Applicability of the Coastwise Trade Laws to the Carriage of Merchandise Between the U.S. and Guam either directly, or Via the Commonwealth of the Northern Mariana Islands or the Federated States of Micronesia

HQ 110754 February 23, 1990 VES-3-07-CO:R:P:C 110754 CATEGORY: Carriers Jean Melancon, Esquire Suite 902-A, Pacific News Building 238 Archbishop F.C. Flores Street Agana, Guam 96910 RE: Applicability of the Coastwise Trade Laws to the Carriage of Merchandise Between the U.S. and Guam either directly, or Via the Commonwealth of the Northern Mariana Islands or the Federated States of Micronesia Dear Mr. Melancon: This is in response to your letter of January 3, 1990, in which you request a ruling on the applicability of the coastwise trade merchandise statute (46 U.S.C. App. 883) to the transpor- tation of ductile iron pipe between the U.S. and Guam, either directly or via other Pacific transshipment points. FACTS: The AME Matex Corporation of New Jersey (AME) has contracted to provide one-half-million pounds of ductile iron pipe to a Guam corporation for use in a public works water project in Guam. Primary and alternative routes for the transportation of the pipe are proposed. The first proposal is to carry the cargo directly from the mainland United States to Guam aboard a foreign-flag vessel. In the alternative, AME proposes to take the cargo to either the Commonwealth of the Northern Mariana Islands (CNMI) or to the Federated States of Micronesia (FSM) on a foreign-flag vessel for transshipment to a U.S.-flag vessel and delivery to Guam. ISSUE: Whether any or all of the proposed transportation itiner- aries set forth in the Facts section of this ruling are pro- hibited under the Jones Act merchandise transportation statute (46 U.S.C. App. 883). LAW AND ANALYSIS: Section 27 of the Act of June 5, 1920, as amended (41 Stat. 999; 46 U.S.C. App. 883, often called 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 a monetary amount up to the value thereof as determined by the Secretary of the Treasury, 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 the laws of the United States and owned by persons who are citizens of the United States * * *. Pursuant to 46 U.S.C. App. 877, the coastwise laws are applicable to Guam. Under 46 U.S.C. 12105(b), however, a vessel for which a registry is issued by the United States Coast Guard may be employed in trade with Guam. Under that statute and 46 U.S.C. 12102, a foreign-built, United States-owned vessel may, under certain circumstances, be issued a registry. In inter- preting these statutes, the Customs Service has ruled that foreign-built, United States-registered vessels may be used for transport between points in Guam. Although the restrictions on vessels used in the trade between the U.S. and Guam have been relaxed, in that registry vessels maybe so employed, section 883 still provides the relevant interpretative guideposts. The statutory language restricts merchandise transportation "... either directly or via a foreign port, or for any part of the transportation...". Since registry vessel transportation is permissible, either such vessels or coastwise qualified vessels must be used for the entirety of the transportation. A proposed transshipment in either the CNMI or FSM (neither of which is considered a coastwise point under the facts as presented), will not act to interrupt the transportation between the U.S. and Guam. The proposed transportation may only be accomplished, regardless of the itinerary, with the use of coastwise qualified or U.S.-flag registry vessels. HOLDING: A shipment of merchandise between the U.S. and Guam, even though transshipped at a non-coastwise point, may only be accom- plished by coastwise-qualified or U.S.-flag registry vessels. Sincerely, B. James Fritz Chief Carrier Rulings Branch