United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org  Rulings By Number  Rulings By Category  Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 2005 HQ Rulings > HQ 116219 - HQ 116491 > HQ 116423

Previous Ruling Next Ruling
HQ 116423

---

March 25, 2005

VES-3-RR:IT:EC 116423 GOB

CATEGORY: CARRIER

H. Brinson Miles, III
Vice President
Gulf Marine Fabricators
P.O. Box 3000
Aransas Pass, Texas 78335

RE: 46 U.S.C. § App. 883; Coastwise Transportation of Merchandise

Dear Mr. Miles:

This letter is in reply to your letter of March 11, 2005.

FACTS:

You describe the essential facts as follows:

Gulf Marine Fabricators (GMF), a Texas general partnership owned by Technip, is a major fabrication yard of deepwater oil and gas structures and processing facilities, located near Corpus Christi, Texas. . . .
In our Houston office, GMF designed and developed a new deepwater hull form (called the Cell Spar). . . . . . .
. . . a key aspect of the cost related to delivery of the Cell Spar is the launching operation . . . getting it from our fabrication yard into the water. Once in the water, U.S. tugs move the Cell Spar directly to the offshore deepwater location in the Gulf of Mexico.

The most cost-effective method to get the Cell Spar in the water is to utilize a special purpose “heavy-lift” ship to offload the Cell Spar within our harbor, adjacent to our fabrication yard. We have a “deep-hole” that we have dredged specifically for such a purpose. At the present time, there are no U.S. flagged vessels capable of this task and we are forced to use a foreign vessel for this purpose. . . . This vessel can partially submerge to take on or off-load its cargo.

The “heavy-lift” ship, once loaded with the cell-spar, will be pivoted to the off-load position utilized winches. The “heavy-lift” ship will not utilize its propulsion system during this movement.

We believe that this launching operation is compliant with the intent of the Jones Act for there are no U.S. flagged vessels capable of performing this operation and there is no transportation from port to port in U.S. coastal waters.

The enclosed drawings and pictures depict the load-out and off-load operations at or adjacent to our GMF yard . . . :

“Starting Position” – this shows the completed Cell Spar sitting in our yard ready for “load-out.” A “heavy-lift” ship is shown positioned so that the Cell Spar can be skidded (dragged) onto it from our yard.

2. “Skid out Complete’ – this shows the Cell Spar fully loaded onto the “heavy-lift” ship and ready to be moved to a position within our harbor, which we call the “deep hole.” The “deep hole” has been dredged by GMF to 86-foot depth for this purpose. . . .

3. “Final Off-load Position” – this drawing shows the “heavy-lift” ship with the Cell Spar on-board. It has repositioned a few hundred feet away from the load-out position, to where the "deep hole" is located. In this drawing it is ready to ballast down to allow the Cell Spar to float-off. After float-off, the “heavy-lift” ship operation is complete and it departs empty. We then pull the Cell Spar to our bulkhead, using winches and/or U.S. flag tugs to complete final preparations for it to be towed to the final destination offshore in the Gulf of Mexico.

ISSUE:

Whether the proposed activity is permitted or prohibited pursuant to the coastwise merchandise statute, 46 U.S.C. App. § 883.

LAW AND ANALYSIS:

Statutory and Regulatory Background

Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. A vessel built in, documented under the laws of, and owned by citizens of the United States is said to be “coastwise-qualified.” The owner of such a vessel may obtain a coastwise endorsement from the U.S. Coast Guard.

Title 46, United States Code, section 883 (46 U.S.C. App. § 883), the coastwise merchandise statute 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 a vessel built in, documented under the laws of, and owned by citizens of the United States.

The coastwise laws generally apply to points in the territorial sea, which is 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.

Customs and Border Protection (“CBP”) has long held that the use of a stationary, non-coastwise-qualified crane vessel to load and unload cargo or construct or dismantle a marine structure is not coastwise trade and does not violate the coastwise laws provided that any movement of merchandise is effected exclusively by the operation of the crane and not by movement of the vessel, except for necessary movement which is incidental to a lifting operation while it is taking place. However, the movement of merchandise while it is suspended from the crane, even between two points in a harbor, which is effected by a movement of the vessel which is neither necessary nor incidental to a lifting operation by the crane would constitute the coastwise transportation of merchandise within the purview of 46 U.S.C. App. § 883. See, for example, HQ 106351 dated November 1, 1983 and HQ 113858 dated April 4, 1997. See also § 4.80(a), CBP Regulations (19 CFR § 4.80(a)).

In HQ 115630 dated March 25, 2002, we held that where lateral movement of the entire floating crane/barge was required to lift and place its load, such activity constituted the coastwise transportation of merchandise because it exceeded movement necessary and incidental to a lifting operation.

In HQ 115881 dated April 21, 2003, we considered a number of scenarios. One of the scenarios was described and analyzed thusly:

. . . before launching the truss section, mooring lines at a fixed length would be attached to the port stern corner of the barge to secure that corner of the barge over its original footprint. The bow of the barge would then be rotated approximately 10–30 degrees on the axis created by the mooring lines to create a launch angle at which the deep water pit could accommodate the full length of the truss section when launched. Once its barge is rotated on its axis to a favorable angle, the truss section would be launched into the deep water pit. When this process is broken down, it is clear that an illegal coastwise movement will occur . . .

Our Analysis and Determination

In your letter, you state: “The ‘heavy-lift’ ship, once loaded with the cell spar, will be pivoted to the off-load position utilizing winches.” You further state: “It [the heavy-lift ship with the Cell Spar on board] has re-positioned a few hundred feet away from the load-out position, to where the ‘deep hole’ is located.”

With your letter, you have submitted three diagrams which reflect the starting position of the heavy-lift ship (“the vessel”), the “skid out complete,” and the final offload position. See the more detailed description in the FACTS section of this ruling. The vessel appears to be in the same position in steps (diagrams) one and two. The difference is that the Cell Spar is loaded onto the vessel in the second step. In the third step or diagram, however, the vessel has moved in a material fashion. You state (as detailed in the FACTS section and in the previous paragraph) that “[i]t has repositioned a few hundred feet away from the load-out position.” This movement or “repositioning,” which includes the lading of the Cell Spar on the vessel at one coastwise point and the unlading of the Cell Spar at a second coastwise point, is a coastwise movement of merchandise (i.e., the Cell Spar) which, pursuant to 46 U.S.C. App. § 883, may only be accomplished by a coastwise-qualified vessel. The fact that the vessel has remained in the same port, or harbor, does not indicate, or mean, that a coastwise movement has not occurred.

Accordingly, we determine that the proposed movement by a non-coastwise-qualified vessel such as the foreign-flag heavy-lift ship would violate 46 U.S.C. App. § 883.

In addition to the rulings cited above, our determination herein is consistent with our determinations in the following relatively recent rulings: HQ 116191, dated April 15, 2004, and HQ 116225, dated May 6, 2004. In fact, the extent of the proposed movement in your request exceeds the movements proposed in HQ 116191 and HQ 116225, both of which were found to be violative of 46 U.S.C. App. § 883.

You may wish to contact the Maritime Administration of the Department of Transportation (202-366-0760) with respect to the availability of coastwise-qualified vessels.

HOLDING:

The proposed movement by a non-coastwise-qualified vessel such as the foreign-flag heavy-lift ship would violate 46 U.S.C. App. § 883. The movement, which includes the lading of the Cell Spar on the vessel at one coastwise point and the unlading of the Cell Spar at a second coastwise point, is a coastwise movement of merchandise (i.e., the Cell Spar) which, pursuant to 46 U.S.C. App. § 883, may only be accomplished by a coastwise-qualified vessel.

Sincerely,

Glen E. Vereb
Chief

Previous Ruling Next Ruling