Dredging; Coastwise Trade; Navigable Waters; 46 U.S.C. App. 292, 883, 289

HQ 114582 January 25, 1999 VES-10-02/3-13-RR:IT:EC 114582 GEV CATEGORY: Carriers Francis X. Nolan, III Schnader Harrison Segal & Lewis LLP 330 Madison Avenue 14th Floor New York, New York 10017-5092 RE: Dredging; Coastwise Trade; Navigable Waters; 46 U.S.C. App.  292, 883, 289 Dear Mr. Nolan: This is in response to your letter dated January 18, 1999, regarding the application of the above-referenced statutes to sand and gravel extraction operations in the United States. Specifically, you request confirmation that standing water in a gravel pit or quarry does not constitute navigable waters of the United States thereby rendering inapplicable the aforementioned statutes so that a foreign-built dredging vessel may be used for such extraction operations. Our ruling in this matter is set forth below. FACTS: Dredge Technology Corporation, a Dutch manufacturer of dredging vessels, is proposing to build a demountable wheel dredger vessel in Holland for shipment disassembled to the United States. Upon arrival, the vessel will be carried over land to the buyer's sand and gravel quarry in Romeo, Michigan, where it will be reassembled, floated in a gravel pit and used to extract sand and gravel. The sand and gravel pit, which is located entirely within the State of Michigan, is not connected by a natural or manmade canal or other body of water to any lake, river, ocean, stream or navigable water of the United States. ISSUE: Whether the operation of a foreign-built dredge in a gravel pit as described above is in contravention of 46 U.S.C. App.  292, 883 and/or 289. - 2 - LAW AND ANALYSIS: Title 46, United States Code Appendix,  292 (46 U.S.C. App.  292, the coastwise dredging statute), provides that with one exception not herein applicable, vessels may not dredge in the navigable waters of the United States unless they meet the requirements of 46 U.S.C. App.  883, as discussed below. Title 46, United States Code Appendix,  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 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). The so-called "twelfth proviso" to this statute renders it applicable to the transportation of dredged material regardless of whether it has commercial value. Title 46, United States Code Appendix,  289 (46 U.S.C. App.  289, the passenger coastwise law), prohibits the transportation of passengers between points embraced within the coastwise laws of the United States, either directly or by way of a foreign port, in a non-coastwise-qualified vessel (i.e., any vessel not built in and documented under the laws of the United States and owned by persons who are citizens of the United States). Provided the subject dredge does not carry persons other than those who are connected with its operation, navigation, ownership or business, no violation of 46 U.S.C. App.  289 will occur regardless of whether it is operating on navigable waters. (See  4.50(b), Customs Regulations (19 CFR  4.50(b), which defines a "passenger" as anyone not meeting the aforementioned criteria.) Points embraced within the coastwise laws include all points within the territorial waters of the United States, including points within a harbor. The territorial waters of the United States consist of the territorial sea, 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, in cases where the baseline and coastline differ. As noted above, the above-cited statutes, as well as the other navigation laws administered by the U.S. Customs Service, are applicable only to those vessels engaged in activities in the navigable waters of the United States, and the navigable waters of its territories and possessions. The U.S. Coast Guard determines whether a particular body of water is deemed to be to be navigable waters of the United States in order to ascertain its jurisdiction to enforce the laws it administers. The U.S. Customs Service, in ascertaining its own jurisdiction to enforce the navigation laws it administers, is strongly disposed to follow determinations of the U.S. Coast Guard in the absence of Federal judicial decisions or explicit Congressional enactment, although it is not required to do so. In the absence of any such U.S. Coast Guard determination regarding the navigability of a particular body of water, the U.S. Customs Service will render its own determination pursuant to Customs Circular VES-3-MD, dated February 6, 1961. - 3 - With respect to the applicability of the dredging statute to the operation of foreign-built dredges at locations such as the gravel pit in Romeo, Michigan, we note that Customs has long-held that 46 U.S.C. App.  292 would not prohibit a foreign-built dredge from dredging in an artificial "dredge pond" which is not connected to any navigable body of water (see Customs ruling letters 102304, dated December 6, 1978, and 108326, dated April 30, 1986, the latter of which permitted the use of a Dutch-built dredge in a manmade gravel pit filled with water from natural seepage). The underlying rationale of these decisions (which remain Customs position on this matter to date) is that such a "dredge pond" does not meet the test of navigability established by the Federal courts. This test consists of four essential elements which, when taken together, state that a navigable waterway of the United States must: (1) be or have been; (2) used or susceptible of use; (3) in the customary modes of trade and travel on water; (4) as a highway of interstate commerce. The Daniel Ball, 77 U.S. 557, 563 (1871); The Montello, 87 U.S. 430, 441 (1874); United States v. Utah, 283 U.S. 64, 76 (1931); and United States v. Appalachian Electric Power Co., 311 U.S. 377, 406-408 (1940). Accordingly, since it is readily apparent that the gravel pit in Romeo, Michigan, is not a navigable body of water for the purposes of the navigation laws administered by Customs, the provisions of the laws cited herein (46 U.S.C. App.  292, 883 and 289) are not applicable to the proposed operation of the subject Dutch-built dredge. HOLDING: The operation of a foreign-built dredge in a gravel pit as described above is not in contravention of 46 U.S.C. App.  292, 883 and/or 289. Sincerely, Jerry Laderberg Chief Entry Procedures and Carriers Branch