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HQ 116078

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February 11, 2004

VES-3-06:RR:IT:EC 116078 TLS

CATEGORY: CARRIER

Julie Knight
Islands’ Oil Spill Association
225 A Street
P.O. Box 2316
Friday Harbor, Washington 98250-2316

RE: Oil spill containment and cleanup operations; 46 U.S.C. App. §§ 289 and 883; 19 CFR 4.50(b)

Dear Ms. Knight:

This is in response to your letter of November 5, 2003, in which you request clarification regarding the use of non-coastwise vessels to engage in oil spill containment and cleanup operations in U.S. waters. Our ruling on this matter is set forth below.

FACTS:

Islands’ Oil Spill Association (IOSA) is a non-profit organization that provides oil spill response and prevention services in Washington. You describe IOSA’s services as responding to local spills on a first response basis when local agencies cannot arrive before IOSA, responding to local spills that are too small or short- term to be worthy of response from local agencies, and contribution of local knowledge to longer term spill response procedures. You state that IOSA is reimbursed for operating expenses by either the responsible party or the U.S. Coast Guard.

The vessel IOSA proposes to use for these operations is a Canadian-built vessel. It has been specifically built to perform the following operations: carry a spill response crew and equipment to the spill site, setting a boom for initial containment, deflection, or diversion of oil, stopping a spill source, and providing a platform for removal equipment. You claim that the vessel will not transport any recovered oil and that such transportation will be provided by smaller U.S.-built vessels, which are also owned by IOSA.

ISSUE:

Whether a non-coastwise qualified vessel may engage in the operations described above pursuant to 46 U.S.C. App. §§ 289.

LAW AND ANALYSIS:

Section 27 of the Act of June 5, 1920, as amended (41 Stat. 999; 46 U.S.C. App. § 883 [also referred to as the “Jones Act”]), provides, in pertinent part, that:

No merchandise shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or monetary amount up to the value thereof... or the actual cost of the transportation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to 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 other vessel than a vessel built in and documented under that laws of the United States and owned by persons who are citizens of the United States...

We have previously ruled on a case concerning a non-coastwise oil spill recovery vessel. In Customs ruling HQ 110386 (September 29, 1989), we ruled that a non-coastwise-qualified vessel may engage in, among other things, using oil separation equipment to purify water and pump it into barges for disposition. We ruled in HQ 110386 that such operations would not provide transportation of merchandise between coastwise points. HQ 110386 also noted that Customs has long held that the use of a non-coastwise qualified vessel as a stationary facility, whether for lodging, processing, storage, etc., is not a transportation activity which would be prohibited under section 883.

Thus, in this case, the activities contemplated for the subject vessel would not be violative of section 883 when they are stationary activities within the meaning of HQ 110386. See also Customs ruling HQ 111372 (March 20, 1991). As noted above, the subject vessel would carry its gear (containment boom, absorbents, anchor systems, drums, etc.) in order to set a boom for initial containment, deflection, or diversion of oil, stopping a spill source, and provide a platform for removal equipment. None of these activities would involve the transportation of merchandise in view of the fact that the gear involved is vessel equipment which does not constitute merchandise for purposes of 46 U.S.C. App. § 883. We have consistently held that equipment that will be used by a vessel in the course of its business is not “merchandise” within the general meaning of that term. See, e.g., Customs ruling 113137 (June 27, 1994); Customs ruling HQ 112218 (July 22, 1992); and Customs ruling HQ 102945 (November 8, 1978). See also Treasury Decision 49815(4) (March 13, 1939). We emphasize, however, that any transportation of the recovered oil at any point within coastwise waters must be done by coastwise-qualified vessels.

The passenger coastwise law, 46 U.S.C. App. § 289, provides that “[n]o foreign vessel shall transport passengers between ports or places in the United States, either directly or by way of a foreign port, under a penalty of $300 for each passenger so transported and landed. Pursuant to 19 CFR 4.50(b), a vessel “passenger” is defined as “any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business.” Thus, the spill response crew and crew members involved in navigation of the vessel would not be considered passengers within the meaning of section 4.50(b) and therefore are exempt from section 289.

HOLDING:

As specified in the Law and Analysis section of this ruling, the subject non-coastwise vessel may engage in the operations described above since such activities do not violate the provisions of 46 U.S.C. App. §§ 289 and 883.

Sincerely,

Glen E. Vereb
Chief

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