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HQ 116579

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February 8, 2006

VES-3-RR:BSTC:CCI 116579 CK

CATEGORY: CARRIER

James M. Reilly, Esq.
Herzog Law Firm
7 Southwoods Boulevard
Albany, NY 12211

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

Dear Mr. Reilly:

This letter is in reply to your ruling request dated December 2, 2005 on behalf of your client, St. Lawrence Cement Co., LLC. Our reply follows.

FACTS:

St. Lawrence Cement Co., LLC is engaged in the domestic manufacture and importation of cement. The company has five terminals on the East Coast, located in the ports of Boston, Providence, New York, Camden and Baltimore. The company has two barges that are qualified to engage in the coastwise trade which transport products from its U.S. manufacturing facilities to the various distribution terminals.

The company proposes to acquire a used barge and refit it as a cement unloader barge. The barge may not be qualified to engage in the coastwise trade. The company proposes to do the following activities with the barge.

The barge will be outfitted with equipment for unloading the cement ships, and the equipment will be either a Siwertell ship unloader or a Kovaco ship unloader. Both unloaders operate the same way by pumping the cement off the ship into two holding tanks on the unloader barge. When operating, the ship unloader is filling one of the holding tanks with approximately 250 metric tons of cement while the product in the other holding tank is blown out into storage facilities on the shore. This operation is performed on a continuous basis.

You state that the sole use of the barge will be to unload cement in the two following ways. The principal use would be to unload the cement from the ship to storage facilities on shore. In doing this, the unloader barge would lie wharfside between the dock and the ship being unloaded. Periodically, either the barge or the ship would shift its position to allow access to all holds. Although not specifically stated in your ruling request, we assume that as is the case with your second proposal below, during this repositioning of the unloader barge there will be no cement onboard.

The second means of unloading the cement would be to unload it at an anchorage point in a United States port. In this case, the unloader barge would transfer the cement from the ship to the coastwise barge as described above. Again, at times when the unloader barge would move along the length of the ship to access all holds, it will have not have any cement onboard.

ISSUE:

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

LAW AND ANALYSIS:

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 Appendix, 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.

U.S. 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 115940, dated April 17, 2003 we were asked whether the use of a crane barge and deck barge in unloading boulders for placement on the ocean floor was coastwise activity. The barges were to be brought alongside of the crane barge and the crane (which was affixed to its barge in one position) was to offload these boulders one by one and place them on the ocean floor. We held that since the only movement of the crane barge was to reposition itself for proper unloading, and the crane barge would not be used to transport any material utilized on the project, then this was not a coastwise activity requiring a coastwise-qualified vessel.

Additionally, you cite to HQ 110823, dated February 1, 1990. The facts in that ruling were a non-self-propelled barge would be fitted with a Siwertell ship unloader and used to unload cargo ships. The barge would be moved along the vessel, but when the barge was moved or repositioned to unload it would not carry any merchandise whatsoever. We found that the use of that non-coastwise-qualified barge for unloading operations from a fixed position would be permissible as long as no merchandise was onboard the barge during its repositioning for further unloading.

The same analysis would apply to both proposals you present. You state that from a stationary position the non-coastwise-qualified barge unloader would pump out the cement from a cargo vessel and then blow its other holding tank of cement either directly to storage facilities on shore, or onto a coastwise-qualified vessel for transportation to shore. When the barge is repositioned so that it may reach all the tanks on a vessel for unloading it will have no cement onboard. Based on the facts you present the barge would not be engaged in prohibited coastwise activities and would not be in violation of 46 U.S.C. App. §883.

HOLDING:

The proposed activity of the non-coastwise-qualified barge is permitted pursuant to the coastwise merchandise statute, 46 U.S.C. App. § 883.

Sincerely,

Glen E. Vereb

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