46 U.S.C. App. 316(a), 883; Coastwise transportation ofmerchandise; Transfer vessel

HQ 226762 February 28, 1996 VES-3-RR:IT:EC 226762 GOB CATEGORY: Carriers R. Keith Jarrett, Esq. Liskow & Lewis One Shell Square 701 Poydras Street Suite 5000 New Orleans, LA 70139-5099 RE: 46 U.S.C. App. 316(a), 883; Coastwise transportation of merchandise; Transfer vessel Dear Mr. Jarrett: This is in response to your letter dated February 23, 1996. FACTS: Your letter states: Our client, a U.S. corporation, contemplates constructing a nonself-propelled mid-stream commodity transfer vessel ("the transfer vessel") using a barge hull built in the United States fitted with sophisticated dust-free transfer equipment manufactured in the Netherlands. The vessel will neither store nor transport cargo. Instead, it will be used to offload all manners of dusty commodities such as aluminum silica from ocean-going vessels moored in the river. The exact process will work like this. The ocean-going vessel will tie off to a mid-stream mooring buoy. The commodity transfer vessel will be towed into position alongside the ocean-going ship where it will be tied off to the ship. River barges will be brought along the outboard side of the transfer rig and tied off. Using a suction nozzle, the dusty commodity will be offloaded from the ship and transferred by an air slide into the hopper barges. Any movement of the transfer vessel will be incidental to its operation. In essence, as you further described to a member of my staff, the transfer vessel acts as a conduit between the ocean-going vessel from which the dusty commodity will be unladed and the hopper barges onto which the dusty commodity will be laded. ISSUE: Is the activity of the transfer vessel, as described supra, violative of 46 U.S.C. App. 883? LAW AND ANALYSIS: Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. 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, documented under the laws of, and owned by citizens of the United States. 19 U.S.C. 1401(c) defines "merchandise," in pertinent part, as follows: "goods, wares, and chattels of every description..." 46 U.S.C. App. 316(a) prohibits the use of a non-coastwise-qualified vessel to tow any vessel, other than a vessel in distress, between ports or places in the United States embraced within the coastwise laws, either directly or by way of a foreign port, or to do any part of such towing, or to tow any such vessel between points in a harbor of the United States. The coastwise laws generally apply to points in the territorial sea, which is 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. Your letter of February 23, 1996 excerpted Ruling 109831 dated November 14, 1988, which stated in pertinent part: The Customs Service has long held that the use of a non-coastwise qualified crane vessel to load and unload cargo is not coastwise trade and does not violate 46 U.S.C. App. 883, provided, that any movement of the merchandise is effected exclusively by the operation of the crane and not by movement of the vessel, except for necessary movement which is incidental to a lifting operation while it is taking place. (Emphasis in original.) After a consideration of this issue, we determine that the activity of the transfer vessel, as described supra, is not violative of 46 U.S.C. App. 883. As was the case in Ruling 109831, supra, no movement of the merchandise, i.e., the dusty commodity, is effected by movement of the transfer vessel. HOLDING: As detailed supra, the activity of the transfer vessel is not violative of 46 U.S.C. App. 883. Sincerely, Director, International Trade Compliance Division