Coastwise Transportation; Distressed Vessel; 46 U.S.C. § 55102; 19 CFR 4.34

HQ H175537 September 7, 2011 VES-3-02:RR:BSTC:CCI H175537 ALS CATEGORY: Carriers Mr. Jonathan K. Waldron Blank Rome, LLP Watergate 600 New Hampshire Avenue Washington, D.C. 20037 RE: Coastwise Transportation; Distressed Vessel; 46 U.S.C. § 55102; 19 CFR 4.34 Dear Mr. Waldron: This letter is in response to your correspondence dated July 6, 2011, requesting a ruling on the proper assessment of a non-coastwise-qualified vessel that originates at a coastwise point to transport cargo to a foreign location, but experiences a distress situation en route that results in the landing of the foreign-bound cargo at another coastwise point. Our ruling is set forth below. FACTS: You inquire about the proper assessment of a vessel that originates at a coastwise point to transport cargo to a foreign location, but experiences a distress situation en route that results in the landing of the foreign-bound cargo at another coastwise point. You present two scenarios that you represent as possible examples of such. Under the first scenario, a non-coastwise-qualified vessel makes a port call at a coastwise point and loads oil into its cargo tanks. The cargo is bound for a foreign port. While transporting the cargo to the foreign port, the vessel suffers a casualty while still in United States territorial waters and is therefore forced to anchor at another coastwise point at an anchorage area. The cargo is directly transferred to another vessel to allow timely delivery of the cargo to the foreign destination. Under the second scenario, the same set of facts occur, except that the vessel is towed to the nearest Customs and Border Protection port or a coastwise lay berth, where the cargo is unladen to be laden on another non-coastwise-qualified vessel for transportation to the foreign destination. You ask whether the two scenarios presented are permissible coastwise movement of the cargo, particularly with regard to 19 CFR 4.34(g). ISSUE: Whether the transportation of cargo as presented above is permissible coastwise movement under 19 U.S.C. § 55102 and 19 CFR 4.34. LAW AND ANALYSIS: Under 46 U.S.C. 55102 (recodified from former 46 U.S.C. App. 883; Pub. L. 109-304, October 6, 2006), “a vessel may not provide any part of the transportation of merchandise by water, or by land and water, between points in the United States to which the coastwise laws apply, either directly or via a foreign port” unless the vessel was built in and documented under the laws of the United States and owned by persons who are citizens of the United States. See also 19 CFR 4.80 and 4.80b. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise-qualified.” Under 19 CFR 4.34(g), cargo undelivered at a foreign port and returned to the United States is not in violation of the Jones Act if the cargo is permitted by the port director to be transferred onto another vessel for “return to the original foreign destination.” Alternatively, the port director may permit the cargo to remain on board the original vessel. You propose that subsection 4.34(g) would allow for the transfer of cargo from a foreign-bound distressed non-coastwise-qualified vessel that originated from a coastwise point, but due to distress suffered en route has anchored at another coastwise point, to another non-coastwise-qualified vessel for continued transportation to the original foreign destination. We find that the scenarios you present are distinguishable from the intent of subsection 4.34(g), however. In your scenarios, the originating vessel does not leave U.S. territorial waters and consequently does not reach its foreign destination. In three specific instances, including the title of the subsection, subsection 4.34(g) refers to the “return” of the cargo to “the original foreign destination,” clearly implying that the cargo had been transported to the original foreign destination before a permit to transfer to another vessel would be considered. Thus, subsection 4.34(g) is clearly applicable to situations in which the originating vessel had left U.S. territorial waters and reached its foreign destination with the foreign-bound cargo, but for some reason had not delivered the cargo. We therefore find that the specific reference to the vessel having returned from the original foreign destination renders 19 CFR 4.34(g) inapplicable to situations in which the vessel has originated at a coastwise point destined for a foreign location, but has not yet reached the foreign destination. Consequently, the transportation of cargo by a non-coastwise-qualified vessel from the initial coastwise point to another coastwise point in either scenario you present would constitute a coastwise transportation of that cargo in violation of 19 U.S.C. § 55102. HOLDING: 19 CFR 4.34 is not applicable to situations in which the vessel has originated at a coastwise point destined for a foreign location, but has not yet reached the foreign destination. The transportation of cargo by a non-coastwise-qualified vessel from the initial coastwise point to another coastwise point in either scenario you present would constitute a coastwise transportation of that cargo in violation of 19 U.S.C. § 55102. Sincerely, George Frederick McCray Supervisory Attorney-Advisor/Chief Cargo Security, Carriers and Immigration Branch Office of International Trade, Regulations & Rulings U.S. Customs and Border Protection