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HQ 116700





September 12, 2006

VES-3-09-RR:BSTC:CCI 116700 rb

CATEGORY: CARRIER

Austin P. Olney
LeBoeuf, Lamb, Greene & MacRae LLP
260 Franklin Street
Boston, MA 02110-3173

RE: Use of foreign vessels for ice breaking; 46 U.S.C. App. 289, 883

Dear Mr. Olney:

In your letter of July 27, 2006, on behalf of your client, Alcoa, Inc., you request a ruling as to whether the use of two foreign-built, foreign-flagged vessels in ice breaking activities would violate the coastwise laws. The requested ruling follows.

FACTS:

A company has been working for several years in conjunction with the U.S. Environmental Protection Agency (EPA), to address the issue of bottom sediments in a lower portion of a river in New York State; these bottom sediments contain PCBs (Polychlorinated Biphenyls), a hazardous substance. Such bottom sediments can potentially be disturbed as the result of severe ice jams that may periodically form in that reach of the river. Pending implementation of long term remedial action, the company, at EPA’s request, is contemplating ice breaking on the lower reach of the river in order to prevent the formation of ice jams that can upset/mobilize these PCB-containing sediments.

For such specialized ice breaking operations on the river, the company proposes to secure the use of two foreign-built, foreign-flagged vessels - a workboat/tug and a barge. Toward this end, the workboat, which is typically manned by two people, has design features that minimize bottom sediment displacement during ice breaking, as required for the project; likewise, the barge, which is also manned by two people, is designed for shallow river work, thereby making it ideal to break ice jams while avoiding bottom disturbance.

ISSUE:

Whether the use of foreign-built, foreign-flagged vessels in ice breaking operations would violate the coastwise laws.

LAW AND ANALYSIS:

Generally speaking, the coastwise trade consists of the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws (e.g., Headquarters ruling (HQ) 106983, of September 26, 1984).

In particular, under 46 U.S.C. App. 883, the coastwise transportation of merchandise (comprising “goods, wares, and chattels of every description,” 19 U.S.C. 1401(c)) is prohibited in any other vessel than a coastwise-qualified vessel, i.e., a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States. Also, in concert with 46 U.S.C. 12106 and 12110, the requirement that passengers also be transported coastwise in a coastwise-qualified vessel has long and consistently been applied as well to 46 U.S.C. App. 289 (e.g., HQ 109815, dated December 5, 1988); under 19 CFR 4.50(b), a “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.”

In applying the coastwise laws, Customs (now Customs and Border Protection (CBP)) has ruled that a point in United States territorial waters is considered a point embraced within the coastwise laws; and that the coastwise laws typically apply to points in the territorial sea, defined as the belt, three (3) nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline, in cases where the baseline and coastline differ (T.D. 78-440). Thus, the coastwise laws would embrace “points on a river in the United States” (C.S.D. 84-15), “the internal waters of a State” (ibid.), as well as “points within a harbor” (19 CFR 4.80(a)).

However, by way of background, it has long been the position of Customs (now CBP) that the transporting of equipment, supplies and materials used on or from the transporting vessel in effecting such services as inspections and/or installations of, and/or repairs to, offshore or sub-sea structures, including the laying and repair of pipelines, is not coastwise trade, provided these articles are necessary for the accomplishment of the vessel’s mission, and are usually carried aboard the vessel as a matter of course (such articles are not considered to be merchandise in these circumstances under section 883); and the carriage aboard the vessel of crew members, and personnel such as divers and technicians, as well as construction personnel to accomplish the aforementioned services performed on or from the vessel also does not constitute coastwise trade (such crew members, and other specified personnel in these circumstances, are not considered to be passengers under section

289) (e.g., HQ 113838, of February 25, 1997 (inspection/maintenance/repair of oil and gas pipelines and production platforms; and installation of pipelines and wellheads); HQ 115771, of August 19, 2002 (pipeline repairs)).

Consequently, to the same extent as with the services discussed above, vessels involved in ice breaking operations have likewise long been considered as not thereby engaged in coastwise trade. In this regard, as stated in HQ 101197, dated July 9, 1974:

The use of a vessel solely as an icebreaker...is not considered coastwise trade and would not be prohibited by any law or regulation administered by the United States Customs Service [now CBP].

Hence, ice breaking operations are not considered coastwise trade, and, assuming, as distinctly appears to be the case at present, that no merchandise or passengers would be transported by the vessels during these activities, such ice breaking operations would not be prohibited to the vessels under consideration herein (see HQ 107648, dated July 2, 1985). Accord, HQ 115038, of May 5, 2000 (ice breaking not considered coastwise trade).

HOLDING:

Under the facts presented, the use of foreign-built, foreign-flagged vessels in conducting the contemplated ice breaking operations would not violate the coastwise laws.

Sincerely,

Glen E. Vereb
Chief

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