HQ 113461 - Coastwise Trade; Merchandise; Passengers; Oceanographic Research; 46 U.S.C. App. ?? 289, 883 - United States International Trade Commision Rulings

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HQ 113461

June 8, 1995

VES-3-14:R:IT:C 113461 GEV

CATEGORY: CARRIER

Michael R. Hubbell, Esq.
Breazeale, Sachse & Wilson, L.L.P.
Twenty-Third Floor
One American Place
Post Office Box 3197
Baton Rouge, Louisiana 70821-3197

RE: Coastwise Trade; Merchandise; Passengers; Oceanographic Research; 46 U.S.C. App. ?? 289, 883

Dear Mr. Hubbell:

This is in response to your letter of June 6, 1995, requesting a ruling on the applicability of the coastwise laws to the R/V ALBUQUERQUE which has been designated as an oceanographic research vessel. Our ruling on this matter is set forth below.

FACTS:

The R/V ALBUQUERQUE, a U.S.-flagged vessel currently documented for the coastwise trade, is owned by Kinco Operating, Inc. ("Kinco"), a corporation organized under the laws of the State of Louisiana with its stockholders, directors and officers all being United States citizens. The vessel is currently chartered exclusively by Kinco to Kinsella, Cook & Associates, Inc. ("Kinsella"), also a Louisiana corporation wholly owned by stockholders who are United States citizens. The U.S. Coast Guard designated the subject vessel an oceanographic research vessel by letter dated September 8, 1994, in response to a request for such a designation by Kinco.

Specifically, the vessel is used to acquire oceanographic data, primarily in the Gulf of Mexico and adjacent inland waters, that is needed to perform high resolution hazard, archeological, seismic and pipeline route surveys, and other surveys that acquire data pertaining to the nature of the offshore marine environment. Only "scientific personnel", as defined by 46 U.S.C. ? 2101(31) and 46 U.S.C. App. ? 441(2), man the vessel in its oceanographic research
operations. Ordinarily, those on board will be employees of the owner or charterer; occasionally other scientific personnel and technicians may come on board to operate technical equipment used in the aforementioned surveys. No personnel will be transported from one point or place in the United States to another point or place in the United States, either for a consideration or otherwise, although scientific personnel may be disembarked at points other than their place of embarkation after a tour of duty on the vessel. Furthermore, the vessel carries only those supplies and equipment necessary in its operations as an oceanographic (scientific research and survey) vessel.

The stockholders of Kinco are currently contemplating an exchange of 100% of their stock to a Canadian company, which will form K.C. Offshore, L.L.C., a Louisiana limited liability company wholly owned by Canadian citizens. This limited liability company will charter the vessel from Kinco which will meet the U.S. citizenship requirements of 46 CFR ? 67.03-9(a)(1)(2)(3)(4). Accordingly, Kinco will request a change in the endorsement on the subject vessel's certificate of documentation from coastwise to registry.

ISSUE:

Whether oceanographic research conducted within the territorial waters of the United States constitutes an engagement in the coastwise trade.

LAW AND ANALYSIS:

The Act of June 19, 1886, as amended (24 Stat. 81; 46 U.S.C. App. ? 289, sometimes called the coastwise passenger law), provides that:

No foreign vessel shall transport passengers between ports or places in the United States either directly or by way of a foreign port, under a penalty of $200 for each passenger so transported and landed.

Customs has consistently interpreted the above prohibition to apply to all vessels except United States-built, owned, and properly documented vessels (see 46 U.S.C. ? 12106, 12110; 46 U.S.C. App. ? 883; 19 CFR ? 4.80). Furthermore, for purposes of the above statute a "passenger" is defined as "...any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business." (See 19 CFR ? 4.50(b))

The coastwise law pertaining to the transportation of merchandise, ? 27 of the Act of June 5, 1920, as amended (41 Stat. 999; 46 U.S.C. App. ? 883, often called the "Jones Act"), provides, in pertinent part, that:

No merchandise,... shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the transportation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to 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 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...

Under the so-called "First Proviso" to ? 883:

...[N]o vessel having at any time acquired the lawful right to engage in the coastwise trade, either by virtue of having been built in, or documented under the laws of the United States, and later sold foreign in whole or in part, or placed under foreign registry, shall hereafter acquire the right to engage in the coastwise trade.

The coastwise laws generally apply to points in the territorial sea, defined as the belt, three 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. The term "merchandise" as used in ? 883, includes any article, including valueless materials (see amendment to ? 883 by the Act of June 7, 1988, Pub.L. 100-329; 102 Stat. 588).

In its interpretation of the coastwise laws with regard to the issue under consideration, Customs has long held that the use of a vessel solely to engage in oceanographic research is not considered a use in the coastwise trade (see ruling letters 109344, dated July 6, 1988, and 110399, dated August 23, 1989). We have held that the use of non-coastwise-qualified vessels to engage in oceanographic research, including the transportation of persons participating in such research to, from, and between research sites in United States territorial waters, whether or not the persons participating in the research temporarily leave the vessels at the research sites, would not violate the coastwise laws. Furthermore, we have held that the collection of marine specimens at the research sites and the transportation of those specimens from the research sites to points in the United States would not violate the coastwise laws. Of course, if such a vessel transported between coastwise points, or provided any part of such transportation, of any persons other than the vessel crew, persons engaging in oceanographic research and students receiving instruction in such research, or any merchandise other than the usual supplies and equipment necessary for the research and/or research specimens or samples, the coastwise laws would be violated.

This interpretation of the coastwise laws is buttressed by the Act of July 30, 1965 (Pub.L. 89-99; 79 Stat. 424; 46 U.S.C. App. ?? 441-444, often called the Oceanographic Research Vessel Act), as amended, ? 3 (46 U.S.C. App. ? 443) of which provides that, "An oceanographic research vessel shall not be deemed to be engaged in trade or commerce." This Act, in defining the term "oceanographic research vessel," defines oceanographic research as "...including, but not limited to, such studies pertaining to the sea as seismic, gravity meter and magnetic exploration and other marine geophysical or geological surveys, atmospheric research, and biological research." (46 U.S.C. App. ? 441(1))

The contemplated foreign stock exchange of the vessel under consideration would render it ineligible for the coastwise trade. However, we conclude that the use of the vessel as described above constitutes oceanographic research which would not be violative of the coastwise laws. Accordingly, the R/V ALBUQUERQUE would not be required to have a coastwise endorsement on its certificate of documentation to engage in such activity in the territorial waters of the United States.

HOLDING:

Oceanographic research conducted within the territorial waters of the United States does not constitute an engagement in the coastwise trade. Consequently, a vessel issued a certificate of documentation from the U.S. Coast Guard with a registry endorsement may engage in oceanographic research in United States territorial waters.

Sincerely,

Arthur P. Schifflin

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