Bowaters; foreign trade; construction in foreign territory; 46 U.S.C. 12110(c)

HQ 111141 July 26, 1990 VES-3-24-CO:R:P:C 111141 LLB CATEGORY: Carriers Mr. Bruce A. King Bogle and Gates Two Union Square 601 Union Street Seattle, Washington 98101-2322 RE: Bowaters; foreign trade; construction in foreign territory; 46 U.S.C. 12110(c) Dear Mr. King: Reference is made to your letter of June 21, 1990, in which you request a ruling on the use of vessels with a bowaters endorsement in a foreign-based construction project. You have requested, and we will accord, confidential treatment for this matter. FACTS: In a letter of January 15, 1990, you informed us that a marine construction company which has been issued a certificate under section 883-1 of title 46, United States Code Appendix (46 U.S.C. App. 883-1), proposed to utilize certain of its barges (including crane, pile driving, and flat barge configurations) to assist in a construction project in a foreign country. The crane barges and pile driving barges have their apparatus permanently attached. The flat barges will be used as either stationary work platforms or staging barges for various of the construction activities. Certain of the barges will have mobile equipment placed aboard in the United States, which equipment will remain aboard the barges during the entire overseas project, and which will be unloaded at the same location in the United States at which it was originally laden. That January 15 letter included a request for a ruling that several marine activities would not be considered "trade" activities. These included dredging, crane hoisting, pile driving, stationary storage, and use of vessels as staging platforms. We responded that these matters appeared to be hypothetical in nature and not related to the contemplated operation which was to be accomplished at an unspecified foreign location. We stated that our regulations (19 CFR 177.7(a)) precluded us from issuing rulings based on hypothetical situations. Your present correspondence indicates that an answer to the question of whether the previously mentioned uses are "trade" activities is critical because your client company's vessels cannot qualify for registry endorsements. As such, if deemed to be in trade by engagement in the named activities, it is possible that a violation of 46 U.S.C. 12110(c) would be incurred. Only by a determination that there is no "trade" element to the proposal could the project proceed without restriction. ISSUE: Whether engagement in dredging, pile driving, crane hoisting, stationary storage, and work platform activities by a U.S.-flag vessel documented for bowaters trade, is foreign trade if conducted wholly in foreign territorial waters. Likewise, whether the transportation of construction equipment, materials and personnel wholly between foreign points is trade within the meaning of 46 U.S.C. 12110(c). LAW AND ANALYSIS: Neither the Merchant Marine Act of 1920, of which 46 U.S.C. App. 883-1 is a part, nor the Act of August 26, 1983 (Pub. L. 98- 89, 97 Stat. 588), of which 46 U.S.C. 12110(c) is a part, defines either "trade" or "foreign trade." As we understand the contemplated operation, the machinery/equipment taken abroad for use there will be returned to the United States. Likewise, there will be no merchandise landed in the U.S. upon completion of the project which was obtained abroad. We believe that a vessel departing the U.S. bearing a restrictive bowaters endorsement, for the purpose of engaging in dredging, pile driving, etc., and which neither carries export cargo from nor returns import cargo to the U.S. would not be engaged in a "trade" outside of its documentation for the purposes of section 12110(a). While the terms "trade" or "foreign trade" are not defined for the purposes of the statutes here under consideration, we find that credence is lent to our interpretation by a definition found in the Act of April 16, 1936 (46 U.S.C. App. 1312), wherein it is stated that : ... The term "foreign trade" means the transportation of goods between the ports of the United States and ports of foreign countries ... We find this definition persuasive for the purposes of this ruling. HOLDING: A vessel documented under U.S. law with a restrictive bowaters only endorsement and which, by reason of inability to satisfy the requisite owner citizenship requirements, cannot obtain a registry endorsement, may engage in dredging, pile driving, crane hoisting, stationary storage, and work platform activities wholly within foreign territorial waters without violating the terms of its document within the meaning of 46 U.S.C. 12110(c). Likewise, such a vessel may transport construction equipment, materials, and personnel solely between foreign points to the extent such activities may be permissible under the laws of the foreign country or countries involved. Sincerely, B. James Fritz Chief Carrier Rulings Branch