HQ 113856 - COLUMBUS; Coastwise Trade; Dredging; Transportation of Dredge Material; Value; - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1997 HQ Rulings > HQ 113753 - HQ 114005 > HQ 113856

Previous Ruling Next Ruling
HQ 113856

May 28, 1997

VES-3/10-02-RR:IT:EC 113856 GEV

CATEGORY: CARRIER

D. Lee Roberts, Jr., Esq.
Ware, Snow, Fogel, Jackson & Greene, P.C. 570 Tower Place
3340 Peachtree Road, N.E.
Atlanta, Georgia 30326

RE: COLUMBUS; Coastwise Trade; Dredging; Transportation of Dredge Material; Value;
First Proviso; 46 U.S.C. App. ?? 292, 883; Pub. L. 102-587

Dear Mr. Roberts:

This is in response to your letter of February 20, 1997, on behalf of your client, Lake Michigan Contractors, Inc. ("Lake Michigan"), of Holland, Michigan, requesting a ruling regarding the use of the vessel COLUMBUS in a maintenance dredging operation conducted in Cleveland Harbor and the Cuyahoga River in Ohio. Our ruling on this matter is set forth below.

FACTS:

A solicitation to dredge the harbor in the Port of Cleveland and the Cuyahoga River in the State of Ohio was issued by the U.S. Army Corps of Engineers, Buffalo, N.Y. District, on December 16, 1996. The work in question, described in the solicitation offer as being set aside for small business, includes the removal and disposal of approximately 150,000 cubic yards of dredged material from the channels of Cleveland Harbor and the Cuyahoga River. Pursuant to the terms of the solicitation offer, subsequent to its removal from the bottom of these channels this material is to be transported to either the Government-furnished Confined Disposal Facility (CDF) known as Dike 14 located along the Lake Erie shoreline adjacent to the Cleveland Harbor East Entrance Channel, or the Government-designated Offshore Disposal Area (ODA) east of Dike 14 at the village of Bratenahl, Ohio, also located along the Lake Erie shoreline.

Upon reviewing the bids received in response to the above-referenced solicitation, the Corps of Engineers awarded the contract to B + B Dredging Company ("B + B") of Chicago, Illinois, the operator and lessee of the COLUMBUS, a U.S.-flagged, self-propelled, self-loading hopper dredge which is to perform the work in question. This vessel, formerly known as the ESPERANCE III, was originally built in the United States in 1944 as a World War II Landing Ship Tank ("LST"). It was later sold foreign, converted to a hopper dredge in a European shipyard, and placed under Panamanian registry. In 1977, the vessel was purchased by CDECO Maritime Construction, Inc., a Delaware corporation, to be used by Roger J. Au & Son, Inc. for dredging in the United States. Upon its reconversion in the United States, the U.S. Coast Guard ("USCG") documented it as a vessel of the United States on April 7, 1978, and although it was entitled to engage in dredging in this country, due to its prior foreign ownership its Certificate of Registry contained a restrictive notation prohibiting it from engaging in the coastwise trade. Subsequent legislative enactments enabled the vessel to engage in the coastwise trade only for the purpose of transporting "valueless" dredged material.

Lake Michigan, the second low bidder for the subject contract, subsequently filed a protest with the Contracting Officer of the Corps of Engineers and with the Small Business Administration. It is the contention of Lake Michigan that the material to be dredged out of Cleveland Harbor and the Cuyahoga River has value and therefore the COLUMBUS is prohibited from transporting it coastwise.

In support of its position, Lake Michigan has submitted the following exhibits: (1) a copy of a letter from the President of Lake Michigan authorizing counsel to act as their agent in this matter; (2) a copy of the most current USCG Certificate of Documentation for the COLUMBUS; (3) a copy of the Corps of Engineers' Solicitation no. DACW49-97-B-0006, issued December 16, 1996; (4) a copy of the abstract of offers showing that Lake Michigan submitted the second low bid for this contract; (5) maps of Cleveland Harbor showing the location of Dike 14; (6) a copy of Great Lakes Dredge & Dock Company v. Ludwig, 486 F.Supp. 1305, 1307 (W.D. N.Y. 1980), affirmed without opinion in 636 F.2d 1201 (2nd Cir. 1980); (7) a copy of the USCG Certificate of Registry for the subject vessel when it was known as the ESPERANCE III; (8) a copy of a report of survey done at the request of the prior owner describing the characteristics of the vessel; (9) an aerial photograph of the subject vessel circa February, 1978; (10) a copy of USCG ruling letter 16713/31-3, dated September 20, 1977; (11) a copy of selected portions of 46 U.S.C. App. dated September 28, 1977; (13) a copy of an engineering study by Erickson Engineering Associates upon which the aforementioned Customs ruling letter was primarily based; (14) a copy of Customs ruling letter 110063, dated April 12, 1989; (15) a copy of Pub. L. 102-587, Title V, Subtitle E, ? 5501(a)(2), 106 Stat. 5084, included as an annotation to 46 U.S.C. App. ? 292; (16) a copy of a report from Enviromatrix, Inc., dated November 15, 1996; (17) a report from Richard Peddicord, Ph.D., Director of Sediment Management, EA Engineering, Science, & Technology, Inc., dated March 21, 1997; (18) a copy of Customs ruling letter MD 3-89858 F, dated October 30, 1963; (19) a copy of Customs ruling letter MS 216.131 H, dated October 21, 1963; (20) a copy of Customs ruling letter 102787, dated April 20, 1977; (21) a copy of Customs ruling letter 102782/102717,
dated April 26, 1977; (22) a copy of an article describing Burke Lakefront Airport published by the City of Cleveland Planning Commission in 1988; (23) a copy of an aerial view of Burke Lakefront Airport; (24) a copy of an aerial map depicting the proposed expansion of the City of Cleveland's Gordon Park encompassing the area of Dike 14; (25) a copy of relevant portions of a 1987 Cleveland Waterfront Master Plan Update issued by the Ohio Department of Natural Resources and the Governor's Task Force on the Waterfront; (26) a copy of the "Agreement between the United States of America and the Cleveland-Cuyahoga County Port Authority for Local Cooperation for a Contained Spoil Disposal Facility at Site 14 in Cleveland Harbor, Ohio"; (27 & 28) copies of letters from Lake Michigan to the Corps of Engineers proposing to purchase dredge material out of Dike 14; (29) copies of documentation regarding the sale by the Corps of Engineers of dredge material from a CDF in Toledo, Ohio; (30) a copy of a pre-solicitation notice from the Corps of Engineers to raise the existing easterly perimeter of Dike 14 using dredge material previously deposited there; (31) a copy of page EA-5 of the "Environmental Assessment for Lake Erie Littoral Drift Nourishment at Bratenahl and Perkins Beach Cuyahoga County, OH", dated February 7, 1985, from the Corps of Engineers; (32) a copy of a letter dated August 3, 1982, from the U.S. Environmental Protection Agency to the Corps of Engineers; (33) a copy of page C20 of the Corps of Engineers' Manual, EM 1110-2-5026, entitled "Beneficial Uses of Dredged Material", dated June 30, 1987; (34) a report from Charles W. Hummer, Jr., Dredging and Environmental Consultant, dated March 24, 1997.

Subsequent to Customs receipt on February 25, 1997, of counsel's letter on behalf of Lake Michigan enclosing all of the above exhibits with the exception of Exhibits 17 and 34, the aforementioned documentation was promptly forwarded by Customs to B + B's counsel by letter of the same date in order to afford that party an opportunity to respond in kind to the allegations raised therein. Exhibits 17 and 34, missing at the time of Lake Michigan's original submission, were subsequently provided to Customs and counsel to B + B by Lake Michigan's letter of March 31, 1997. Counsel to B + B responded to the entirety of Lake Michigan's submission by its letter of May 13, 1997, enclosing 35 exhibits with the exception of one (Exhibit 24) which was submitted to Customs and Lake Michigan's counsel by letter of May 16, 1997. It is the position of B + B that at the time the subject dredge material is transported and unloaded, it has no value and the COLUMBUS is therefore not prohibited from engaging in the transportation in question.

In support of its position, B + B has submitted the following exhibits: (1) a copy of Pub. L. 100-329; (2) a copy of Pub. L. 102-587; (3) a copy of Customs ruling letter 102961/102466/ 102173, dated September 28, 1977; (4) a copy of Great Lakes Dredge & Dock Company v. Ludwig, 486 F.Supp. 1305, 1307 (W.D. N.Y. 1980), affirmed without opinion in 636 F.2d 1201 (2nd Cir. 1980); (5) a copy of a facsimile transmittal header sheet from the Corps of Engineers, dated May 8, 1997; (6) a copy of a letter from Robert P. Murphy, Area Director for Government Contracting, U.S. Small Business Administration, dated April 4, 1997; (7) a copy of a "Notice To Proceed" from the Corps of Engineers, dated April 14, 1997; (8) a copy of the Corps of Engineers' Supplement Number Two (1994) to: Cleveland Harbor, Ohio Confined Disposal Project Letter Report, dated January 1987; (9) a copy of 46 U.S.C. App. ? 883; (10) a copy of the "Final Environmental Impact Statement Modifications To Dike 14 Confined Disposal Facility

Cleveland Harbor Cuyahoga County, Ohio"; (11) a copy of a "Final Environmental Impact Statement Harbor Maintenance and Confined Disposal Facility Site 10B (15-Year) Cleveland Harbor, Cuyahoga County, Ohio"; (12) a memorandum dated January 10, 1997, from Scott Pickard, Environmental Compliance Officer, Corps of Engineers; (13) a copy of a Public Notice, dated November 17, 1995, from the Corps of Engineers; (14) a copy of House of Representatives Report 102-260, dated October 21, 1991; (15) a copy of Customs Service Decision (C.S.D.) 89-107; (16) a copy of C.S.D. 90-73; (17) a copy of Customs ruling letter 111412, dated November 28, 1990; (18) a copy of Customs ruling letter 109831, dated November 14, 1988; (19) a copy of Customs ruling letter 227126, dated September 21, 1996; (20) a copy of Customs Legal Determination No. 80-0135, issued September 10, 1980; (21) a copy of the Corps of Engineers' Solicitation no. DACW49-97-B-0006, issued December 16, 1996; (22) a copy of a Corps of Engineers' memorandum dated February 11, 1992, regarding the Toledo Harbor Long-Term Dredged Material Management Plan - Phase 1 Report; (23) a copy of "Beneficial Uses of Dredge Material-A Practical Guide" - a report of a working group of the Permanent International Association of Navigation Congresses, dated May 27, 1992; (24) a report from Gahagan & Bryant Associates, Inc.; (25) a copy of an e-mail from Teofilo D. Valerio, dated December 23, 1996; (26) a copy of an e-mail from Mary E. Price, dated November 20, 1996; (27) a copy of "Environmental Assessment For Lake Erie Littoral Drift Nourishment At Bratenahl And Perkins Beach Cuyahoga County, Ohio" prepared by the Corps of Engineers, dated February 7, 1985 and Appendixes EA-A and EA-B consisting of copies of letters from the United States Department of the Interior, dated August 5 and 18, 1982, and October 11, 1983; copies of letters from the United States Environmental Protection Agency, dated August 3 and September 2, 1982; copies of letters from the Ohio Department of Natural Resources, dated August 23 and September 27, 1982; a copy of a letter from the City of Cleveland Planning Commission, dated July 20, 1982; a copy of a letter from the Cuyahoga County Regional Planning Commission, dated June 22, 1982; a copy of a Public Notice from the Corps of Engineers, dated November 5, 1984; a copy of a letter from the Ohio Historic Preservation Office, dated June 18, 1982, and copies of telephone conversations relating to the aforementioned documents and maps of the areas in question; (28); a copy of testimony from a hearing before the Subcommittee on Merchant Marine of the Committee on Commerce, Science, and Transportation, U.S. Senate, on January 28, 1988; (29) a listing of the dredging contracts performed by the subject vessel from 1978 to the present; (30) a copy of Senate Report 100-327, dated May 4, 1988; (31) a copy of the Corps of Engineers' Manual, EM 1110-2-5026, entitled "Beneficial Uses of Dredged Material", dated June 30, 1987; (32) a copy of Senate Report 102-260, dated October 21, 1991; (33) a copy of a declaration from Dewitt Barlow, President of B + B; (34) comments regarding Lake Michigan's ruling request to Customs dated February 20, 1997; and (35) a copy of a letter from Stanley W. Erken of B + B, dated March 11, 1997, to Mr. Henry Cavanaugh, Assistant Administrator for Environmental Affairs, Department of Port Control, Cleveland, Ohio.

Counsel to both Lake Michigan and B + B agree that the COLUMBUS is not prohibited from engaging in the dredging to be performed pursuant to the contract in question. Counsel further stipulate that all points involved in the transportation of the subject dredge material are points embraced within the coastwise laws of the United States. The point of contention in this
matter is this vessel's eligibility to transport material dredged from Cleveland Harbor and the Cuyahoga River to Dike 14 and the ODA at Bratenahl. All parties agree that the resolution of this case turns on whether the dredge material in question is considered to have value for purposes of Customs administration of the coastwise laws.

ISSUE:

Whether the dredge material transported between coastwise points pursuant to the terms of the contract offered by the Corps of Engineers as described above is "dredge material of value" within the meaning of Pub. L. 102-587 and therefore constitutes "merchandise" for purposes of 46 U.S.C. App. ? 883.

LAW AND ANALYSIS:

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 trans- ported), between points in the United States...embraced within the coast- wise laws, either directly or via a foreign port, or for any part of the trans- portation, 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 of more than 200 gross tons (as measured under chapter 143 of title 46, United States Code) 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. (Emphasis added)

Section 5 of Pub. L. 100-329 (102 Stat. 588, effective June 7, 1988), amended 46 U.S.C. App. ? 883 thereby authorizing the COLUMBUS to transport valueless material and dredge material regardless of whether it has value, between coastwise points. Subsequent legislation
amending the dredging statute (46 U.S.C. App. ? 292) addressed this vessel's eligibility to engage in the coastwise trade.

With respect to dredging, ? 1 of the Act of May 24, 1906 (34 Stat. 204; 46 U.S.C. App.
5501(a)(1) and (2), 106 Stat. 5039, 5084-85, effective November 4, 1992) to not only provide, inter alia, that the coastwise eligibility requirements (i.e., U.S.-build, ownership and documentation) are applicable to vessels used as dredges as of the effective date of that legislation, but also with specific regard to the COLUMBUS it further provided:

...the vessel's certificate of documentation shall be endorsed to prohibit the vessel from engaging in the transportation of merchandise (except valueless material), including dredge material of value, between places within the navigable waters of the United States. (emphasis added)

The navigation laws administered by Customs, including 46 U.S.C. App. ?? 883 and 292, 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. As noted above, the transportation of dredge material in this case is between points embraced within the coastwise laws.

THE POSITION OF LAKE MICHIGAN

With respect to the threshold question regarding the value of the dredge material under consideration, Lake Michigan refers to Customs ruling 102961/102466/102173, dated September 28, 1977 and the decision of the Federal District Court in Great Lakes Dredge & Dock Company v. Ludwig, 486 F.Supp. 1305, 1307 (W.D. N.Y. 1980), affirmed without opinion in 636 F.2d 1201 (2nd Cir. 1980), wherein the subject vessel was authorized to transport polluted dredge material for disposal only. Consequently, Lake Michigan proffers that if the dredge material now under consideration is no longer polluted, or if its transportation is for any purpose other than that of disposal, the subject vessel's transportation of such material would exceed the scope of the aforementioned administrative and judicial decisions. With regard to the former, Lake Michigan, through its experts, contends that the material being dredged is no longer polluted under current State of Ohio Environmental Protection Agency (EPA) guidelines and may be used for beneficial purposes such as landfill. Lake Michigan cites prior Customs rulings (Exhibits 18, 19 and 20) in support of its proposition that under such circumstances, dredge material so used would be deemed to have value thereby rendering it merchandise for purposes of the coastwise laws.

Further in regard to the use of dredge material as landfill, Lake Michigan notes that the City of Cleveland has previously built Burke Lakefront Airport on a former CDF used to dispose of material dredged from Cleveland Harbor. With respect to the dredge material to be trans- ported to Dike 14 pursuant to the Corps of Engineers contract currently under consideration,

Lake Michigan asserts that the material is to be used as landfill to expand an already existing recreational facility located adjacent to Dike 14 within the City of Cleveland known as Gordon Park. While contending that the local authorities in Cleveland also have the authority to sell this land to another party after completion of the CDF's use for disposal, Lake Michigan acknowl- edges that the Ohio Revised Code, which recognizes the value of submerged land, may prohibit such a sale.

In addition to its use as landfill, Lake Michigan contends that the subject dredge material has value due to its potential use for construction purposes. To that end Lake Michigan has submitted offers to purchase dredge material from Dike 14 stemming from a previous sale by the Corps of Engineers of dredge material from a CDF in Toledo, Ohio. An example of a construc- tion use suggested by Lake Michigan includes a project using the material to raise the earth berm along the existing perimeter of Dike 14 in order to expand the capacity of the facility.

Notwithstanding any of the possible future uses of dredge material to be deposited in Dike 14 as discussed above, Lake Michigan nonetheless points out that Dike 14 has already been designated a beneficial wetland habitat by the Corps of Engineers. Consequently, Lake Michigan asserts that the value of the dredge material disposed therein is currently acknowledged by that federal agency.

In regard to the material dredged from the Upper Cuyahoga River and deposited at the ODA at Bratenahl, Lake Michigan asserts that its use for beach nourishment is probative of its having value. Lake Michigan states that this beneficial use is already recognized by the Corps of Engineers.

THE POSITION OF B + B

B + B states that the COLUMBUS is entitled to transport dredge material from the dredging sites in Cleveland Harbor and the Cuyahoga River to Dike 14 and the ODA at Bratenahl for the following reasons:

A. Customs ruling letter 102961/102466/102173, dated September 28, 1977, authorizing the COLUMBUS to transport valueless dredged material remains applicable and valid since the dredged material from this project will be disposed of in Dike 14 or in Lake, Erie just as it was in 1978.

B. The 1980 federal district court decision in the Great Lakes case remains valid and applicable for the same reasons as in ? A above.

C. The Customs Service, in determining whether the COLUMBUS is engaged in the coastwise transportation of merchandise, should determine whether the dredged material has value only at the time of the unloading which ends the coastwise movement, and not at a later time.

D. Feasible and beneficial uses of dredged material require lengthy advanced planning and management, and cannot be determined at the time of the coastwise movement.

E. Congress, in Pub.L. 100-329 and Pub.L. 102-587, authorized the COLUMBUS to continue to undertake the same types of dredging and transportation projects that it had undertaken prior to the legislation.

F. The current and previous owners of the COLUMBUS have relied, in good faith, on the above-cited Customs Service ruling, the Great Lakes case, and two federal statutes enacted in 1988 and 1992.

G. The Corps of Engineers has indicated no beneficial use planned for the dredged material from this project. The Corps of Engineers solicitation refers only to disposal of the dredged material, and the Corps of Engineers committed in the solicitation to allow a contractor to retain the material if the contractor wished.

B + B emphasizes that the determination of value must relate only to the dredged material produced in the Cleveland-Cuyahoga project now under consideration, to the value of the dredged material when it is unloaded from the COLUMBUS, and to specific valuable uses already planned and predictable when the dredged material is unloaded. It is suggested by B + B that possible, but unproven, future uses of dredged materials many years in the future, and after substantial remediation, cannot impute value to the material at the time it is disposed of in Dike 14.

In addition, B + B urges Customs to consider the context in which the Corps of Engineers deals with dredged material. It is stated that the Corps of Engineers is required to dispose of many millions of cubic yards of dredged material every year throughout the country, including approximately 300,000-400,000 cubic yards from the Cleveland-Cuyahoga project annually. B + B states that the most expensive option for the Corps of Engineers is to retain the dredged material in a CDF such as Dike 14 which it must build and maintain. B + B further states that the Corps of Engineers would prefer to be able to dispose of the dredged material elsewhere, either by dumping in Lake Erie or by finding a beneficial use that does not require a CDF.

THE POSITION OF THE U.S. CUSTOMS SERVICE

At the outset we note that it is readily apparent that the statutory amendments enacted subsequent to the prior Customs rulings cited by both parties regarding the activities in question, as well as the plethora of information contained within the supporting documentation submitted by both parties in interest (none of which was available to and consequently not considered by Customs at the time of these rulings' issuance), necessitates a de novo review of the record in its entirety with specific regard to the current controlling authority as applied to the undisputed facts
of this case. To that end it should be noted that Customs rulings are issued only in response to a specific set of facts. (19 CFR ? 177.1(d)(1)) Furthermore, no person should rely on a ruling or assume the principles of that ruling will be applied in connection with any transaction other than as described in the ruling letter. (19 CFR ? 177.9(c))

In regard to the prior Customs rulings cited by the parties in interest, it is significant to note that all of them predate the most recent and most critical of the above-referenced statutory amendments (Pub. L. 102-587). Of those rulings addressing the coastwise transportation of dredge material, we note that they collectively reflected Customs position that the mere dumping of dredge material without any particular purpose renders such material other than "merchandise" within the meaning of 46 U.S.C. App. ? 883. Consequently, the transportation of such material between coastwise points under those circumstances could therefore be effected by a non-coastwise-qualified vessel. (Lake Michigan Exhibits (18) Customs ruling letter MD 3-89858 F, dated October 30, 1963; (19) Customs ruling letter MS 216.131 H, dated October 21, 1963; and (20) Customs ruling letter 102787, dated April 20, 1977)

The oft-cited 1977 ruling in question was issued in response to a letter dated August 10, 1977, wherein the former owners of the COLUMBUS, then known as the ESPERANCE III, inquired as to Customs opinion with respect to its proposed transportation of dredge material from a point in U.S. territorial waters in the Great Lakes area to a CDF also within such waters pursuant to a federal dredge contract awarded by the Corps of Engineers. In reviewing this matter, Customs relied in large measure on an August 9, 1977, opinion from Erickson Engineering Associates (Lake Michigan's Exhibit 13) that the dredge material in question was not only polluted, but also a liability to the U.S. Government. Although the report listed potential, albeit dubious, uses of polluted dredge spoil deposited within a CDF (e.g., agricultural, wildlife habitats, construction, etc.), it concluded that "...polluted spoil has no value in the present term, and little chance of value due to fortuitous circumstances in the foreseeable future."

Accordingly, by letter dated September 28, 1977 (Customs ruling letter 102961/102466
/102173, Exhibits 12 and 13 of Lake Michigan and B + B, respectively), Customs determined that the polluted dredge spoil in question was not "merchandise" for purposes of 46 U.S.C. App. transportation in question. In reaching this determination, the ruling provided, in pertinent part:

If material is transported from one point to another within the ter- ritorial jurisdiction of the United States and dumped for the sole purpose of disposing of it, the material will not be considered coastwise "merchandise" and its transportation will not be con- sidered coastwise trade. However, if material is transported from one point to another within the territorial jurisdiction of the United States for a purpose other than just disposing of it, such as for landfill, the material will be considered "merchandise" and its transportation will be deemed coastwise trade.

This ruling was subsequently challenged in U.S. District Court for the Western District of New York by the only other bidder for the project. The court upheld Customs decision in this matter rejecting the plaintiff's claim that Customs construction of the term "merchandise" (i.e., things of value) was erroneous. (see Great Lakes Dredge & Dock Company v. Ludwig, 486 F.Supp. 1305, 1307 (W.D. N.Y. 1980), affirmed without opinion in 636 F.2d 1201 (2nd Cir. 1980), cited as Exhibits 6 and 4 by Lake Michigan and B + B, respectively).

Approximately eleven years after Customs was first presented with the legality of the subject vessel's coastwise transportation of dredge material, Customs was again requested to consider the transportation of dredge material by the same vessel. The issue presented was whether the vessel, now known as the COLUMBUS, could engage in the coastwise transportation of sand (deemed then to have commercial value) it had dredged which was to be used for beach nourishment. However, Customs was requested to render its decision in light of Michigan's Exhibit 11, Exhibit 3 of B + B), which amended 46 U.S.C. App. ? 883 to authorize the COLUMBUS to transport valueless material, and dredged material regardless of whether it has value, between coastwise points. Pursuant to Customs ruling letter 110063, dated April 12, 1989 (Lake Michigan's Exhibit 14), Customs held that the coastwise transportation of dredged sand by the COLUMBUS was in compliance with 46 U.S.C. App. ? 883, as amended.

Additional legislative action on the part of Congress further addressed the eligibility of the COLUMBUS to engage in the transportation of dredge material. Pursuant to Pub. L. 102-587, Title V, Subtitle E, ? 5501(a)(2), 106 Stat. 5084, effective November 4, 1992 (included in an annotation to 46 U.S.C. App. ? 292, on p. 2 of Lake Michigan's Exhibit 15, B + B's Exhibit 2), the COLUMBUS is prohibited from transporting "dredge material of value" between points embraced within the coastwise laws (a distinction heretofore irrelevant given the provisions of Pub. L. 100-329 authorizing the COLUMBUS to transport dredge material coastwise regardless of whether it had value).

With respect to the current maintenance dredging project under consideration in Cleveland Harbor and the Cuyahoga River, the first such instance in which Customs has been requested to consider the ramifications of Pub. L. 102-587, we note the dearth of controlling legal authority cited in the record interpretive of the term "dredge material of value" as it is used in that statute. The legislative history of both Pub. L. 100-329 ("Dredge material can be classified as valuable or valueless, depending on the nature of the product and its intended use." - B + B's Exhibit 30 at p. 4) and Pub. L. 102-587 (merely referencing "valueless dredge material" without discerning what constitutes such a commodity - B + B's Exhibit 32 at p. 19) are also negligible in this regard. Consequently, we find the documentation contained within the record from the Corps of Engineers (the agency charged with annually conducting this and other such dredge projects) addressing dredge material at length, and cited and discussed by both Lake Michigan and B + B, to be instructive in ascertaining whether the subject dredge material is considered to have value within the context of this ruling.

Our review of the above-referenced Corps of Engineers documentation therefore begins with their solicitation offer for this project (Exhibits 3 and 21 of Lake Michigan and B + B, respectively). The language contained therein fails to specify a use of the subject material subsequent to its "disposal" (a term to which we impart no significance beyond the act of off- loading the subject dredge material from the vessel) in both Dike 14 and the ODA at Bratenahl. However, as will be discussed more fully below, this lack of specificity is not in and of itself dispositive of the issue under consideration.

With regard to Lake Michigan's claim that the dredge material to be deposited in Dike 14 will be landfill used for an expansion of Gordon Park, we note that although the Corps of Engineers has identified parks and recreation as a beneficial use of dredge material containment sites (see p. 1-1 of Corps of Engineers' Manual, EM 1110-2-5026, dated June 30, 1987, entitled "Beneficial Uses of Dredged Material"; hereinafter referred to as the "manual"; Exhibits 31 and 33 of Lake Michigan and B + B, respectively), the Corps of Engineers nonetheless states that such use of dredged material containment sites "...requires sound, careful planning..." (Id. at p. 11-1; See also Exhibit 23 of B + B supporting B + B's contention that such use of dredge material requires lengthy advanced planning and management.) In addition, the manual provides that of the many factors to be considered in evaluating the use of such sites for recreational purposes, those deemed important include "...the local or regional demand and need for recreational facilities, the interest and capability of local sponsors to participate in development and operation, and available access." (see the manual at p. 11-1) The documentary evidence submitted by Lake Michigan in support of their claim in this regard includes a map of the proposed expansion of Gordon Park, and pp. 37-38 of a 1987 Cleveland Waterfront Master Plan Update issued by the Ohio Department of Natural Resources and the Governor's Task Force on the Waterfront (Lake Michigan Exhibits 24 and 25). Both indicate an incorporation into the park's land base of Dike 14 as well as the construction of a breakwater "finger" to control waves and water surge in Gordon Park's marina. In addition, Lake Michigan's experts state that the level of contaminants contained within the dredge material to be placed in Dike 14 does not preclude its use for landfill, construction, or other beneficial purposes. (Lake Michigan Exhibits 17 and 34)

In response to Lake Michigan's position that Dike 14 will be used to expand Gordon Park, B + B cites to a letter from the Cleveland Waterfront Coalition, dated November 6, 1989, to the Corps of Engineers regarding the raising of the berm of Dike 14 to provide additional interim fill capacity until a new CDF is available (Exhibit 10 of B + B). As noted by B + B, this letter expresses opposition to raising the height of Dike 14 because it delays any possible park expansion. The letter states that Dike 14 was constructed adjacent to Gordon Park in 1976 and was "envisioned by local officials as a way to reclaim some of the acreage lost due to the construction of Interstate 90." While it provides that "a number of uses have been planned for the Dike 14 area including recreational facilities, parking, fishing piers, picnic areas,...even swimming pools," it nonetheless expresses concern about "the very nature of building public park facilities on top of polluted dredgings."

The above concerns of the Cleveland Waterfront Coalition mirror those of the Corps of Engineers with respect to the use of dredge material for construction and industrial/commercial purposes. With specific regard to the use of dredge material for landfill and CDFs, uses proffered by Lake Michigan, the Corps of Engineers states that, "While there are a number of obvious economic advantages to these types of beneficial uses, the environmental aspects may be so disadvantageous that a project is not feasible." (see the manual at p. 15-8) Lake Michigan has provided no evidence on behalf of the City of Cleveland corroborating the opinions of its experts with respect to whether the use of dredge material in Dike 14 for recreational purposes, let alone for landfill or construction purposes, is environmentally feasible. Furthermore, although the Corps of Engineers issued a construction contract on July 15, 1996, to raise the existing easterly perimeter of Dike 14 using soil borrow "excavated from the dredged sediment previously deposited within the confined disposal facility" (Lake Michigan's Exhibit 30), that dredge material is not the material which is the subject of the ruling request now under consideration.

In addition, we are unpersuaded that the building of Burke Lakefront Airport in Cleveland on a closed CDF in 1947 is probative of the beneficial use of dredge material deposited in Dike 14 approximately 50 years later. The fact that dredge material under certain circumstances can and has been used beneficially for landfill and construction purposes is not in dispute. The building of Burke Lakefront Airport concerned a construction project using different dredge material deposited at a different location for a different purpose four decades ago. We also find the distinctions with respect to location and material regarding a sale by the Corps of Engineers of dredge material from a CDF in Toledo, Ohio (Lake Michigan's Exhibits 27, 28 and 29) to be equally problematic.

Furthermore, B + B cites to p. EIS-25 of the Corps of Engineers' "Final Environmental Impact Statement Modifications To Dike 14 Confined Disposal Facility Cleveland Harbor Cuyahoga County, Ohio, September 1993 (B + B's Exhibit 10) which states that "[w]hile conversion of Dike 14 into a public park is a desirable goal, the primary purpose of the dike is to provide a suitable and safe disposal facility." The next two sentences of that paragraph provide as follows:

After Dike 14 is filled and capped, ownership and responsibility for its future use will be transferred to the city of Cleveland. At that point, any actions required to turn Dike 14 into a public park or other use will be the responsibility of the city of Cleveland.

It is therefore our opinion that although the above-discussed documentation reveals a local interest in expanding Gordon Park through the annexation of a dredge material-filled Dike 14, the four exhibits submitted by Lake Michigan in support of this proposition (Exhibits 17, 24, 25 and 34) do not evidence the degree of local planning and capability to participate in the development and operation of such a project to which the Corps of Engineers refers. This, as well as the other potential uses of the dredge material to be deposited in Dike 14 suggested by Lake Michigan, is tenuous.

Accordingly, we conclude that the record is insufficient to establish that the material to be dredged from Cleveland Harbor and deposited in Dike 14 has value for those future uses proffered by Lake Michigan.

Notwithstanding our above determination, however, we nonetheless refer to p. C-20 of Appendix C of the aforementioned manual, entitled "Examples Of Beneficial Use Development On Dredged Material Sites In North American Waterways*". Dike 14 is listed therein as a project or site already designated by the Corps of Engineers to be of beneficial use for "Habitat development" (a beneficial use discussed at length in Chapter 4 of the manual). Further in this regard, a more recent (September 1993) evaluation of Dike 14 by the Corps of Engineers is contained on p. EIS-19 of B + B Exhibit 10 which provides, in pertinent part, as follows:

3.2.2 Natural Resources - Dike 14 presently exists as an enclosed area composed of various vegetative habitats. To date, the entire 88 acres of the CDF have been converted to man-made wetlands which are in the early successional stage of upland habitat...A mix of open field and upland vegetation is expected to continue to exist until the disposal facility is filled, at which time it will be developed into a recreational area to be tied in with Gordon Park. (Emphasis added)

Accordingly, the above documentation is conclusive evidence of Lake Michigan's claim that the dredge material to be placed in Dike 14 currently has value for the propagation of an existing wetland habitat site recognized as a beneficial use of dredge material by the Corps of Engineers. Regardless of the speculative nature of any future use of this material, Customs declines to contradict this formal acknowledgment by the Federal agency having jurisdiction over its management.

In regard to Lake Michigan's claim that beach nourishment is a beneficial use of dredge material, we note that such a use is also recognized by the Corps of Engineers (see Chapter 9 of the manual), a working group of the Permanent International Association of Navigation Congresses (B + B's Exhibit 23), and B + B (see pp. 13-14 of B + B's letter of May 13, 1997) notwithstanding the latter's position that the dredge material under consideration to be dumped at Bratenahl is of questionable benefit.

With respect to the current use of dredge material taken from the section of the Upper Cuyahoga River specified in the solicitation offer (Station 812+00 to 821+00) and placed at the ODA at Bratenahl, Lake Michigan contends that such material is clean sand suitable for such near-shore disposal citing an August 3, 1982, letter from the United States Environmental Protection Agency (Lake Michigan's Exhibit 32 and contained within Appendix EA-A of B + B's Exhibit 27). We note that the Corps of Engineers has historically recognized the value of the placement of dredge material at Bratenahl for purposes of beach nourishment as opposed to the economically unfeasible alternative of purchasing sand commercially and trucking it to that location where it would have to be dumped and spread so as to be accessible to wave action.

(See p. EA-5 of the "Environmental Assessment For Lake Erie Littoral Drift Nourishment At Bratenahl And Perkins Beach Cuyahoga County, OH" prepared by the Corps of Engineers, dated February 7, 1985; and Appendix EA-A cited as Exhibits 31 and 27 by Lake Michigan and B + B, respectively)

Notwithstanding the apprehensions of the Ohio Department of Natural Resources as to the effectiveness of placing dredge material from the Upper Cuyahoga River at Bratenahl (see their letters to the Corps of Engineers dated August 23 and September 27, 1982, contained within B + B's Exhibit 27), we note the inclusion of a letter dated August 24, 1984, in Appendix EA-A of B + B's Exhibit 27, from the United States Environmental Protection Agency, to the Corps of Engineers stating that, "The bottom sediments from stations 821 to 813 are predominantly clean sands and of acceptable quality for littoral disposal." Furthermore, the Corps of Engineers as recently as the Spring of 1996 has continued to use dredge material obtained from this same area of the Upper Cuyahoga River for beach nourishment at Bratenahl. We note that p. 2 of a Public Notice of the Corps of Engineers regarding maintenance dredging and dredged material discharge on the Cuyahoga River in 1996 (Exhibit 13 of B + B) provides, in pertinent part:

Shoal material between approximate Station 821+10 (upstream channel limit) downstream to approximate Station 815+00...is predominantly sands and is suitable for littoral drift nourishment.
The majority of the material dredged from this reach during the spring phase will be placed at the existing nearshore disposal facility at Bratenahl...

Furthermore, with respect to the material to be dredged from this section of the Upper Cuyahoga River, we note the statement of B + B's expert that, "Based on the general physical characteristics of the dredged material from this area, the sandy material could be used marginally as a beach nourishment fill, provided the Corps of Engineers requires the proper techniques and procedures for such use, and issues permits and offers such an option." (See p. 4 of Exhibit 24 of B + B) Notwithstanding this conditional acknowledgment of the beneficial use of this material, the remainder of the record does not corroborate the contention that the aforementioned provisional requirements are a condition precedent for the subject dredge material to be deemed to have value for purposes of beach nourishment. The record is probative of the fact that since the mid-1980's and as recently as the Spring of 1996, the Corps of Engineers, with the concurrence of the United States Environmental Protection Agency, has determined that material dredged from the same section of the Upper Cuyahoga River that is specified in the Corps of Engineers' solicitation offer currently under review is suitable for beach nourishment at Bratenahl and in fact has been so used. The record is devoid of any scintilla of evidence suggesting either that the dredge material to be deposited at Bratenahl pursuant to the current solicitation offer will be placed there for any other purpose, or that it has restrictions placed upon its use that would render it valueless at the time it is so deposited.

Accordingly, we find the subject dredge material transported from the Upper Cuyahoga River (Station 812+00 to 821+00) to the ODA at Bratenahl pursuant to the terms of the solicitation offer of the Corps of Engineers to have value for purposes of beach nourishment.

HOLDING:

The dredge material transported between coastwise points pursuant to the terms of the contract offered by the Corps of Engineers as described above is "dredge material of value" within the meaning of Pub. L. 102-587 and therefore constitutes "merchandise" for purposes of 46 U.S.C. App. ? 883. Its coastwise transportation aboard the COLUMBUS therefore contravenes 46 U.S.C. App. ? 883.

Sincerely,

Jerry Laderberg

Previous Ruling Next Ruling