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HQ 114468

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December 14, 1998

VES-3-RR:IT:EC 114468 LLB

CATEGORY: CARRIER

Ms. Darnell Bludworth
643 Magazine Street
P.O. Box 60643
New Orleans, Louisiana 70130-0643

RE: Coastwise trade; Semi-submersible barge; Movement within harbor; Foreign-flag vessel; 46 U.S.C. App. 883

Dear Ms. Bludworth:

Reference is made to your letter of September 16, 1998, received via facsimile transmission at the close of business on that date, in which you request that we rule upon an operation which is to take place involving a foreign-flag semi-submersible barge and a jack-up rig currently under construction in a shipyard operated by your client, Halter Marine Group, Inc., in Pascagoula, Mississippi. Our ruling follows.

FACTS:

A jack-up type oil rig, the PERFORADORA B506 LETOURNEAU SUPER 116C (hereinafter, the rig) is currently under construction in the Halter Marine Group, Inc., shipyard in Pascagoula, Mississippi. Apparently the construction has entered a phase which requires that the rig be moved from its current location prior to completion of the project. The impending movement will be accomplished with the assistance of a vessel, the BOABARGE 9, a semi-submersible registered in the Cayman Islands. The vessel is said to be a 15,000 dead weight ton barge, and is scheduled to arrive at the shipyard on September 17, 1998. It is stated that the Customs Port Director, Pascagoula, Mississippi, supplied Halter with correspondence indicating that the proposed movement may constitute a violation of the Jones Act.

This office contacted the Port Director in Pascagoula, Mississippi, for the purposes of obtaining a copy of the written advice issued to Halter Marine, as well as for gaining a better understanding of the factual background concerning the proposed transportation. By facsimile transmission of September 17, 1998, we received a copy of the referenced correspondence dated September 16, 1998. That letter recites the facts as understood by Customs officials on the scene, and requests that Halter Marine contact Customs if their stated understanding of the facts is incorrect. No further contact is noted. The letter from the Port Director, as well as further discussion, reveals that the rig is currently located on the ground in the shipyard. It is proposed that a skidding system be constructed in order to move the rig from its land-based location to the foreign-flag barge. Having received the rig, the barge would be moved to a site approximately 100 yards distant where water depth would permit the barge to submerge for the purpose of allowing the rig to float free. The rig, once afloat on its own, would then be towed back to a dock location in the shipyard for continuation of construction operations.

The incoming request for a ruling cites as support for the issuance of a favorable ruling from this office, the case of Shipbuilder's Council of America, et al. v. United States, 868 F.2d 452 (1989), as well as quoted language from an unidentified Customs Headquarters ruling, which we have since identified as our case number 107903, September 13, 1985. The apparent reason for reliance upon the ruling is its reference to an incidental shifting of a barge within a shipyard.

ISSUE:

Whether under the facts as discussed, the proposed movement would be one which would require the use of a coastwise-qualified vessel.

LAW AND ANALYSIS:

The coastwise law pertaining to the transportation of merchandise, section 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 that:

No merchandise shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the transportation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to be transported), between points in the United States...embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any other vessel than a vessel built in and documented under the laws of the United
States and owned by persons who are citizens of the United States...

For your general information, we have consistently interpreted this prohibition to apply to all vessels except United States-built, owned, and properly documented vessels (see 46 U.S.C. ?? 12106, 12110, 46 U.S.C. App. ? 883, and 19 C.F.R. ? 4.80).

The coastwise laws generally apply to points in the territorial sea, defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in the internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ. These laws have also been interpreted to apply to transportation between points within a single harbor. Merchandise, as used in section 883, includes any article, including even materials of no value (see the amendment to section 883 by the Act of June 7, 1988, Pub. L. 100-329; 102 Stat. 588).

The facts under consideration in the cited court case as well as the ruling involved the placement of a rig aboard a non-coastwise-qualified semi-submersible barge in waters of sufficient depth to permit the loading. The loaded barge would then act as a floating dry dock, retaining the rig aboard during repairs which would take place at a nearby dock facility. Following repairs, the barge with rig still aboard would be returned to the same site at which the rig was first taken aboard. At that site, the barge would submerge, and the repaired rig would be floated free. Under these stated circumstances, the points of lading and unlading would be the same. As only a single coastwise point would be involved, the prohibition under United States law on the lading and unlading by a non-qualified vessel at separate coastwise points would not be effective.

In the present matter, the rig would be laded aboard the foreign-flag barge from a shore point. The barge would proceed to a point in the harbor area adjacent to the shipyard to unlade the rig. At that point, a violation of the Jones Act will have occurred. Reliance on the mention of "incidental shifting" in the cited ruling is misplaced. The point which was sought to be made in that case was that Customs would not penalize the transportation simply because the lading and unlading might not be accomplished to a geographic certainty at precisely the same point.

HOLDING:

Following a thorough review of the facts and analysis of the relevant law and precedents, we have determined, in accord with the information set forth in the Law and Analysis section of this ruling letter, that the proposed operation would violate the coastwise laws administered by the Customs Service.

Sincerely,


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