VES-3-CO:R:IT:C 112085 LLB
Mr. David A. Mayo
President, Freight Management Companies
200 W. Thomas Street, Suite 305
Seattle, Washington 98119
RE: Coastwise transportation; Waiver of coastwise laws; Third
proviso to merchandise transportation statute;
Transportation of fish products; 46 U.S.C. App., section 883
Dear Mr. Mayo:
Reference is made to your letter of February 18, 1992,
received via facsimile transmission, in which you request that
this office issue a ruling regarding the use of a non-coastwise-
qualified vessel in the transportation of fish products between
coastwise points. Proposed as alternatives are the direct
transportation of the products, and the transportation in part
via Canadian rail trackage.
FACTS:
An unusually large harvest of Alaskan crab has reportedly
led to a shortage in the numbers of available refrigerated
containers. It is also stated that there is a shortage in the
number of coastwise-qualified refrigerated bulk cargo vessels.
Such containers or vessels are necessary for the shipment to
United States markets of frozen pollock roe from Dutch Harbor,
Alaska. There also exists a shortage of freezer capacity in
Dutch Harbor.
With the foregoing as background, two alternative proposals
are made. The first is that a waiver from the application of the
coastwise laws be granted. Alternatively, it is requested that
consideration be given to whether the merchandise might be
permitted to be transported from Dutch Harbor on a foreign-flag
vessel to the port of Vancouver, British Columbia, Canada, and
thence via railroad from Canada to a destination in the United
States. It is reported the as a result of recent deregulation
initiatives undertaken by the Interstate Commerce Commission,
frozen fish has been designated as an exempt commodity for which
route rate tariffs are not required to be filed.
ISSUE:
1. Whether a waiver of the coastwise merchandise
transportation statute may be authorized for the transportation
of frozen fish products directly between coastwise points.
2. Whether merchandise may be transported indirectly
between coastwise points, in part via rail trackage in Canada,
when the cargo being transported has been designated by the
Interstate Commerce Commission as an exempt commodity for which
route rate tariffs need not be filed.
LAW AND ANALYSIS:
The coastwise law pertaining to the transportation of
merchandise, section 27 of the Act of June 5, 1920, as amended
(41 Stat. 999; 46 U.S.C. App. 883, often called the Jones Act),
provides that:
No merchandise shall be transported by water,
or by land and water, on penalty of forfeiture
of the merchandise (or a monetary amount up to
the value thereof as determined by the Secretary
of the Treasury, or the actual cost of the trans-
portation, whichever is greater, to be recovered
from any consignor, seller, owner, importer,
consignee, agent, or other person or persons
so transporting or causing said merchandise to 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 other
vessel 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...
The coastwise laws generally apply to points in the
territorial sea, defined as the belt, three nautical miles wide,
seaward of the territorial sea baseline, and to points located in
the internal waters, landward of the territorial sea baseline, in
cases where the baseline and the coastline differ. These laws
have also been interpreted to apply to transportation between
points within a single harbor. Merchandise, as used in section
883, includes any article, including even materials of no value
(see the amendment to section 883 by the Act of June 7, 1988,
Pub. L. 100-329; 102 Stat. 588).
The navigation laws (including the coastwise laws) can only
be waived under the authority provided by the Act of December 27,
1950 (64 Stat. 1120; note preceding 46 U.S.C. App. 1). This
statute provides that, "...[t]he head of each department or
agency responsible for the administration of the navigation and
vessel inspection laws is directed to waive compliance with such
laws upon the request of the Secretary of Defense [and] [t]he
head of such department or agency is authorized to waive
compliance with such laws ... either upon his own initiative or
upon the written recommendation of the head of any Government
agency whenever he deems that such action is in the interest of
national defense." Owing to the necessity for some national
defense justification, requests for waiver of the coastwise laws
are infrequently granted. We perceive no valid waiver
justification in the present matter.
The third proviso to 27 of the Merchant Marine Act, 1920,
as amended (46 U.S.C. App. 883), provides:
That this section shall not apply to
merchandise transported between points within
the continental United States, including
Alaska, over through routes heretofore or
hereafter recognized by the Interstate
Commerce Commission for which routes rate
tariffs have been or shall hereafter be filed
with said Commission when such routes are in
part over Canadian rail lines and their own
or other connecting water facilities...
Simply stated, 883 would not prohibit the transportation of
merchandise if all of the conditions of the third proviso are
met, that is:
a) through routes are utilized which have heretofore or are
hereafter recognized by the I.C.C.
b) routes rate tariffs have been or shall hereafter be filed
with the I.C.C., and have not subsequently been rejected for
filing, have become effective according to their terms, and
have not been subsequently suspended, or withdrawn by the
Commission.
c) the routes utilized are in part over Canadian rail lines
and their own or other connecting water facilities.
We have held that "over Canadian rail lines" means simply
over rail trackage in Canada, and that "their own or other
connecting water facilities" means water facilities covered by a
through route regardless of whether those facilities connect
directly with the Canadian rail line covered by that through
route.
An investigation was made into Interstate Commerce
Commission procedures regarding the commodity exemption claim
which has been advanced in this matter. Research has revealed
that frozen seafood has been designated as Standard
Transportation Commodity Code 20 361, an exempt commodity for
which no rate tariff is required under agency procedures (see
title 49, Code of Federal Regulations, section 1039.11, which
implements subtitle IV of title 49, United States Code, the
enabling legislation for the Interstate Commerce Commission).
These findings were confirmed with a representative of the
Tariffs Section, Interstate Commerce Commission.
It is a basic tenet of statutory construction and
interpretation that the laws as enacted are considered to be
forward-looking and adaptable to evolving circumstances. This
has application to the present matter in that although the
statute specifies the filing of rate tariffs with the Interstate
Commerce Commission, mechanistic adherence to that requirement in
the present climate of deregulation would lead to an absurd
result which cannot be justified. Accordingly, the indirect
transportation between coastwise points of commodities which are
exempt from requirements regarding rate tariffs, through the
utilization of foreign-flag vessels and Canadian rail trackage,
is not impermissible merely because no tariffs may be filed to
cover the movements.
HOLDING:
1. The proposed direct transportation of frozen seafood
between coastwise points on non-coastwise-qualified vessels is
not a transportation for which a national defense waiver from the
restrictions of the coastwise merchandise transportation statute
may be justified.
2. The proposed non-coastwise-qualified vessel
transportation of frozen fish between coastwise points which is
accomplished in part over Canadian rail trackage, is permissible
under the third proviso to 46 U.S.C. App. 883. The legality of
the proposed movement is not defeated merely because a statutory
element is the filing of a rate tariff with the Interstate
Commerce Commission and the commodity to be transported is
exempted under Agency rules from such rate requirements.
Sincerely,
B. James Fritz
Chief