Coastwise Trade; Foreign-Flagged Barge; 46 U.S.C. App.  883

HQ 113544 August 23, 1995 VES-3-07-R:IT:C 113544 GEV CATEGORY: Carriers Robert E. Schuller Schuller & Allan, Inc. 5012 Telephone Road Houston, Texas 77087-3598 RE: Coastwise Trade; Foreign-Flagged Barge; 46 U.S.C. App.  883 Dear Mr. Schuller: This is in response to your letter dated August 18, 1995, requesting a ruling regarding your client's proposed use of a foreign-flagged barge. Our ruling on this matter is set forth below. FACTS: You have a client who owns a foreign-flagged barge currently operating in the Pacific Ocean. Your client also owns a small refinery in Alaska. He proposes to permanently mount the refinery on the barge, supplemented by some additional refinery equipment he also owns which is located in Oklahoma, and then take the completed floating refinery foreign. To accomplish this proposal, the barge must be taken to Alaska where the refinery would be laden. This must be expeditiously accomplished in view of the impending icy weather. The barge would then be towed to Houston, Texas, where the refinery equipment would be rearranged on the vessel but not unladen, supplemented by the additional Oklahoma equipment which would be laden, and the entire unit would be permanently attached. Upon completion of this work, the vessel would then be towed foreign to operate. ISSUE: Whether the transportation of refinery equipment on a foreign-flagged barge from the point at which it is laden in Alaska, to Houston where it will be rearranged on board but not unladen and where additional equipment will be laden, and then, subsequent to the entire unit being permanently attached in Houston, to a foreign location, constitutes an engagement in the coastwise trade in violation of 46 U.S.C. App.  883. - 2 - LAW AND ANALYSIS: Title 46, United States Code Appendix,  883 (46 U.S.C. App.  883, the merchandise coastwise law often called the "Jones Act") prohibits the transportation of merchandise between United States coastwise points, either directly or via a foreign port, or for any part of the transportation, in any vessel other 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 (i.e., a coastwise-qualified vessel). In interpreting  883, Customs has ruled that a point in United States territorial waters is a point in the United States embraced within the coastwise laws. The territorial waters of the United States consist of the territorial sea, defined as the belt, 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 the coastline differ. Section 4.80b(a), Customs Regulations (19 CFR  4.80b(a)), promulgated pursuant to 46 U.S.C. App.  883, provides, in part, that: A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws ("coastwise point") is unladen at another coastwise point, regardless of the origin or ultimate destination of the merchandise. In applying  4.80b(a) to your client's proposal, although the foreign-flagged barge would be transporting merchandise (i.e., the refinery and additional equipment) which would be laden at two different coastwise points (i.e., Alaska and Houston, respectively), such merchandise would not be unladen at another coastwise point. Rather, it would be permanently mounted on the vessel in Houston which would then proceed foreign to operate. Consequently, the use of a foreign-flagged barge to accomplish this proposal would not violate 46 U.S.C. App.  883. Parenthetically, we note that the towing of the subject barge from Alaska to Houston must be accomplished by a coastwise-qualified vessel pursuant to 46 U.S.C. App.  316(a).  - 3 - HOLDING: The transportation of refinery equipment on a foreign-flagged barge from the point at which it is laden in Alaska, to Houston where it will be rearranged on board but not unladen and where additional equipment will be laden, and then, subsequent to the entire unit being permanently attached in Houston, to a foreign location, does not constitute an engagement in the coastwise trade in violation of 46 U.S.C. App.  883. Sincerely, Arthur P. Schifflin Chief Carrier Rulings Branch