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HQ 113569




May 21, 1995

VES-10-01-R:IT:C 113569 BEW

CATEGORY: CARRIER

Neal Michael Mayer, Esquire
Hoppel, Mayer & Coleman
Attorneys and Counsellors-at- Law
1000 Connecticut Avenue, N.W.
Washington, D. C. 20036

RE: Coastwise trade; Diversion of merchandise, Hurricane Marilyn, Virgin Islands; 46 U.S.C. App 883

Dear Mr. Mayer:

This is in reference to your letter of September 19, 1995, concerning a request on behalf of Tropical Shipping & Construction Co. Ltd. (Tropical), for a waiver of the penalties for a proposed violation of the coastwise laws, to permit merchandise which originated in the mainland U.S., and is now in the U.S. Virgin Islands, to be transported to San Juan.

FACTS:

You state that Tropical carries substantial amounts of refrigerated containers laden with cargoes to supply the cruise vessels that serve St. Thomas, Virgin Islands, which is a major port of call for such cruise vessels. You state that Tropical currently has in its St. Thomas marine terminal approximately 32 forty-foot reefer containers for cruise vessel customers.

Hurricane Marilyn has caused extensive damage to the U.S. Virgin Islands, especially St. Thomas. As a result of the damage caused by Hurricane Marilyn, it is not anticipated that cruise vessels will be calling at St. Thomas at any time in the near future. You state that these cruise ship operators have asked Tropical to transfer all of the St. Thomas refrigerated containers to San Juan, Puerto Rico, and that Tropical is willing to do so provided no penalties are assessed for violation of the coastwise laws.

You further state the refrigerated cargoes are subject to spoilage and need to be supported with electrical power, the cargoes are at risk of total loss if they remain in St. Thomas, and that this request only affects those refrigerated containers that are in St. Thomas.

You state that Tropical is the only vessel operator capable of moving shipments from St. Thomas to San Juan, and providing the necessary electrical power to the reefers to protect the cargoes from spoilage. You further state that the removal of these reefer containers from St. Thomas will create terminal space and reefer capabilities for much needed relief cargoes to St. Thomas.

In addition to your request, we have received a bulletin from Tropical Shipping dated Wednesday September 20, 1995, 8:00 a.m. which indicates the following:

That due to night navigational aids missing in the St. Thomas port areas, the U.S. Coast Guard has placed restrictions on passage through the port to daytime hours only.

"The island is in total chaos and the Federal Government has clamped down using Federal Marshalls (sic) and the 42 Airborne".

"We suffered major damage in the warehouse, in the offices, in the shop and to the reefer line, as well as numerous containers both dry and reefers. There are reports that power will not be restored for 6 months or more."

LAW AND ANALYSIS:

Generally, the coastwise laws (e.g., 46 U.S.C. App. 289 and 883, and 46 U.S.C. 12106 and 12110) prohibit the transportation of merchandise or passengers between points in the United States embraced within the coastwise laws 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. The "Jones Act", 46 U.S.C. App. 883, was enacted in 1920, for the protection of American shipping and shipbuilding.

The Act of December 27, 1950 (64 Stat. 1120) provides that the navigation laws (such as sections 883 and 289) may only be waived when deemed necessary in the interest of national defense. Under the 1950 Act, the Customs Service, acting for the Department of the Treasury, is required to waive the navigation laws which it enforces, including the coastwise laws, if requested to do so by the Department of Defense in the interest of national defense. In addition, the Treasury Department is authorized to waive such laws on its own initiative or the recommendation of another Government agency to the extent that Treasury determines such action is necessary in the interest of national defense. A waiver of the provisions of the coastwise laws cannot be issued solely for economic reasons. Accordingly, we must deny any request for a waiver under the circumstances as outlined above.

The transportation of the merchandise from a coastwise port in the mainland to the port of San Juan would be in violation of section 883. However, in light of the conditions currently existing at the port of St. Thomas, we are requesting that penalties not be assessed when the vessels arrive at the port of San Juan, Puerto Rico. Upon arrival at the port of San Juan, all Customs procedures must be followed.

Sincerely.

Stuart P. Seidel
Assistant Commissioner
Officer of Regulations and Rulings

CC: District Director, San Juan

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