HQ 114842 - Bowaters amendment; Dredging; Charter; 46 U.S.C. App. 292; 46 U.S.C. App. 883-1 - 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 > 2000 HQ Rulings > HQ 084357 - HQ 114893 > HQ 114842

Previous Ruling Next Ruling
HQ 114842

December 6, 1999

VES-2-RR:IT:EC 114842 LLB

CATEGORY: CARRIER

Mr. William N. Myhre
1735 New York Avenue, N.W.
Suite 500
Washington, D.C. 20006-5209

RE: Bowaters amendment; Dredging; Charter; 46 U.S.C. App. 292; 46 U.S.C. App. 883-1

Dear Mr. Myhre:

Reference is made to your request that this office rule upon the proposed use of vessels either owned or chartered by a so-called “Bowaters citizen” in pursuit of dredging or mining operations in United States territorial waters. Our ruling follows.

FACTS:

A ruling is requested on behalf of the Great Lakes Dredge & Dock Company (Great Lakes) which is considering entering into a joint venture with potential partners, some of whom qualify as “Bowaters Corporations” within the meaning of Section 27A of the Merchant Marine Act of 1920, codified at 46 U.S.C. App. 883-1. Great Lakes routinely conducts operations constituting dredging in the territorial waters of the United States within the meaning of the dredging statute, 46 U.S.C. App. 292, with the use of vessels qualified under law for such engagement.

Presently under consideration is an operation which would involve potential joint venture partners in the removal of sand and gravel from submerged tracts in the United States pursuant to various mineral leases. It is anticipated that the operations might be accomplished, at least in part, through the use of dredging vessels which are either owned or chartered by Bowaters citizen partners. The matter of the legality of such vessel use has been referred for our resolution.

ISSUE:

What restrictions, if any, operate with respect to a Bowaters citizen owning or chartering a vessel which is engaged in dredging or mining activities in the navigable waters of the United States.

LAW AND ANALYSIS:

The Act of September 2, 1958 (72 Stat. 1736, often called the Bowaters Amendment), titled "An Act to amend section 27 of the Merchant Marine Act of 1920," added a new section 27A which is codified at 46 U.S.C. App. 883-1 and which provides, in pertinent part, that:

Notwithstanding any other provision of law, a corporation incorporated under the laws of the United States ... shall be deemed to be a citizen of the United States for the purposes of and within the meaning of that term as used in sections 316, 808, 835 and 883 of this title, and the laws relating to the documentation of vessels, if it is established by a certificate filed with the [Coast Guard] ... that...[certain conditions relating to the corporation are satisfied] but no vessel owned by any such corporation shall engage in the fisheries or in the transportation of merchandise or passengers for hire between points in the United States ... embraced within the coastwise laws, except as a service for a parent or subsidiary corporation and except when such vessel is under demise or bareboat charter at prevailing rates for use otherwise than in the domestic noncontiguous trades from any such corporation to a carrier subject to jurisdiction under subchapter II of chapter 135 of Title 49, which otherwise qualifies as a citizen under section 802 of this title, and which is not connected, directly or indirectly, by way of ownership or control of such corporation... Vessels built in the United States and owned by a corporation meeting the conditions hereof which are non-self-propelled or which, if self-propelled, are of less than five hundred gross tons shall be entitled to documentation under the laws of the United States, and except as restricted by this section, shall be entitled to all the other benefits and privileges and shall be subject to the same requirements, penalties, and forfeitures as may be applicable in the case of vessels built in the United States and otherwise documented or exempt from documentation under the laws of the United States.

Title 46, United States Code Appendix, section 292 specifies the vessels which may engage in dredging in waters of the United States as follows:

(a) In general

Except as provided in subsection (b) of this section, a vessel may engage in dredging in the navigable waters of the United States only if
(1) the vessel meets the requirements of section 883 of this Appendix and sections 802 and 803 of this Appendix for engaging in the coastwise trade;
(2) when chartered, the charterer of the vessel is a citizen of the United States under sections 802 and 803 of this Appendix for engaging in the coastwise trade; and
(3) for a vessel that is at least 5 net tons, the vessel is documented under chapter 121 of title 46 with a coastwise endorsement.

(b) Exception
A documented vessel with a registry endorsement may engage in the dredging of gold in Alaska.

(c) Penalty
When a vessel is operated in knowing violation of this section, that vessel and its equipment are liable to seizure by and forfeiture to the United States Government.

(May 28, 1906, ch. 2566, Sec. 1, 34 Stat. 204; Nov. 4, 1992, Pub. L. 102587, title V, Sec. 5501(a)(1), 106 Stat. 5084.)

1992 Amendments

Pub. L. 102587, § 5501(a)(1), generally amended section, substituting provisions relating to vessels that may engage in dredging, for provisions relating to dredging by foreign built dredges.

Applicability to Certain Vessels

Section 5501(a)(2) of Pub. L. 102587 provided that: ''The amendment made by paragraph (1) [amending this section] does not apply to
(A)(i) the vessel STUYVESANT, official number 648540;

(ii) any other hopper dredging vessel documented under chapter 121 of title 46, United States Code [section 12101 et seq. Of Title 46, Shipping] before the effective date of this Act [probably means Nov. 4, 1992] and chartered to Stuyvesant Dredging Company or to an entity in which it has an ownership interest; however, this exception expires on December 3, 2022 or when the vessel STUYVESANT ceases to be documented under chapter 121, whichever first occurs; and

(iii) any other nonhopper dredging vessel documented under chapter 121 [section 12101 et seq. Of Title 46] and chartered to Stuyvesant Dredging Company or to an entity in which it has an ownership interest, as is necessary (a) to fulfill dredging obligations under a specific contract, including any extension periods; or (b) as temporary replacement capacity for a vessel which has become disabled but only for so long as the disability shall last and until the vessel is in a position to fully resume dredging operations; however, this exception expires on December 8, 2022 or when the vessel STUYVESANT ceases to be documented under chapter 121, whichever first occurs;

(B) the vessel COLUMBUS, official number 590658, except that 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;

(C) a vessel that is engaged in dredged material excavation if that excavation is not more than a minority of the total cost of the construction contract in which the excavation is a single, integral part, and the vessel is
(i) built in the United States;
(ii) a nonselfpropelled mechanical clamshell dredging vessel; and
(iii) owned or chartered by a corporation that had on file with the Secretary of Transportation, on August 1, 1989, the certificate specified in section 27A of the Merchant Marine Act, 1920 (46 App. U.S.C. 8831); or

(D) any other documented vessel engaged in dredging and time chartered to an entity that, on August 1, 1989, was, and has continuously remained, the parent of a corporation that had on file with the Secretary of Transportation on August 1, 1989, a certificate specified in section 27A of the Merchant Marine Act, 1920 (46 App. U.S.C. 8831) [section 883-1 of this title] if the vessel is

(i) not engaged in a federally funded navigation dredging project; and
(ii) engaged only in dredging associated with, and integral to, accomplishment of that parent's regular business requirements.

The Bowaters Amendment provides certain narrow exceptions to the broad restrictions imposed on the “pedigrees” of vessels whose use is proposed for engagement in certain activities in our waters. These narrow exceptions were last amended by the Congress in the above-cited legislation, and those exceptions remain narrow and specific in scope. As may be readily noted, the amendments concern certain named vessels and include certain grandfather provisions applicable to Bowaters qualifiers.

Under the terms of the amended law, those grandfather provisions are available only with respect to the named qualifying conditions having been satisfied prior to August 1, 1989. It is our determination that vessels which do not qualify under Chapter 121 of title 46, United States Code appendix, are not specifically named in the amended dredging statute, or do not meet the qualifying grandfather provisions relating to Bowaters citizens and their vessels as set forth in the cited amendments to section 292, may not legally be used in dredging activities in the United States.

HOLDING:

Following consideration of the facts and analysis of the applicable law, regulations and precedents, we have determined that legal dredging activities involving Bowaters citizens and their vessels in the United States are limited to those having met the qualifying date of August 1, 1989, set forth in Section 5501(a)(2) of Pub.L. 102-587 as detailed in the Law and Analysis portion of this ruling.

Sincerely,

Jerry Laderberg

Previous Ruling Next Ruling