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HQ 115322

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April 16, 2001

VES-3-01-RR:IT:EC 115322 GEV

CATEGORY: CARRIER

Philip Yale Simons
Simons & Wiskin
90 West Street
10th Floor
New York, NY 10006

RE: Coastwise Trade; Cable-Laying; 46 U.S.C. App. §§ 289, 883

Dear Mr. Simons:

This is in response to your letter dated March 12, 2001, on behalf of your client, the Power Systems Division of ABB Power T&D Company, Inc., Raleigh, NC (hereinafter “ABB Power”), regarding the proposed use of a foreign-owned vessel in a cable-laying operation in Long Island Sound scheduled to occur in October 2001. Our ruling in this matter is set forth below.

FACTS:

ABB Power will erect two High Voltage Direct Current converter substations on opposite sides of Long Island Sound: one will be in New Haven, CT, and the other in Shoreham, NY. These substations will be connected by fiber optic and high-voltage electrical cables laid across Long Island Sound. To minimize potential damage to the cables, they will be buried in the same trench, which may be up to six feet deep.

ABB Power has engaged a Dutch cable-laying ship to lay cables in Long Island Sound. This ship will leave the Netherlands and sail to Sweden where it will lade the cables. It will then sail directly to Long Island Sound. The crew which will lay the cables will be flown to the United States and then be ferried to the Dutch cable-laying ship. After the cable is laid, the crew will be ferried back to the same place where
they embarked the ferry for the cable-laying ship and then return to their home. The ship will then return directly to the Netherlands after the cable-laying operation is completed.

ISSUES:

Whether the use of a Dutch vessel in the cable-laying/burial operation described above constitutes a violation of 46 U.S.C. App. § 883.

Whether the crew that will be performing the actual cable-laying/ burial operation aboard the Dutch cable-laying vessel are passengers for purposes of 46 U.S.C. App. § 289 so that their transportation within U.S. territorial waters aboard that vessel constitutes a violation of that statute.

Whether the above-referenced crew may be ferried aboard a non-coastwise-qualified vessel between the mainland and Dutch cable-laying vessel without being in contravention of 46 U.S.C. App.

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).

Title 46, United States Code Appendix, § 289 (46 U.S.C. App. § 289, the passenger coastwise law) as interpreted by the Customs Service, prohibits the transportation of passengers between points in the United States embraced within the coastwise laws, either directly or by way of a foreign port, in a non-coastwise-qualified vessel (i.e., any vessel that is not built in and documented under the laws of the United States, and owned by persons who are citizens of the United States). For purposes of § 289, “passenger” is defined as “any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, business.” (19 CFR § 4.50(b))

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.

With respect to the first issue for our consideration, the Customs Service has held that the sole use of a non-coastwise-qualified vessel to lay cable between points in the United States or in international waters does not violate 46 U.S.C. App. § 883. The rationale for this holding is that such cable is not only laid, and not "transported," between points in the United States, but it is also being used in furtherance of the primary mission of the cable-laying vessel and is therefore similar to vessel equipment. (Customs ruling letter 110402, dated April 18, 1989) In addition, Customs has held that the cable burial/trenching activity performed in conjunction with the operation under consideration does not constitute coastwise trade. (Customs ruling letter 113223, dated September 29, 1994) Furthermore, it should be noted that the fact that the cables will be laded foreign (Sweden) renders inapplicable the provisions of 46 U.S.C. App. § 883 inasmuch at this statute contemplates the transportation of merchandise between a coastwise point of lading and a coastwise point of unlading.

The second and third issues for our consideration pertain to whether the crew that will be performing the actual cable-laying/burial operation aboard the Dutch cable-laying vessel are considered “passengers” within the meaning of 19 CFR § 4.50(b) not only while working aboard the cable-laying vessel, but also while being transported aboard a vessel that will ferry them to the cable-laying vessel. Our resolution of these issues is dependent upon the nexus between the subject crew and the specific vessel upon which they will be transported. In that regard, with respect to the second issue, it is our position that the crew are not “passengers” in view of the fact that they are sufficiently connected with the operation and business of the cable-laying vessel. Consequently, their transportation within territorial waters aboard the Dutch cable-laying vessel would not violate 46 U.S.C. App. § 289.

However, we do not reach the same conclusion with respect to the third issue. Any vessel ferrying the crew from the mainland to the cable-laying vessel at a location within territorial waters must be coastwise-qualified since the subject crew are not sufficiently
connected with the ferrying vessel to be considered other than passengers within the meaning of 19 CFR § 4.50(b). Consequently, your understanding of Customs position with respect to this issue is incorrect. The ruling you cite in your letter in support of your position (Customs ruling letter 112992, dated January 12, 1994), which holds that persons participating in oceanographic research may be transported between coastwise points aboard a non-coastwise-qualified oceanographic research vessel supports our determination in both the second issue discussed above as well as this issue. Passenger status as to one vessel is not necessarily the same as to all vessels. Of course, it should be noted that should the subject crew be ferried to the cable-laying vessel located at a position beyond U.S. territorial waters, the provisions of 46 U.S.C. App. § 289 would not be applicable and a non-coastwise-qualified vessel may be used for such ferrying service.

HOLDINGS:

The use of a Dutch vessel in the cable-laying/burial operation described above does not constitute a violation of 46 U.S.C. App.

The crew that will be performing the actual cable-laying/burial operation aboard the Dutch cable-laying vessel are not passengers for purposes of 46 U.S.C. App. § 289 with respect to their carriage aboard that specific vessel. Consequently, their transportation within U.S. territorial waters aboard the Dutch cable-laying vessel does not constitute a violation of that statute.

The above-referenced crew may not be ferried aboard a non-coastwise-qualified vessel between the mainland and the Dutch cable-laying vessel located within U.S. territorial waters without being in contravention of 46 U.S.C. App. § 289. However, such a vessel may be used to ferry the subject crew to the cable-laying vessel if the latter is located beyond U.S. territorial waters.

Sincerely,

Larry L. Burton

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