from the corporation's headquarters in New York). Their destinations are predominantly points within U.S. territorial waters, but may include points in Canadian or international points as well. The transportation of buoys from a U.S. storage facility to a point within the territorial waters is a "transportation of merchandise" and must be accomplished by a coastwise-qualified vessel. If the buoys are being placed in Canadian or international waters, then there are no coastwise issues raised and the transportation would be allowed. When the buoys are brought back to storage, they must be transported via a coastwise qualified vessel if they are in U.S. waters.

Depending on how the use of the crawl crane is implemented into the dredging and buoy run operations, a violation of the coastwise law may arise. The Customs Service has long held that the use of a non-coastwise qualified crane vessel to load and unload cargo or to construct or dismantle a marine structure is not coastwise trade and does not violate the coastwise laws, provided, that any movement of merchandise is effected exclusively by the operation of the crane and not by movement of the vessel, except for necessary movement which is incidental to a lifting operation while it is taking place. Thus, a crane barge could lift merchandise with its crane at one coastwise point, be pivoted while remaining at one location, and put down the merchandise at a place other than that from which it was lifted. A crane barge would be prohibited from lifting merchandise with its crane at one coastwise point, being towed or pushed or otherwise moving to another coastwise point while the merchandise is suspended from the crane, and placing the merchandise at a second coastwise point. Headquarter Rulings 106351 (Nov. 1, 1983) and 108213 (Mar. 6, 1986).

Title 46, United States Code, appendix, section 289 expressly prohibits a foreign vessel from transporting "passengers between ports or places in the United States, either directly or by way of a foreign port. . .." 19 U.S.C. app. 289 (1992). The Customs Regulations define "passenger" for purposes of section 289 as "any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business." 19 C.F.R. 4.50(b)(1993). From your description of the individuals who will be aboard (three to four marine personnel, one crane operator, and several trade personnel), there appear to be no passenger coastwise violations. If additional individuals who are not connected with the navigation, ownership, or business of the vessel are transported between coastwise points, then there is a coastwise law violation.

HOLDINGS:

1. A non-coastwise qualified vessel is expressly prohibited from engaging in dredging operations at points embraced within the coastwise laws. 46 U.S.C. app. 292 (1992).

2. A non-coastwise qualified vessel may engage in the construction, repair, and maintenance of navigational aids and docking facilities at coastwise points so long as there is no lading of materials at one coastwise point and an unlading of the materials at another coastwise point.

3. A non-coastwise qualified vessel may not be used to transport buoys from one coastwise point to another, but may be used to transport the buoys to or from Canadian or international waters.

4. A non-coastwise qualified vessel may use a crane to transport items between coastwise points so long as the crane is the source of the movement. If the non-coastwise qualified vessel upon which the crane is attached is moved, then there is a coastwise violation.

5. A non-coastwise qualified vessel is permitted to transport only individuals who are connected to its navigation, ownership, or business.

Sincerely,

Acting Chief

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