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HQ 116105

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March 26, 2004

VES-3-17:RR:IT:EC 116105 TLS

CATEGORY: CARRIER

Mr. David F. Smith
Mr. Wayne R. Rohde
Sher & Blackwell
1850 M Street, N.W.
Washington, D.C. 20036

RE: Coastwise Trade; Empty Cargo Containers; Chassis; Sixth Proviso; 46 U.S.C. App. § 883; 19 CFR 4.93.

Dear Messrs. Smith and Rohde:

This is in response to your letter on behalf of Nippon Yusen Kaisha (NYK), dated January 5, 2003, requesting a ruling concerning whether certain empty truck chassis may be transported coastwise on foreign-flag vessels pursuant to the Sixth Proviso of 46 U.S.C. App. § 883.

FACTS:

With regard to your inquiry, you state the following. NYK is a Japanese corporation that operates foreign-flag vessels in the foreign commerce of the United States. The vessels are container ships that transport standard-sized containers in intermodal traffic. The containers are transported inland via rail, truck, or a combination thereof. When transported via truck, NYK provides its customers with chassis, which are steel frames with wheels to which the container is fastened. The chassis is connected to a truck tractor. NYK owns and leases the chassis. NYK proposes to transport the chassis between the continental United States and Hawaii on vessels documented under the laws of either Panama or Antigua and Barbuda.

ISSUE:

Whether the chassis as described above may be transported coastwise on foreign-flag vessels pursuant to the Sixth Proviso of 46 U.S.C. App. § 883.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, section 883 (46 U.S.C. App. § 883), commonly referred to as 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 a vessel built in and documented under the laws of the United States. Section 883 was amended by the Act of September 21, 1965 (Pub. L. No. 89-104, 79 Stat. 823), which added the Sixth Proviso, and by the Act of August 11, 1968 (Pub. L. No. 90-474, 83 Stat. 700), which amended that proviso.

The 1965 Act exempted from the provisions of section 883 the coastwise transportation of empty cargo vans, empty lift vans, and empty shipping tanks in non-coastwise-qualified United States-flag vessels or foreign-flag vessels, on a reciprocal basis, when the vans and tanks are owned and leased by the owner or operator of the transporting vessels and are being transported for use in the carriage of cargo in foreign trade. The 1968 Act added equipment for use with cargo vans, lift vans, and empty shipping tanks, empty barges specifically designed for carriage aboard a vessel, and certain empty instruments of international traffic to the articles included within the Sixth Proviso. These articles and the articles covered by the 1965 Act were required by the 1968 Act to be owned or leased by the owner or operator of the transporting vessel and transported for his use in handling his cargo in foreign trade.

The Sixth Proviso also provides in pertinent part, that upon such terms and conditions as the Secretary of [Homeland Security] by regulation may prescribe, and if the transporting vessel is of foreign registry, upon his finding, pursuant to information furnished by the Secretary of State, that the government of the nation of registry extends reciprocal privileges to vessels of the United States, this section shall not apply to the transportation of the above-named equipment by vessels of that foreign registry.

The regulation administered by U.S. Customs and Border Protection (CBP) which is promulgated pursuant to the Sixth Proviso is set forth in 19 CFR 4.93. It requires that the articles to be transported coastwise must be “owned or leased by the owner or operator of the transporting vessel and... transported for his use in handling his cargo in foreign trade.” As listed under 19 CFR 4.93(b)(1) and (2), Antigua and Barbuda and Panama are among the nations that have granted reciprocal privileges to vessels of the United States to engage in the transportation of “empty cargo vans, empty lift vans, and empty shipping tanks” and “equipment for use with [such articles].” In this regard we note that this agency has previously ruled that “bare” (i.e., empty) chassis are considered “equipment for use with cargo vans, lift vans, or shipping tanks” within the meaning of the Sixth Proviso of 46 U.S.C. App. § 883. See Customs ruling HQ 103388 (May 12, 1978).

Thus, to the extent that NYK owns and leases the chassis, uses them to transport their cargo in foreign trade, and operates the vessels documented under the flag of either Antigua and Barbuda or Panama upon which they are transported between coastwise ports, the transportation of the subject chassis in said manner would not constitute a violation of either 46 U.S.C. App. § 883 or 19 CFR 4.93(b).

HOLDING:

The transportation of empty chassis as described above between two coastwise points is not a violation of either 46 U.S.C. App. § 883 or 19 CFR 4.93(b).

Sincerely,

Glen E. Vereb
Chief

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