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HQ 113913





July 2, 1997

VES-3/10-02-RR:IT:EC 113913 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 April 17, 1997, on behalf of your client, The King Company ("King"), of Holland, Michigan, requesting a ruling regarding the use of the vessel COLUMBUS in a maintenance dredging operation conducted in the vicinity of the Maumee River and the harbor in the Port of Toledo, Ohio. Our ruling on this matter is set forth below.

FACTS:

A solicitation to dredge the Maumee River and Toledo Harbor in the State of Ohio was issued by the U.S. Army Corps of Engineers, Buffalo, N.Y. District, on December 20, 1996. The work in question, described in the solicitation offer as being set aside for small business, includes the removal and disposal of approximately 600,000 cubic yards of dredged material from the channels of the Maumee River and Toledo Harbor. 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, and deposited in, the Government-furnished Confined Disposal Facility (CDF) known as Port Facility No. 3 located along the Lake Erie shoreline adjacent to the Lake Approach Channel.

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.

King, 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 King that the material to be dredged out of the Muamee River and Toledo Harbor has value and therefore the COLUMBUS is prohibited from transporting it coastwise.

In support of its position, King has submitted the following exhibits: (1) a copy of a letter from the President of King 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-0003, issued December 20, 1996; (4) a copy of the abstract of offers showing that Lake Michigan submitted the second low bid for this contract; (5) a map of the Maumee River and Toledo Harbor showing the location of Port Facility No. 3; (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 character-istics 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. ? 883; (12) a copy of Customs ruling letter 102961/102466/102173, 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 the Corps of Engineers, dated March 24, 1994, containing a dredged material testing analysis and land application assessment/evaluation for Toledo Harbor CDF Cell 1; (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 Amendment and Extension of Plan by Toledo-Lucas County Port Authority Board of Directors - 1968; (23) a copy of a letter dated November 15, 1985, from the Seaport Director, Toledo-Lucas County Port Authority to the Chief, Water Quality Section, Corps of Engineers, Buffalo, N.Y.; (24) a copy of the Corps of Engineers' SF 114, Sale of Government Property - Bid and Award;

(25) a copy of page C-20 of the Corps of Engineers' Manual, EM 1110-2-5026, entitled "Beneficial Uses of Dredged Material", dated June 30, 1987; (26) a copy of an August 1987 article entitled, "Beneficial Uses of Dredged Material: The Word is Out" published in the August 1987 issue of World Dredging and Marine Construction; (27) a report from Charles W. Hummer, Jr., Dredging and Environmental Consultant, dated April 21, 1997; (28) copies of pp. EIS-B-4 and EIS-B-15 of the Toledo Harbor, Ohio, Confined Disposal Facility Final Environmental Impact Statement, dated June 1990, issued from the Corps of Engineers; and (29) a copy of the newsletter, Environmental Effects of Dredging, vol. D-97-1 (February 1997).

Simultaneous to Customs receipt of counsel's letter on behalf of King enclosing all of the above exhibits with the exception of Exhibit 27, the aforementioned documentation was forwarded by King 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. Exhibit 27, missing at the time of King's original submission, was subsequently provided to Customs and counsel to B + B by King's letter of May 1, 1997. Counsel to B + B responded to the entirety of King's submission by its letter of June 17, 1997, enclosing 29 exhibits with the exception of one (Exhibit 20) which was submitted to Customs and King's counsel by letter of June 19, 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) documentation from the Corps of Engineers directing B + B to remove the COLUMBUS from its dredging project in the Cuyahoga River and Cleveland Harbor as a result of Customs ruling letter 113856, dated May 28, 1997; (2) a copy of Pub. L. 100-329; (3) a copy of Pub. L. 102-587; (4) a copy of a letter dated April 4, 1997, from Mary E. Price, Contracting Officer, Corps of Engineers, to B + B, and a copy of a letter dated April 1997, from Sharon R. Aiken, Contracting Officer Corps of Engineers, to B + B; (5) a copy of a letter dated April 4, 1997, from Robert P. Murphy, Area Director for Government Contracting, Small Business Administration, to B + B; (6) a copy of a Corps of Engineers document entitled "Supplement Number Two to: Cleveland Harbor, Ohio Confined Disposal Project Letter Report," dated January 1987; (7) a copy of 46 U.S.C. App. September 28, 1977; (9) 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); (10) a copy of House of Represent-atives Report No. 102-260, Committee on Merchant Marine and Fisheries, dated October, 1991; (11) a copy of Customs ruling letter 110265, dated June 21, 1989, published as Customs Service Decision (C.S.D.) 89-107; (12) a copy of Customs ruling letter 110898, dated March 28, 1990, published as C.S.D. 90-73; (13) a copy of Customs ruling letter 111412, dated November 28, 1990; (14) a copy of Customs ruling letter 109831, dated November 14, 1988; (15) a copy of Customs ruling letter 227126, dated September 21, 1996; (16) a copy of Customs ruling letter 104493, dated June 23, 1980, published as Legal Determination No. 80-0135, issued September 10, 1980; (17) a copy of the Corps of Engineers' Solicitation no. DACW49-97-B-0003, issued December 20, 1996; (18) 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;

(19) 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;
(20) a report from Gahagan & Bryant Associates, Inc., dated June 19, 1997; (21) a copy of an e-mail from George B. Brooks, dated November 20, 1996; (22) a copy of the Corps of Engineers' SF 114, Sale of Government Property - Bid and Award; (23) a copy of a letter dated April 1997 to Michelle F. Barczak, Esq., Freedom of Information Act Officer, Corps of Engineers, to Mr. Terry L. Leitzell, Esq.; (24) a copy of a letter dated March 19, 1997, from John F. Gradel, Sr., to Hans B. Blomberg, Vice President, B + B; (25) a copy of the Corps of Engineers' Manual, EM 1110-2-5026, entitled "Beneficial Uses of Dredged Material", dated June 30, 1987; (26) a copy of S. Hrg. 100-554, a hearing on amendments to the Merchant Marine Act of 1920 before the Subcommittee on Merchant Marine, Committee on Commerce, Science, and Transportation, U.S. Senate, dated January 28, 1988; (27) a listing of the dredging contracts performed by the subject vessel from 1978 to the present; (28) a copy of Senate Report 100-327, dated May 4, 1988; and (29) a copy of a declaration from Dewitt Barlow, President of B + B.

Counsel to both King 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 the Maumee River and Toledo Harbor to Port Facility No. 3. 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 KING

With respect to the threshold question regarding the value of the dredge material under consideration, King 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, King proffers that if the dredge material now under consid-eration 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, King, through its experts, con-tends that the contaminants in the material being dredged are not at such a level as to preclude its use for commercial purposes. (King Exhibits 17 and 27) King cites prior Customs rulings 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. (King Exhibits 18, 19 and 20)

Further in regard to the use of the dredge material to be transported pursuant to the Corps of Engineers contract currently under consideration, King asserts that the material is to be used as landfill to create valuable port land. In addition to its use as landfill, King contends that the subject dredge material has value due to the sale by the Corps of Engineers of dredge material previously deposited in Port Facility No. 3. To that end King has submitted a copy of the 1994 Corps of Engineers' invitation for bids to purchase dredge material from part of this same CDF in Toledo as well as accompanying test reports and results attesting to its acceptability for use as landfill and other commercial uses. (Exhibit 16 and 24)

Notwithstanding any possible future uses of the subject dredge material to be deposited in Port Facility No. 3, King nonetheless points out that this site has already been designated as beneficial "Industrial fill" by the Corps of Engineers. Consequently, King asserts that the value of the dredge material disposed therein is currently acknowledged by that federal agency.

THE POSITION OF B + B

B + B states that the COLUMBUS is entitled to transport dredge material from the dredging sites in the Maumee River and Toledo Harbor to Port Facility No. 3 for the following reasons:

A. The Customs Service, in determining whether the COLUMBUS is engaged in the coastwise trade of merchandise, should determine whether the dredged material has value only at the time and place of unloading which ends the coastwise movement.

B. The Customs Service should review and rely heavily on the expressed intent of the
Corps of Engineers at the time of the bidding process with regard to the disposal or use of the dredged material.

C. The Corps of Engineers solicitation for the Maumee-Toledo project states clearly that the scope of work is to "remove and dispose of approximately 600,000 cubic yards of dredged material." The terms "dispose of" and "disposal" are used con- sistently throughout the solicitation. The Corps of Engineers' solicitation is dis- positive evidence of the Corps of Engineer's intent to treat the dredged material as waste that requires confinement in the disposal facility.

D. The Corps of Engineers has stated no beneficial use planned for the dredged mate- rial from this project. The solicitation for the Maumee-Toledo project contains no statement of intent or plans to use the dredged material for any use whatsoever.

E. Feasible and beneficial uses of dredged material require lengthy advanced planning, management, and clear local commitment in order to be successful. In the Maumee-
Toledo project, those factors are not present at the time and place of the unloading of the dredged material. In fact, the Corps of Engineers was even unwilling to state that old, dewatered, and consolidated material in a Toledo confined disposal facility was suitable or intended for any use.

F. 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.

G. The current and previous owners of the COLUMBUS have relied, in good faith, on the previous Customs Service rulings, a 1980 federal district court case, and the two federal statutes enacted in 1988 and 1992.

B + B emphasizes that the determination of value must relate only to the dredged material produced in the Maumee-Toledo project now under consideration, to the value of the dredged material when and where it is unloaded from the COLUMBUS (the end of the coastwise movement), and to specific valuable uses already planned and committed when the dredged material is unloaded. It is suggested by B + B that possible, but unproven, 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 Port Facility No. 3.

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 600,000 cubic yards from the Maumee-Toledo 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 Port Facility No. 3 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. (King 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 (King 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 8 and 12 of B + B and King, 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 9 by King 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 Exhibit 11, Exhibit 2 of B + B), which amended 46 U.S.C. App. ? 883 (see the so-called "Twelfth Proviso" therein) 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 (King 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.

With respect to Customs administration of the aforementioned First and Twelfth Provisos, we are governed by the long-recognized legal tenet that a proviso which carves out a special class of cases from the purview of a general or comprehensive statute "...is to be construed strictly and held to apply only to cases shown to be clearly within its purpose." United States v. McElvain, et al., 272 U.S. 633, 639 (1926); see also, United States v. Dickson, 15 Pot. (U.S.) 141, 165 (1841); Shilknet v. Musicraft Records, 131 F.2d. 929, 931 (1942). We note, however, that legislative action on the part of Congress further impacted Customs administration of the twelfth proviso by imposing additional limitations on the eligibility of the COLUMBUS to engage in the coastwise transportation of dredge material. Pursuant to the Oceans Act of 1992 (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 King Exhibit 15, B + B's Exhibit 3), the COLUMBUS is prohibited from transporting "dredge material of value" between points embraced within the coastwise laws (Emphasis added; 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).

Accordingly, by legislative fiat Congress directed that as of November 4, 1992, the COLUMBUS was no longer eligible to transport "dredge material of value", yet remained eligible to transport valueless dredge material. For Customs to disregard this distinction in statutory language runs contra to the axiom that "[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion," citing Russello v. United States, 464 U.S. 16, 23 (1983); and General Motors Corp. v. United States, 496 U.S. 530, 110 S.Ct. 2528, 2532 (1990)). Furthermore, "...words in statutes should not be discarded as 'meaningless' or 'surplusage' when Congress specifically and expressly included them, particularly where the words are excluded in other sections of the same act." United States v. Wong Kim Bo, 472 F.2d. 720, 722 (1972); see also City of Galatin v. Cherokee County, 563 F.Supp. 940, 946 (1983); United States v. Handy, 761 F.2d. 1279, 1280 (1985); and Enserch International Exploration, Inc., v. Attlock Oil Company, Ltd., 656 F.Supp. 1162, 1165 (1987).

Consequently, Customs remains of the opinion that the case currently under review turns on whether the subject dredge material has value, notwithstanding any transportation by the COLUMBUS of dredge material prior to November 4, 1992.

With respect to the Maumee River and Toledo Harbor maintenance dredging project under consideration, 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 and Pub. L. 102-587 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 King 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 17 of King 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 Port Facility No. 3. 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 King's claim that the dredge material to be deposited in Port Facility No. 3 will be landfill used for the reclamation of submerged land for the purpose of constructing port facilities, we note that the Corps of Engineers has identified such construction 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"; Exhibit 25 of both King and B + B). However, the Corps of Engineers further states that with respect to such use of dredged material, "[t]he key for the beneficial use planner is to identify how, when, and where dredged material from a navigation project can fill an economic need, while not overlooking biological beneficial uses and environmental considerations and limitations." (Id. at p. 15-1) In addition, numerous considerations determinative of the feasibility of using dredged material must be analyzed prior to the implementation of such use. (See Exhibit 19 of B + B supporting B + B's contention that such use of dredge material requires lengthy advanced planning and management.) The documentary evidence submitted by King in support of their claim in this regard includes the master plan created by the Toledo-Lucas County Port Authority Board of Directors, as amended and extended in 1968, calling for the construction of extensive port facilities on the site of Port Facility No. 3 (i.e., a general cargo facility (including a bulkhead, wharf, rail access, etc.) as well as a site for plants, factories, offices, etc.) after the completion of fill activities. (King Exhibit 22) In addition, a November 15, 1985, letter from the Seaport Director, Toledo-Lucas County Port Authority, to the Corps of Engineers reiterates the aforementioned intended future uses of Port Facility No. 3. (King Exhibit 23) King's experts further state that the level of contaminants contained within the dredge material to be placed in Port Facility No. 3 does not preclude its use for landfill, construction, or other beneficial purposes. (King Exhibits 17 and

With specific regard to the use of dredge material for industrial/commercial purposes such as landfill, 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) Our review of the record reveals that King has provided no evidence on behalf of the City of Toledo corroborating the opinions of its experts with respect to whether the use of dredge material in Port Facility No. 3 for landfill or construction purposes, is environmentally feasible. It is therefore our opinion that although the above-discussed documentation reveals a local interest in the construction of port facilities through the annexation of a dredge material-filled Port Facility No. 3, the four exhibits submitted by King in support of this proposition (Exhibits 17, 22, 23 and 27), 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.

However, notwithstanding the apparent tenuous use of the dredge material to be deposited in Port Facility No. 3 as suggested by King, 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*". The Toledo-Lucas County Port Authority site under consideration (i.e., Port Facility No. 3) is listed thereon as a project or site of beneficial use for "Industrial Fill" (a beneficial use discussed at length in Chapter 15 of the manual).

In addition, we note that on October 14, 1994, the Corps of Engineers issued a solicitation for the sale of up to 50,000 cubic yards of previously deposited dredged material that had been in Port Facility No. 3 for a period of between three to five years. (King Exhibit 24, B + B Exhibit 22) This two-year contract was awarded on November 23, 1994, to the George Gradel Company ("Gradel"), a site development and marine contractor in Toledo, Ohio, the only bidder for the contract, which bid $6,000.00 ($.12 per cubic yard). (B + B Exhibit 22) It was Gradel's intention to use the material to supplement site work and landscape projects in the Toledo area, a use for which Gradel has subsequently deemed it to be unsuited. (B + B Exhibit 24) Gradel has thus far purchased and removed only 300 cubic yards of the 50,000 cubic yards of material it had contracted to purchase, paying $36.00. Nonetheless, Gradel requested, and the Corps of Engineers approved, a one year extension of this sales contract. (B + B Exhibit 21) Regardless of the relatively small amount of dredge material in Port Facility No. 3 purchased to date, this contract extension corroborates the Corps of Engineers' designation of this site as beneficial as set forth on p. C-20 of Appendix C of the aforementioned manual discussed above. Furthermore, this documentation collectively constitutes prima facie evidence that the subject dredge material to be deposited in Port Facility No. 3 is considered by both parties to the contract to be other than valueless.

Accordingly, the above documentation is conclusive evidence of King's claim that the dredge material to be placed in Port Facility No. 3 currently has value for purposes of this ruling request.

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

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