VES-3-06-CO:R:P:C 110402 GV
Shant J. Harootunian, Esq.
American Telephone and Telegraph Company
295 North Maple Avenue
Basking Ridge, New Jersey 07920
RE: Applicability of coastwise merchandise law, 46 U.S.C. App.
883, to proposed carriage of cable by a foreign-built vessel
Dear Mr. Harootunian:
This is in response to your letter of August 2, 1989,
requesting a ruling or a waiver regarding the permissibility of
the proposed carriage of cable by a foreign-built vessel.
FACTS:
Transoceanic Cable Ship Company ("Transoceanic"), a wholly
owned subsidiary of American Telephone and Telegraph Company
("AT&T"), proposes to use two of its vessels, the C.S. BROWN and
the C.S, LONG LINES, for the transportation and installation of
telecommunications cable. Both of the aforementioned vessels are
foreign-built. Under the proposal, approximately 41 km. of SL
telecommunications cable would be laded at its site of
manufacture, Newington, New Hampshire, aboard the C.S. LONG LINES
which would transport the cable to Honolulu, Hawaii. Upon
arrival in Honolulu it is contemplated that the cable would be
directly transferred from the C.S. LONG LINES to the C.S. BROWN
and then be laid between the Loihi Seamount and the Island of
Hawaii by the C.S. BROWN. Because the C.S. BROWN is assigned to
cable repair duties in the Pacific Ocean, it is possible that the
C.S. BROWN may be engaged in a repair when the C.S. LONG LINES
arrives at Honolulu on August 19, 1989, its present estimated
time of arrival. In such event, the cable would be temporarily
off-loaded into a storage depot for subsequent loading aboard the
C.S. BROWN upon its availability.
The installation of this cable is being offered by AT&T to
the Hawaii Institute of Geophysics ("HIG") of the University of
Hawaii, Manoa, as a part of the Hawaii Undersea Geo-Observatory
Project ("project Hugo"). Project Hugo involves the design,
construction, installation, testing and operation of a permanent
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deep-ocean scientific laboratory on the Loihoi underwater
volcano. Project Hugo will permit the study of submarine
volcanic, biologic and oceanographic processes. By establishing
the observatory on the Loihi Seamount, HIG will be able to add
significantly to its knowledge of the morphology, eruptive
characteristics, lava volatile, water chemistry, seismicity,
internal structure, life processes at volcanic vents and slope
stability. Project Hugo would become part of the larger Hawaiian
Volcanic Observatory seismic network and would add continuity to
the snapshots of information obtained by short Ocean seismic
studies, submergible dives and surface mapping studies.
Project Hugo has been submitted by HIG to the National
Science Foundation ("NSF") for support. As part of that process,
AT&T has conducted a peer review in which it has concluded that
the conceptual design of Project Hugo is feasible. AT&T is
willing to support Project Hugo by supplying the SL cable and
installing it by the C.S. BROWN, thereby reducing the cost
support required from NSF by over $320,000. AT&T would not
charge any sum for freight, or the value of the cable or its
services in installing the cable. Rather, AT&T would be donating
its services as a part of Project Hugo in the interest of
furthering submarine volcanic research and the gathering of
scientific data.
ISSUE:
Whether the carriage of cable by a foreign-built cable
laying and repair vessel from its point of lading in the United
States to a second point in the United States where it will be
either temporarily unladed into an onshore storage depot or
unladed directly onto another foreign-built cable-laying and
repair vessel located within U,S. territorial waters which will
subsequently install the cable constitutes a violation of 46
U.S.C. App. 883.
LAW AND ANALYSIS:
Title 46, United States Code, Appendix 883 (46 U,S,C. App.
883), provides, in pertinent 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 citizens of the United States (i.e., a coastwise
qualified vessel).
For purposes of section 883, a point in the United States
territorial waters is considered a point embraced within the
coastwise laws. The territorial waters of the United States
consist of the territorial sea, defined as the belt, 3 nautical
3
miles wide, adjacent to the coast of the United States and
seaward of the territorial sea baseline.
The Customs Service has held that the sole use or a non
coastwise-qualified vessel to lay cable between points in the
United States or in international waters does not violate the
coastwise laws. Such cable is not only laid, and not
"transported," between points in the United States, but is also
being used in furtherance of the primary mission of the cable
laying vessel and is therefore similar to vessel equipment. The
Customs Service has ruled that equipment laden on a non
coastwise-qualified vessel at a coastwise point and used by the
vessel for reasons relating to the operation of the vessel may be
later unladen at a second coastwise point without violation of 46
U.S.C. App. 883. The use of the equipment between American ports
will have broken the continuity of the transportation between
American ports. This rule applies to any small amount of similar
equipment that was laden for use but was not in fact needed
during the operation of the vessel.
While the use of cable in connection with the operation of a
cable-laying vessel does not violate the coastwise laws, the
transportation and landing of cable that was not placed on the
vessel to be used in a cable-laying operation, other than cable
retrieved to be repaired, at a port in the United States other
than at the port at which the cable was laden aboard the vessel
constitutes a violation of 46 U.S.C. App. 883.
Accordingly, the transportation of cable from Newington, New
Hampshire (the point of lading) to Honolulu, Hawaii (the point of
unlading) by the C.S. LONG LINES (a non-coastwise-qualified
vessel) constitutes a violation of 46 U.S.C. App. 883 in view of
the fact that it was not laden for use on board that particular
vessel. The transportation is merely a movement of merchandise
between two coastwise points not in furtherance of the primary
mission of the vessel so transporting (i.e., cable-laying). The
fact that AT&T is providing its services free of charge is
irrelevant. We emphasize that a violation of section 883 occurs
in both alternatives presented (either when the unlading is to an
onshore storage facility in Hawaii or directly onto the C.S.
BROWN located within U.S, territorial waters).
Counsel cites three prior Customs rulings in support of his
position to permit the operation described above. All three
rulings are distinguishable from the case now under
consideration. In ruling 103217 we held that no violation of
section 883 occurs when repair cable is laden at a coastwise
point on a cable-laying and repair vessel not qualified to engage
in the coastwise trade, carried on the vessel for a substantial
period as part of its cable repair inventory, and offladen at a
second coastwise point. In that particular case the cable in
question was aboard the vessel under consideration for
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approximately 3 years, a period deemed sufficient to break the
continuity of the transportation between coastwise points. In
rulings 108985 and 105644 we held that a small percentage of the
total amount of cable laded aboard a non-coastwise-qualified
cable-laying and repair vessel and unladed at a second coastwise
point did not constitute a violation of section 883 in view of
the fact that such cable was laded in anticipation of actual need
and treated at the time of unlading as equipment of the vessel
doing the transporting in question.
In all three of the cases cited above by counsel, the cable
in question was originally laded aboard the particular vessels in
anticipation of actual need of the vessels in order to further
their primary mission of cable-laying and repair. In the case
now under consideration, the lading of cable aboard the C.S. LONG
LINES is not in furtherance of its primary mission as a cable
laying and repair vessel. The sole purpose of the lading is to
transport merchandise between two different coastwise points, a
violation of section 883.
We recognize that the proposed use of the C.S. LONG LINES
appears to be indirectly related to Project Hugo. Although the
Customs Service has ruled that the use of a vessel in
oceanographic research and survey, or teaching courses such as
oceanography is not coastwise trade, the C.S. LONG LINES is not
itself being used for that purpose. Accordingly, the exemption
from the coastwise laws recognized by Customs in this area does
not apply.
You request, as an alternative to a ruling permitting this
transportation, a waiver of the coastwise laws. Other than
legislation enacted by Congress to explicitly exempt a particular
vessel from the application of the navigation laws, the only
other waiver authority is that contained in the Act of
December 27, 1950 (64 Stat. 1120), under which the navigation
laws may be waived by the Secretary of the Treasury in the
interest of national defense. This Act, among other things,
directs the granting of a waiver upon the request of the
Secretary of the Defense and permits such a waiver upon the
written recommendation of the head of any other United States
Government agency.
Although we are not of the opinion that the proposed use of
the C.S. LONG LINES would justify a waiver of section 883, should
you wish to pursue this matter further we suggest you direct your
request to the following:
The Honorable
Jack Katzen
Assistant Secretary of Defense (P&L)
Pentagon, Room 3E808
Washington, D.C. 20301-8000
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HOLDING:
The carriage of cable by a foreign-built cable-laying and
repair vessel from its point of lading in the United States to a
second point in the United States where it will be either
temporarily unladed into an onshore storage depot or unladed
directly onto another foreign-built cable-laying and repair
vessel located within U.S. territorial waters which will
subsequently install the cable constitutes a violation of 46
U.S.C. App. 883 in view of the fact that the cable was not laded
for the purpose of furthering the primary mission of the
transporting vessel but merely for the transportation of such
cable between coastwise points.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch