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HQ 112765

July 23, 1993

VES-3-21 CO:R:IT:C 112765 JBW

CATEGORY: CARRIER

A. E. Henn
Rear Admiral, United States Coast Guard
Chief, Office of Marine Safety,
Security and Environmental Protection
2100 Second Street, S.W.
Washington, D.C. 20593-0001

RE: Coastwise; Vessel; Equipment; Collapsible Bladders; Dracones; Emergency Response; Oil Pollution Act of 1990; 46 U.S.C. app. 883.

Dear Admiral Henn:

Thank you for your letter of June 16, 1993, in which you request a ruling by the Customs Service on the application of the coastwise laws (46 U.S.C. app. 883) to the use of collapsible bladders known as "dracones" or "temporary storage bladders (TSBs)" for emergency response to oil and hazardous substance discharges.

FACTS:

Dracones are flexible containers used for the containment of oil or other hazardous substances skimmed from the surface of the water. The dracones are attached to the skimming equipment of a skimming vessel and filled with oil spill waste. The dracones are then detached from the skimming vessel, and they either remain stationary for discharge into a support barge or may be towed to a discharge area. After discharge, the dracones are rolled up and transported back to the skimming vessels where they may be reused.

The only use of the dracones under consideration is for oil recovery and storage. The materials from which they are made render the dracones unusable for non-petroleum products. Moreover, the dracones currently are not used for the commercial transportation of cargo nor, given their unique design, are they capable of such use.

ISSUE:

Whether dracones used for oil and hazardous waste clean-up are vessels and consequently subject to the restrictions of the coastwise laws.

LAW AND ANALYSIS:

The coastwise laws of the United States prohibit the transportation of merchandise between points in the United States embraced within the coastwise laws, either directly or via a foreign port, 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. 46 U.S.C.A. app. 883 (West Supp. 1993)(referred to as "the Jones Act").

The term merchandise is defined in the coastwise statute to include valueless materials. 46 U.S.C. app. 883. The statute further provides that the transportation of valueless material, regardless of its commercial value, from a point or place in the United States or a point or place on the high seas within the Exclusive Economic Zone, as defined in the Presidential Proclamation of March 10, 1983, to another point or place in the United States or a point or place on the high seas within the Exclusive Economic Zone falls within the ambit of the coastwise statute.

From this statutory framework, the Customs Service has concluded that the removal of surface oil by skimming constitutes a lading of merchandise. Headquarters Ruling Letter 111420, dated June 17, 1991. The deposit of the skimmed oil at a different point would constitute an unlading of merchandise. The coastwise laws prohibit the use of a non-coastwise-qualified mobile vessel for such recovery and transportation of oil in waters within the jurisdiction of the coastwise laws. Headquarters Ruling Letter 110386, dated September 29, 1989. However, Customs has held that the use of a non-coastwise-qualified vessel as a stationary facility for lodging, processing, storing, or other activities is not a "transportation" that is prohibited by section 883. Id. If such a stationary vessel is being loaded or unloaded and must be moved to another location temporarily due to stress of weather or other reason involving the safety of the vessel, the coastwise laws are not violated so long as no loading or unloading occurs at any other coastwise point and the vessel is subsequently returned to its original location once the danger has passed. Id.

Only coastwise-qualified vessels may accept the transfer of the recovered oil at a coastwise point for transportation to another coastwise point, regardless of whether the vessel leaves the territorial waters or Exclusive Economic Zone of the United States. Headquarters Ruling Letter 110276, dated June 15, 1989. Transportation by a non-coastwise-qualified vessel is permitted only if the oil is unloaded at a foreign point. Id.

The coastwise restrictions set out above are applicable only to objects that are "vessels" under the statute. The term vessel, for purposes of the coastwise law, is statutorily defined to include: "every description of watercraft or other artificial contrivance used, or capable of being used, as a means of transportation on water." 1 U.S.C.A. 3 (West 1985); 46 U.S.C.A. 2101(45) (West 1993). The courts have not specifically addressed the definition of vessel as it is used in 46 U.S.C. app. 883. However, examination of the term has been the focus of judicial inquiry in other contexts.

The variety of structures and the different uses to which they are put have led courts to examine "the purpose for which the craft is constructed and the business in which it is engaged" when evaluating whether a particular watercraft or structure is a vessel. Gremillion v. Gulf Coast Catering Co., 904 F.2d 290, 293 (5th Cir. 1990)(quoting The Robert W. Parsons, 191 U.S. 17 (1903)). The court in Gremillion states: "The caselaw is heavily skewed in favor of conferring such status upon craft whose primary mission is the transportation of cargo, equipment, or passengers over navigable waters." Id. The vessel must be designed for navigation and commerce. Fox v. Taylor Diving & Salvage Co., 694 F.2d 1349, 1354 (5th Cir. 1983). Although watercraft that are not considered vessels may possess some navigability, any transportation function must be incidental to the primary function of the watercraft. Brunet v. Boh Brothers Construction Co., 715 F.2d 196, 198 (5th Cir. 1983). Finally, courts may determine whether the designation of a craft as a vessel is consistent with underlying policy of the statute. See generally, T. Schoenbaum, Admiralty and Maritime Law

From these authorities, we determine that dracones used for oil or hazardous materials clean-up are not vessels for purposes of 46 U.S.C. app. 883. The purpose for which the dracones are used is to collect and contain skimmed oil or other hazardous substances, not for the transportation of those waste materials. In essence, the dracones are external storage tanks that are more properly characterized as equipment than as vessels. See Headquarters Ruling Letter 111892, dated September 16, 1991. The fact that they float and can be moved on water is incidental to the primary containment purpose. Finally, the policy purposes of the coastwise laws are to protect and promote the United States merchant marine, shipyards, and national defense. Wirth Ltd. v. S/S Acacia Forest, 537 F.2d 1272 (5th Cir. 1976). Emergency oil spill recovery is not an activity typically associated with the merchant marine, and dracones are not the type of watercraft that are usually constructed in United States shipyards. Thus, extending vessel status to dracones is not consistent with the underlying policies of the coastwise laws.

Treasury Decision 55274(1) held that dracones are vessels that are subject to the coastwise laws. T.D. 55274(1), 95 Treas. Dec. 511 (1960). The items under consideration in that determination were intended to be used in commercial intercoastal trade. Id. Since that decision, commercial transportation using dracones has proven to be unfeasible. The facts presented in this earlier case may therefore be distinguished from the present facts, and we do not find Treasury Decision 55274(1) to be controlling in this case.

HOLDING:

Dracones used for oil or hazardous materials clean-up are not vessels for purposes of 46 U.S.C. app. 883.

Sincerely,

Acting Chief

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