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HQ 115601

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February 28, 2002

VES-3-07-RR:IT:EC 115601 GEV

CATEGORY: CARRIER

Jeanne M. Grasso, Esq.
Dyer Ellis & Joseph
Watergate, Eleventh Floor
600 New Hampshire Ave., NW
Washington, D.C. 20037

RE: Coastwise Trade; 46 U.S.C. App. § 883

Dear Ms. Grasso:

This is in response to your letter dated February 14, 2002, on behalf of your client, [ ], requesting a ruling that foreign-flag vessels may be used to return chemicals to the same U.S. port from which the vessels departed. Our ruling in this matter is set forth below.

FACTS:

In November 2001, the foreign-flag vessels [ ] and [ ]were loaded with chemicals at A-22 Dock at the [ ] terminal in [ ] for transportation to and sale in [ ] and [ ], respectively. While the vessels were en route, [ ] determined that the product needed to be returned to the United States for reprocessing.

Prior to offloading in [ ], the chemicals were transferred from the [ ] to the foreign-flag vessel [ ] for return to [ ] because the [ ] had another charter commitment. The chemicals aboard the [ ] were off-loaded into a terminal tank in [ ] for temporary storage pending transportation arrangements to return the product to [ ] . [ ] intends to return all the chemicals that were originally aboard the [ ] and [ ] to [ ] for reprocessing.

Ultimately, the chemicals will be offloaded at the same dock on which they were loaded, A-22 Dock, because this is the only dock in [ ] where loading/unloading for this chemical is available. It is possible, however, that when the vessels return to [ ], [ ] will not have available tankage to store the returned chemicals. [ ] is considering possible options for offloading and temporary storage of the chemicals until tankage becomes available. Either existing piping, transfer hoses, or temporary piping will be used at the A-22 Dock to transfer the product from the tanker to a barge and from a barge to tankage depending on Coast Guard requirements applicable to the transfer operations.

Accordingly, [ ] poses several scenarios (diagrams of which are attached to your letter) regarding the return of the chemicals to [ ]. For purposes of the scenarios described below, you reference the [ ] but assume that the analysis would be the same for the chemicals originally aboard the [ ] that were offloaded in [ ] and will be returned to [ ] by a foreign-flag vessel.

SCENARIO 1

Unloading the Chemicals from the [ ] at A-22 Dock

It remains possible that sufficient tankage may become available at [ ] [ ] facility by the time the [ ] arrives. If such space becomes available, the [ ] would unload the chemicals at the same location on A-22 Dock (i.e., Dock Face) where the chemicals were loaded onto the [ ].

SCENARIO 2

Transferring the Chemicals to a Coastwise-Qualified Barge, Moored Alongside the [ ], which is Docked at the Same Location Where the Chemicals were Loaded

If tankage is not available at the [ ] facility, [ ] would transfer the chemicals from the [ ] to a coastwise-qualified barge for temporary storage. At the time of the transfer, the [ ] would be at A-22 Dock (i.e., Dock Face), the same location at which the [ ] was docked when the chemicals were loaded, and the barge would be moored outboard and alongside the [ ]. After the transfer, the barge would be moved to a temporary location in the [ ] area until adequate
tankage becomes available at the [ ] facility. Ultimately, the barge would return to A-22 Dock for offloading of the chemicals at the same location (i.e., Dock Face) used by the [ ] for loading the chemicals.

SCENARIO 3

Transferring the Chemicals to a Coastwise-Qualified Barge, which is Docked at the Same Location Where the Chemicals were Loaded, and the [ ] is Moored Outboard of the Barge

This alternative is similar to that discussed in Scenario 2. In this scenario, the [ ] would be at the same dock at which the chemicals were loaded aboard the [ ]; however, the coastwise-qualified barge would be docked at A-22 (i.e., Dock Face) and the [ ] would be moored outboard of the barge. After the transfer, the barge would be moved to a temporary location in the [ ] area until adequate tankage became available at the [ ] facility. Ultimately, the coastwise-qualified barge would return to Dock A-22 (i.e., Dock Face) for offloading of the chemicals at the same location used by the [ ] for loading the chemicals.

SCENARIO 4

Transferring the Chemicals to a Coastwise-Qualified Barge, Moored Near the [ ], which is Docked at the Same Location Where the Chemicals were Loaded

If tankage is not available at the [ ] facility, [ ] would transfer the chemicals from the [ ] to a coastwise-qualified barge for temporary storage. At the time of the transfer, the [ ] would be at A-22 Dock (i.e., Dock Face), the same location at which the [ ] was docked when the chemicals were loaded, and the barge would be moored in a barge slip near the [ ]. After the transfer, the barge would be moved to a temporary location in the [ ] area until adequate tankage becomes available at the [ ] facility. Ultimately, the barge would return to A-22 Dock (i.e., Dock Face) for offloading of the chemicals at the same location used by the [ ] for loading the chemicals.

SCENARIO 5

Transferring the Chemicals to a Non-Coastwise-Qualified Barge in Scenarios 2 Through 4, Described Above

This scenario would simply substitute a non-coastwise-qualified barge for the coastwise-qualified barge described in Scenarios 2 through 4, above.

SCENARIO 6

Transferring the Chemicals to a Coastwise-Qualified Barge in Scenarios 2 through 4, Described Above, Except Ultimately the Barge Would Not Return to the Same Location

This scenario is the same as Scenarios 2 through 4 except the coastwise-qualified barge would ultimately return to the barge slip at A-22 Dock rather than the Dock Face for offloading of the chemicals.

ISSUE:

Whether the use of foreign-flag vessels as described in the above scenarios is in contravention 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).

Section 4.80(a), Customs Regulations (19 CFR § 4.80(a)), promulgated pursuant to the above-cited statute, provides in pertinent part that the coastwise laws include “points within a harbor.”

In addition, § 4.80b(a), Customs Regulations (19 CFR § 4.80b(a)), also promulgated pursuant to the above-cited 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, regardless of the origin or ultimate destination of the merchandise. (Emphasis added)

In regard to the scenarios offered for our consideration, our position is as follows.

In Scenario 1, the transporting vessel is abutting the A-22 Dock for unloading at the same exact point where the transported chemicals were loaded (i.e., Dock Face). In view of the fact that the coastwise points of loading and unloading are the same, no violation of the Jones Act would occur in this scenario.

Likewise, Scenario 2 also involves the transporting vessel abutting A-22 Dock for unloading at the same exact point where the transported chemicals were loaded. Notwithstanding the transfer of the chemicals to a coastwise-qualified barge on the other side of the vessel, the coastwise points of loading and unloading are the same in this scenario therefore no violation of the Jones Act would occur with respect to the vessel or the coastwise-qualified barge when it subsequently returns the chemicals to the Dock Face for offloading when tankage becomes available.

Scenario 3, however, does not involve the return of the chemicals by the transporting vessel to the same exact point where the transported chemicals were loaded. Rather than abutting the Dock Face, the transporting vessel will abut the barge which will be between it and the Dock Face. The chemicals will therefore not be unloaded at the coastwise point where they were loaded. Consequently, since the coastwise points of loading and unloading are not the same, the transporting vessel would violate the Jones Act. No such violation would arise with respect to the coastwise-qualified barge.

Scenario 4, as in the case with Scenarios 1 and 2, involves the transporting vessel abutting the Dock Face for unloading at the same exact point where the transported chemicals were loaded. Since the coastwise points of loading and unloading are the same, no violation of the Jones Act would occur in this scenario with respect to the vessel or the coastwise-qualified barge moored in a nearby barge slip.

Scenario 5 involves the substitution of a non-coastwise-qualified barge for the coastwise-qualified barge in Scenarios 2-4. This would give rise to a violation only as to Scenario 2 inasmuch as the coastwise points of loading (the vessel width from the Dock Face) and unloading (the Dock Face) would be different coastwise points.

Scenario 6 involves the coastwise-qualified barge ultimately returning to the barge slip at A-22 Dock rather than the Dock Face for offloading of the chemicals. This scenario does not give rise to a Jones Act violation.

HOLDING:

The use of foreign-flag vessels as described in the above scenarios is in contravention of 46 U.S.C. App. § 883 only with respect to Scenario 2 as discussed in the Law and Analysis portion of this ruling.

Sincerely,

Larry L. Burton

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