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HQ 113132 DEC


June 9, 1994

VES-3-14-CO:R:IT:C 113132 DEC

CATEGORY: CARRIER

Mr. Bruce Stein
Aufrichtig, Stein & Aufrichtig, P.C.
Fifth Floor
300 East Forty Second Street
New York, New York 10017

RE: Coastwise Trade; Foreign Trade Zone; 19 U.S.C. ?81e

Dear Mr. Stein:

This ruling is in response to your facsimile transmittal of June 7, 1994, in which you inquired as to the legality of using a non-coastwise qualified vessel to transport gasoline from a foreign trade zone in Puerto Rico to Connecticut.

FACTS:

In your correspondence with the Customs Service, you indicate that your client plans to transport foreign-produced gasoline from Brazil to Puerto Rico, the Dominican Republic, and Connecticut. Since the first two ports present draft restrictions, the vessel plans to discharge 40,000 barrels of gasoline in a Puerto Rican foreign trade zone before making its first delivery in San Juan. The vessel will then proceed to the Dominican Republic to make its second delivery. Subsequently, the vessel will return to the Puerto Rican foreign trade zone to retrieve the 40,000 gallons of gasoline and make its final delivery of gasoline in Connecticut.

ISSUE:

Whether the use of a non-coastwise qualified vessel to transport merchandise from a Puerto Rican foreign trade zone to Connecticut violates the coastwise laws.

LAW AND ANALYSIS:

The coastwise law pertaining to the transportation of merchandise, as amended (41 U.S.C. app. 883, often called the Jones Act), provides that:

No merchandise, including merchandise owned by the United States Government . . . shall be transported by water, or by land and water . . . 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 . . ..

For purposes of the coastwise laws, a point in the United States territorial waters is considered a point embraced within the coastwise laws. The territorial waters of the United States consist of the territorial sea, defined as the belt, three nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline.

Title 19, United States Code, section 81e addresses the issue of vessels entering or leaving a foreign trade zone and provides that

Vessels entering or leaving a zone shall be subject to the operation of all the laws of the United States, except as otherwise provided in this chapter, and vessels leaving a zone and arriving in customs territory of the United States shall be subject to such regulations to protect the revenue as may be prescribed by the Secretary of the Treasury. Nothing in this chapter shall be construed in any manner so as to permit vessels under foreign flags to carry goods or merchandise shipped from one foreign trade zone to another zone or port in the protected coastwise trade of the United States.

19 U.S.C. ?81e (1993).

The transportation of gasoline laded in a Puerto Rican foreign trade zone and transported to Connecticut where it is to be unladed constitutes a coastwise movement of merchandise that is subject to the restrictions of the coastwise laws.

HOLDING:

Merchandise transported from a United States foreign trade zone to another port of the United States embraced within the coastwise laws must be conveyed via a coastwise-qualified vessel.

The contemplated transport of gasoline from a Puerto Rican foreign trade zone to Connecticut aboard a foreign vessel would constitute a violation of the coastwise laws.

Sincerely,

Arthur P. Schifflin
Chief

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