HQ 227065 - Towing; Coastwise Trade; Registry-endorsed tug; Coastwise-endorsed barge; Guam; Continuous Tow; 46 U.S.C. App. ?? 316(a), 883; 46 U.S.C. ? 12105(b); T.D. 70-223(19) - United States International Trade Commision Rulings

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HQ 227065

September 16, 1996

VES-10-03-RR:IT:EC 227065 GEV

CATEGORY: CARRIER

Kevin P. Callahan
Alaska Cargo Transport, Inc.
6700 W. Marginal Way S.W.
Seattle, Washington 98106

RE: Towing; Coastwise Trade; Registry-endorsed tug; Coastwise-endorsed barge; Guam; Continuous Tow; 46 U.S.C. App. ?? 316(a), 883; 46 U.S.C. ? 12105(b); T.D. 70-223(19)

Dear Mr. Callahan:

This is in response to your letter dated June 24, 1996, requesting a ruling regarding 46 U.S.C. App. ?? 316(a) and 883. The ruling you request is set forth below.

FACTS:

Your company is contemplating the use of a U.S.-flag tug endorsed by the U.S. Coast Guard (USCG) with a registry endorsement pursuant to 46 U.S.C. ? 12105. The vessel it would tow is a U.S.-flag barge endorsed by the USCG with a coastwise endorsement pursuant to 46 U.S.C. ? 12106. You inquire as to the applicability of the towing statute and the Jones Act (46 U.S.C. App. ?? 316(a) and 883, respectively) in the following scenarios each of which contemplates the transportation of cargo on only the barge, not the tug:

1. On a voyage from Guam to Seattle, may cargo be loaded on the barge in
Guam and part of the cargo be unloaded in Hawaii and part of the cargo unloaded in Seattle? Prior to arriving in Seattle, can cargo be discharged in another contiguous U.S. port? Can any cargo be loaded in that other contiguous port and discharged in Seattle?

2. On a voyage from Guam to Seattle, can cargo be loaded on the barge in
Guam and discharged in Hawaii and cargo loaded on the barge in Hawaii and discharged in Seattle? Can any cargo be discharged in another contiguous U.S. port?

3. On a voyage from Seattle to Guam, can cargo be loaded on the barge in
Seattle that will be discharged in Hawaii and cargo that will be discharged in Guam?

4. On a voyage from Seattle to Guam, can cargo be loaded on the barge in
Seattle and cargo loaded on the barge in Hawaii that will be discharged in Hawaii?

5. On a voyage from Seattle to Guam, can cargo be loaded on the barge in
Seattle and additional cargo loaded on the barge in another contiguous
U.S. port to be transported to Guam? On this voyage can cargo be discharged in Hawaii?

ISSUE:

Whether the transportation of merchandise by a coastwise-qualified barge towed by a non-coastwise-qualified tug as described in any of the above scenarios constitutes a violation of 46 U.S.C. App. ?? 316(a) and/or 883.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, ? 316(a) (46 U.S.C. App. ? 316(a), the coastwise towing statute) prohibits the use of any vessel not having in force a certificate of documentation endorsed for the coastwise or Great Lakes trades (46 U.S.C. 12106, 12107, respectively) to tow any vessel other than a vessel in distress, from any point or place embraced within the coastwise laws of the United States to another such port or place, either directly or by way of a foreign port or place, or for any part of such towing.

Title 46, United States Code Appendix, ? 883 (46 U.S.C. App. Act"), provides in part, that no merchandise shall 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 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 (i.e., a coastwise-qualified vessel). Pursuant to title 19, United States Code, ? 1401(c) (19 U.S.C. ? 1401(c)), the word "merchandise" is defined as "...goods, wares and chattels of every description, and includes merchandise the importation of which is prohibited."

Section 4.80b(a), Customs Regulations (19 CFR ? 4.80b(a)), promulgated pursuant to 46 U.S.C. App. ? 883, provides, in part, that:

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. (Emphasis added)

Points embraced within the coastwise laws include all points within the territorial waters of the United States, including points within a harbor. The territorial waters of the United States consist of 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 coastline differ.

Pursuant to 46 U.S.C. ? 877, the coastwise laws are applicable to island territories and possessions of the United States. However, as provided in 46 U.S.C. ? 12105(b), a vessel for which a registry endorsement is issued may be employed in foreign trade or trade with Guam, American Samoa, Wake, Midway, or Kingman Reef.

In regard to the interpretation of 46 U.S.C. App. ? 316(a), it is the position of the Customs Service that this provision is to be construed consistently with 46 U.S.C. App. ? 883. (Treasury Decision (T.D.) 70-223(19)) Consequently, Customs has held that foreign-flag (or other non-coastwise-qualified) tug of a vessel engaged in foreign trade on a voyage from a foreign port to a United States port or ports, or from a United States port or ports to a foreign port, merely because both the tug and towed vessel stop at other United States ports to load export cargo or unload import cargo. (Customs ruling letter 110236 citing T.D.

In regard to your inquiry, Customs interpretation of 46 U.S.C. App. ?? 316(a) and 883 as applied to the scenarios you pose leads us to conclude that none of the five scenarios gives rise to a violation of these statutes. In regard to ? 883, in view of the fact that all of the cargo in question would either be laden on or unladen from a coastwise-qualified barge at points embraced within the coastwise laws (i.e., Guam, Hawaii, Seattle and another contiguous U.S. port), its transportation aboard the barge between those coastwise points would not constitute a violation of that statute. With respect to 46 U.S.C. App. ? 316(a), we note that under the proposed scenarios the towing in question would either commence or terminate at either Guam or Seattle with intervening stops which are also coastwise points (Hawaii and a contiguous U.S. port). As you know from our prior correspondences to you, a U.S.-flag tug with a registry endorsement may tow a barge between Guam and a U.S. port. (Customs ruling letters 113196 and 113298) In regard to the tow of the subject barge between the aforementioned intervening coastwise points or between such points and Seattle, Customs has taken the position that a towing operation is not terminated unless the vessels in question are either unlinked or there is a change of the towing vessel. (Customs ruling letters 113092 and 224477) Under the scenarios you pose the same tug would be used in a continuous tow commencing in Guam and terminating in Seattle (or vice versa). Consequently, as long as the tug and barge at all times remain connected, the towing operations set forth in the above scenarios are not in contravention of ? 316(a).

HOLDING:

The transportation of merchandise by a coastwise-qualified barge towed by a non-coastwise-qualified tug as described in any of the above scenarios does not constitute a violation of 46 U.S.C. App. ? 883. With respect to 46 U.S.C. App. ? 316(a), no violation thereof would arise provided the tug and barge at all times remain connected during the course of a continuous tow between Guam and Seattle notwithstanding stops at intervening coastwise points.

Sincerely,

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