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HQ 115333

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April 27, 2001

VES-3-01-RR:IT:EC 115333 LLO

CATEGORY: CARRIER

Douglas R. Burnett
195 Broadway
New York, New York 10007-3189

RE: Coastwise Trade; Cable-laying; Vessel Equipment; 46 U.S.C. App. § 883

Dear Mr. Burnett:

This is in response to your letter dated March 26, 2001, regarding the proposed use of a foreign-flagged vessel in a cable laying operation in Puerto Rico and Washington State. Our ruling on this matter is set forth below.

FACTS:

A European manufacturer of submarine electrical power cables plans to charter a Norwegian-flag vessel to lay submarine cables in Puerto Rico and Washington, USA.

The European manufacturer plans to charter the C/S HAVILA, a Norwegian-flag vessel designed to lay submarine cables. Four separate submarine electrical power cables will be loaded onto the HAVILA in Halden, Norway, the location where the cables are manufactured.

The vessel then plans to sail for San Juan, Puerto Rico, were it will lay two of the electrical power cables between Puerto Rico and two U.S. adjacent islands. The vessel then plans to proceed via the Panama Canal to Anacortes, Washington, where the remaining two cables will be laid between two islands and the mainland in Washington State. Following completion of this cable installation, the ship will depart United States waters.

ISSUE:

Whether the use of a foreign-flagged vessel to lay cable between coastwise points constitutes a violation of 46 U.S.C. App. §883.

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). Pursuant to title 19, United States Code, 1401(c) (19 U.S.C. §1401 (c)), the word “merchandise” is defined as “goods, wares and chattels of every description, and includes merchandise the importation of which is prohibited.”

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

With respect to laying of cable, 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 114305, dated March 31, 1998)

As noted above, vessel equipment is not included within the general meaning of merchandise for purposes of 46 U.S.C. App. 883. Vessel equipment has been defined as articles, “necessary and appropriate for the navigation, operation or maintenance of the vessel and for the comfort and safety of the persons on board.” (Treasury Decision 49815(4), dated March 13, 1939) Customs has specifically ruled that, “Vessel equipment placed aboard a vessel at one United States port may be removed from the vessel at another United States port at a later date without violation of the coastwise laws.” (Customs ruling letter 102945, dated November 8, 1978)

Customs has held that equipment used by a cable-laying vessel during the course of a cable-laying operation, may be laden on a vessel at a coastwise point and used by the vessel for reasons relating to the operation of the vessel and may later be unladen at a second coastwise point without violation of 46 U.S.C. App. §883.

HOLDING:

The use of a foreign-flagged vessel to lay cable between coastwise points does not constitute a violation of 46 U.S.C. App. §883.

Sincerely,

Larry L. Burton
Chief
Entry Procedures and Carriers Branch

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