HQ 115212 - Coastwise Trade; Towing; 46 U.S.C. App. §§ 316(a), 883 - United States International Trade Commision Rulings

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HQ 115212

November 16, 2000

VES-3-RR:IT:EC 115212 GEV

CATEGORY: CARRIER

M. Hamilton Whitman, Jr., Esq.
Ober, Kaler, Grimes & Shriver
120 East Baltimore Street
Baltimore, Maryland 21202-1643

RE: Coastwise Trade; Towing; 46 U.S.C. App. §§ 316(a), 883

Dear Mr. Whitman:

This is in response to your letter dated November 6, 2000, requesting a ruling regarding your client’s contemplated participation in a project to repair and reconstruct two existing breakwaters in a U.S. port. Our ruling in this matter is set forth below.

FACTS:

One of the breakwaters in question runs parallel with the shoreline, while the other is perpendicular to the shoreline. The project would entail removal of some of the armor stone currently covering the two breakwaters, replacement of the under layer stone, and rebuilding the water side of the berm with recovered and new armor stone. The project may also require some minor excavation at the toe of the berm, to temporarily remove sediment that has accumulated since the berm was first built, in order to expose armor stone at the base of the berm. The excavated material would be set aside on the bottom adjacent to the toe of the berm and later put back at the toe of the berm after the armor stone has been replaced. A section of sheet piling wall is also to be removed and replaced.

Your client is planning to utilize one or two crane barges to perform a large portion of the work. The crane barge would be employed to remove and reset the old and new armor stone. The crane barge would remain stationary while working, but would be moved along the berms from place to place as the construction proceeds.

In addition, another barge or barges would also be utilized to hold the recovered armor stone from the berm. This barge would be positioned alongside the stationary crane barge performing the construction work, and would be moved to be positioned alongside the crane barge as the crane barge is repositioned. Armor stone would be placed temporarily on this barge after which good armor stone would be replaced in the berm, while damaged armor stone would be placed on a barge for disposal.

Furthermore, another barge or barges would be utilized to carry the replacement armor stone and underlay stone to the crane barge, and to remove some of the replaced armor stone off site. This barge would be carrying the armor stone and underlay stone from a quarry that is either in the U.S. or Canada. The armor stone to be disposed of could be taken ashore to the U.S., taken ashore to Canada, or possibly disposed of in U.S. or Canadian waters.

Tugboats would be required to position and reposition the crane barge, and would also move the barges carrying the underlay stone and armor stone to and from the crane barge. The tugs would also move barges carrying any material to be disposed of off-site.

ISSUES:

Whether the crane barge utilized in the above-described project would be required to be coastwise-qualified pursuant to 46 U.S.C. App. § 883.

Whether the barge holding the recovered armor stone that would be taken off the berm and placed back onto the berm would be required to be coastwise-qualified pursuant to 46 U.S.C. App. § 883, assuming either (a) this barge would never be moved with stone on it, or (b) this barge would be moved with stone in it so as to remain alongside the crane barge as that barge is repositioned from place to place.

Whether the barges carrying the underlay stone and armor stone would be required to be coastwise-qualified pursuant to 46 U.S.C. App. § 883, assuming the underlay stone and armor stone are brought directly from Canada and any replaced armor stone to be disposed of is taken directly to Canadian waters.

Whether the tugs moving the barges carrying the underlay stone and armor stone would be required to be coastwise-qualified pursuant to 46 U.S.C. App. § 316(a), assuming the underlay stone and armor stone are brought directly from Canada and any replaced armor stone to be disposed of is taken directly to Canadian waters.

Whether the answers to issues 3 and 4 would be different if the barges were removed from place to place within U.S. waters while carrying stone.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, § 883 (46 U.S.C. App. § 883, the merchandise coastwise law often called the “Jones Act”), provides, in part, that no merchandise shall be transported between points in the United States embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any vessel other than one that is coastwise-qualified (i.e., U.S.-built, owned and documented).

Section 4.80b(a), Customs Regulations (19 CFR § 4.80b(a)), promulgated pursuant to the aforementioned statute, provides, in pertinent part, as follows:

A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point,”
(Emphasis added)

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

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 internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ.

In regard to the first issue presented for our consideration, the U.S. Customs Service has long held that the use of a non-coastwise-qualified crane barge to load and unload cargo or construct or dismantle a marine structure is not coastwise trade and does not violate the coastwise laws, provided, that any movement of merchandise is effected exclusively by the operation of the crane and not by movement of the vessel, except for necessary movement which is incidental to a lifting operation while it is taking place. Thus, a crane barge could lift merchandise with its crane at one coastwise point, be pivoted while remaining in that location, and put down the merchandise at a coastwise point other than that from which it was lifted. A crane barge would be prohibited from lifting merchandise with its crane at one coastwise point, being towed or pushed or otherwise moving to another coastwise point while the merchandise is suspended from the crane, and placing the merchandise at that second coastwise point. (Customs ruling letters 106351, dated November 1, 1983, and 108213, dated March 6, 1986)

Accordingly, the crane barge to be used in the project in question would not be required to be coastwise-qualified as long as it is used within the parameters of the above-cited Customs decisions.

The second issue for our review concerns the barge holding the recovered armor stone that would be taken off the berm and placed back on it. With respect to the first scenario under this issue (i.e., the barge would never be moved with the stone on it), such activity does not constitute the coastwise transportation of merchandise within the meaning of 19 CFR § 4.80b(a). Consequently, the barge would not be required to be coastwise-qualified. As for the second scenario (i.e., the barge would be moved with stone in it so as to remain alongside the crane barge as that barge is repositioned from place to place), so long as the stone is laded and unladed at the same coastwise point, there is no coastwise transportation of merchandise within the meaning of 19 CFR § 4.80b(a) and the barge is therefore not required to be coastwise-qualified.

In the third issue, the underlay stone and armor stone would be transported on board the barges directly from Canada (foreign point of lading, U.S. point of unlading) and any replaced armor stone to be disposed of would be transported on board the barges directly to

Canadian waters (U.S. point of lading, foreign point of unlading). This activity does not constitute coastwise trade and the barges would not be required to be so-qualified.

The fourth issue pertains to the tugs moving the barges referenced in the third issue. Although unstated, the two possible towing scenarios we envision with respect to this issue are as follows: (1) the tugs are engaged in a continuous tow between Canada and the U.S.; or (2) the tugs tow only one way (Canada-U.S. or vice versa) with repositioning of the barges by tugs within U.S. waters when the one-way tow has terminated. In regard to the former, Customs has held that 46 U.S.C. App. § 316(a) does not prohibit the continuous towing by the same non-coastwise-qualified tug of a vessel engaged in foreign trade on a voyage from a foreign location to a United States port or place, or from a United States port or place to a foreign location, merely because both the tug and towed vessel stop at other United States ports or places to load export cargo or unload import cargo. (Customs ruling letter 110236, dated May 22, 1989, citing Treasury Decision (T.D.) 70-223(19)) Further in this regard, Customs has taken the position that a towing operation is continuous and has not terminated unless the vessels in question are either unlinked or there is a change of the towing vessel. (Customs ruling letters 113092, dated December 6, 1994, and 224477, dated May 28, 1993) With respect to the latter scenario, a one-way tow originating in Canada and terminating in the U.S. or vice versa does not fall within the purview of 46 U.S.C. App. § 316(a). However, it should be noted that the repositioning of the barges (including the crane barge), solely within U.S. territorial waters, subsequent or unrelated to the termination of any one-way tow from Canada, would fall under the proscription of that statute.

The fifth issue inquires as to the holdings in the preceding two issues if the barges were removed from place to place within U.S. waters while carrying stone. With respect to the barges (issue three), mere movement/repositioning of them between coastwise points would not change our holding unless stone laden at one coastwise point is unladen at a different coastwise point. As for the tugs (issue 4), their use in the movement/repositioning of the barges (including the crane barge) between coastwise points would not change our holding, provided they are engaged in a continuous tow as discussed above. Engagement in other than a continuous tow would necessitate their being coastwise-qualified.

HOLDINGS:

The crane barge utilized in the above-described project would not be required to be coastwise-qualified pursuant to 46 U.S.C. App. § 883, provided any movement of the stone between coastwise points would be effected by the crane and not by the barge.

The barge holding the recovered armor stone that would be taken off the berm and placed back onto the berm would not be required to be coastwise-qualified pursuant to 46 U.S.C. App. § 883, assuming either (a) this barge would never be moved with stone on it, or (b) this barge would be moved with stone in it so as to remain alongside the crane barge as that barge is repositioned from place to place and the armor stone is not unladed at a second coastwise point.

The barges carrying the underlay stone and armor stone would not be required to be coastwise-qualified pursuant to 46 U.S.C. App. § 883, assuming the underlay stone and armor stone are brought directly from Canada and any replaced armor stone to be disposed of is taken directly to Canadian waters.

The tugs moving the barges carrying the underlay stone and armor stone would not be required to be coastwise-qualified pursuant to 46 U.S.C. App. § 316(a), assuming either a continuous tow or a one-way tow (Canada-U.S. or vice versa) whereby the underlay stone and armor stone are brought directly from Canada and any replaced armor stone to be disposed of is taken directly to Canadian waters.

The answers to issues 3 and 4 would be different if the barges were removed from place to place within U.S. waters while carrying stone and the barges were unladed at a second coastwise point (issue 3), or the tugs engaged in towing the barges solely between coastwise points unrelated to a continuos tow (issue 4).

Sincerely,

Larry L. Burton
Chief

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