VES-3-01-OT:RR:BSTC:CCI H032257 JLB
Marc J. Fink
Joshua P. Stein
Sher & Blackwell
1850 M Street, N.W.
Suite 900
Washington, DC 20036
RE: Coastwise Transportation; 46 U.S.C. § 55102
Dear Messrs. Fink and Stein:
This letter is in response to your correspondence dated June 30, 2008, in which you request a ruling on whether a floating dry dock constitutes a “vessel” for purposes of the Jones Act, 46 U.S.C. § 55102. You request confidential treatment of certain information that you maintain divulges sensitive financial information. We grant your request and redact the confidential information that you have identified in your ruling request by the use of brackets. Our ruling on your request follows.
FACTS
The [ ] is a floating, foreign-built dry dock operated by [ ]. Its function is to raise vessels out of the water to facilitate construction, maintenance, and repair of the portion of a vessel that is normally underwater and then to relaunch the vessel by lowering it back into the water upon completion of the work.
The dry dock is stated to not have been built nor equipped for mobility, navigation or transporting cargo. It is currently fixed to the shore by four 20 meter long metal rails which are welded to the port side of the dry dock so as to fit into steel gripper joints cast into concrete pockets on the side of the permanent pier. The dry dock lacks navigational lights, a raked or spoon bow for navigation, ABS classing, a propulsion system, towing brackets or other similar appurtenances, skegs for towing stability, crew and crew quarters. It has only one small generator onboard, which is designed to shut valves in an emergency situation, and therefore can only function when it is connected to electric power on shore. In addition, the dry dock has a “wasting redundancy” of steel in its hull; meaning that the hull is thick enough to simply waste away over the useful life of the dry dock to ensure that it never needs to be dry docked for replacement or repair of the steel. However, notwithstanding these characteristics, the dry dock is registered with the U.S. Coast Guard as a vessel. You assert that the registration was the result of the insistence of a lender in a financing transaction and that a mere filing with the U.S. Coast Guard does not ipso facto make the dry dock a vessel.
[ ] has been contracted to perform fabrication and assembly work as part of the construction of domestic [ ]. The foreign-built dry dock, with its lifting capacity of [ ], is stated to be the only readily available dry dock which can launch the hull sections given that [ ]’s other dry dock is incapable of accommodating the launch due to the size of the hulls. However, in order to launch the hull sections, the dry dock needs to be temporarily moved from its fixed location, and repositioned near the location of the hulls.
Specifically, this would consist of disconnecting the dry dock from its mooring location and shifting it two slips south, which is approximately 100 yards. In order to move the dry dock, all its support systems, personnel gangway, and vehicle ramp must first be disconnected. Then tugs will be lashed to the sides of the dry dock and the mooring pins will be removed from the gripper joints. After the dry dock is temporarily relocated to the hull fabrication area, the hulls will be rolled on it and it will return to its original location. At its original mooring location, the dry dock will be reattached to so that it may launch the hulls.
ISSUES
Whether the dry dock described above constitutes a “vessel” for purposes of 46 U.S.C. § 55102?
If dry dock constitutes a “vessel,” then does the use of that non-coastwise-qualified vessel as described above constitute a violation of 46 U.S.C. § 55102?
LAW AND ANALYSIS
The Jones Act, former 46 U.S.C. App. § 883 recodified as 46 U.S.C. § 55102, pursuant to P.L. 109-304 (October 6, 2006), states that “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 U.S. Customs and Border Protection (“CBP”) Regulations, 19 C.F.R. §§ 4.80, 4.80b. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise-qualified.” 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.
Pursuant to 19 U.S.C. § 1401(c), the word "merchandise" is defined as "goods, wares, and chattels of every description, and includes merchandise the importation of which is prohibited, and monetary instruments as defined in section 5312 of Title 31.” For purposes of the Jones Act, merchandise also includes “valueless material.” See 46 U.S.C. § 55102(a)(2). The CBP Regulations promulgated under the authority of 46 U.S.C. § 55102 provide that a coastwise transportation of merchandise takes place when merchandise laden at a coastwise point is unladen at another coastwise point, regardless of origin or ultimate destination. See 19 C.F.R. § 4.80b(a).
The Jones Act, 46 U.S.C. § 55102, is only applicable to vessels engaged in transporting merchandise in U.S. waters. Section 401(a), Tariff Act of 1930, as amended (19 U.S.C. § 1401(a)), defines the term "vessel" to include "... every description of water craft or other contrivance used, or capable of being used, as a means of transportation in water." (see also 1 U.S.C. § 3). This definition of “vessel” should be used in any act of Congress passed subsequent to February 25, 1871 unless the context of the act indicates otherwise. See Stewart v. Dutra Construction Company, 543 U.S. 481, 489 (2005). Accordingly, the only way a water craft may be declared a “vessel” for purposes of one statute yet declared not to be a “vessel” for purposes of another statute is if one of the statutes specifically provides another definition. See Stewart, 543 U.S. 481 at 485-486, 495-498 (once the party conceded that the water craft was a “vessel” for purposes of one statute, the Supreme Court held the water craft must be a “vessel” for purposes of both statutes since a definition of “vessel” was not specifically provided in either statute).
You assert that the dry dock does not constitute a “vessel,” as it is incapable of maritime transportation of cargo or crew, lacks many indicia of a vessel and is permanently moored to the shore except for this temporary, fugitive movement. The fact remains, however, that during its proposed use it will not be a fixed, permanently moored structure but rather will be used as a means of transportation of merchandise in water. Furthermore, the dry dock is registered with the U.S. Coast Guard as a vessel. While you insist that such a registration was performed at the insistence of a lender in a financing transaction and should not be given a material consideration given that the dry dock possesses no other indicia of a vessel, we disagree. Since neither the Jones Act nor the relevant Coast Guard documentation statutes provide an explicit definition of the term “vessel,” the definition set forth in 19 U.S.C. § 1401(a) is applicable and controlling. Accordingly, not only does the dry dock meet that definition, upon registration of the dry dock with the U.S. Coast Guard, it was deemed a “vessel” for purposes of the Jones Act.
Given that the dry dock constitutes a “vessel,” the provisions of 46 U.S.C. § 55102 are applicable. Based on the information you provided, the dry dock will be disconnected from its moored location, towed to the hull fabrication area where the hulls will be rolled onto the dry dock and then the dry dock will return to its original moored location so that the hulls may be launched. This means that the hulls will be laden aboard the dry dock at the hull fabrication area, and unladen at the dry dock’s original mooring location, approximately 100 yards south. CBP Regulations promulgated pursuant to 46 U.S.C. § 55102 clearly define the term coastwise points as “including points within a harbor,” thus; the hulls are being transported between two coastwise points. See 19 C.F.R. § 4.80(a). Consequently, such coastwise transportation on a non-coastwise-qualified vessel is in violation of 46 U.S.C. § 55102. See Headquarters Ruling Letter 116225, dated May 6, 2004 (the transportation of the vessel by movement of the foreign-flag dry dock results in a violation of 46 U.S.C. § 55102).
HOLDINGS
The dry dock described above constitutes a “vessel” for purposes of 46 U.S.C. § 55102.
The transportation of merchandise by a non-coastwise-qualified vessel as described above constitutes a violation of 46 U.S.C. § 55102.
Sincerely,
Glen E. Vereb, Chief
Cargo Security, Carriers and Immigration Branch