VES- 3-OT-RR:BSTC:CCI H114310 GOB
Daniel A. Tadros, Esq.
Joseph B. Marino, III, Esq.
Chaffe McCall L.L.P.
2300 Energy Center
1100 Poydras Street
New Orleans, LA 70163-2300
RE: 46 U.S.C. § 55102; Continuity of Transportation
Dear Messrs. Tadros and Marino:
This letter is in reply to your submission of July 8, 2010 on behalf of Gulfwind Shipholding, S.A. ("Gulfwind"), wherein you request a ruling as to whether the proposed transportation by the non-coastwise-qualified GREEN ARROW would constitute a violation of 46 U.S.C. § 55102. Our ruling on this matter is set forth below.
FACTS:
You describe certain of the pertinent facts as follows:
From May 8 to May 9, 2010, a cargo of corn in bulk was loaded aboard the GREEN ARROW while the vessel was berthed at the CHS, Inc. Terminal at Myrtle Grove, Louisiana in the Lower Mississippi River…. After loading was complete, the vessel sailed directly to Puerto Cabello, Venezuela where a portion of bulk corn cargo was discharged. Following discharge at Puerto Cabello, the vessel sailed directly to Guanta, Venezuela, where the subject cargo [9,976,940 pounds or 4,525.510 metric tons of U.S. yellow corn in bulk; footnote omitted] was destined for discharge….
The GREEN ARROW arrived in Venezuela at the Port of Guanta on June 11, 2010. On June 17, 2010, Venezuelan authorities inspected the subject cargo at Guanta during discharge operations. That day, approximately 20-30 metric tons of the subject cargo was found wet and Venezuelan authorities ordered that GREEN ARROW’s discharge operations must be stopped. Venezuelan authorities then alleged that
the entire amount of remaining cargo, approximately 1,300 metric tons, was humid and not suitable to be discharged at Guanta nor anywhere else in Venezuela. Venezuelan authorities then issued an order that the remaining cargo must leave Venezuelan waters aboard the GREEN ARROW as soon as clearance is granted [footnote omitted].
After Venezuelan officials rejected the cargo, Gulfwind representatives and charterers attempted to locate another foreign (non-U.S.) port besides Venezuela to discharge the subject cargo of corn which was loaded in Myrtle Grove. Unfortunately, another foreign (non-U.S.) port that would accept the cargo has not been located.
Venezuelan authorities have ordered the GREEN ARROW to vacate the Port and leave Venezuelan waters as soon as clearance is issued [footnote omitted].
You assert that, at all times, as required by the bill of lading, it was the intent of Gulfwind to deliver the subject cargo to Guanta, Venezuela for discharge into Venezuelan commerce. In support of your claim, you have submitted the following documentation: a Berth Term Grain Bill of Lading which shows 9,976,950 pounds (4,525.510 metric tons) of U.S. yellow corn in bulk in the port of Myrtle Grove, LA bound for Guanta, Bolivarian Republic of Venezuela; a U.S. Department of Agriculture (“USDA”) Official Grain Weight Certificate; a USDA Official Export Inspection Certificate; a Certificate of Origin; Minutes of Orders issued by the Venezuelan authority indicating that the U.S.-origin yellow corn should be exported; and a report from the Venezuelan Ministry of Agriculture and Lands (the external quarantine inspector, authorized by the National Institute of Integral Agricultural Health) ordering the exportation of the corn because of dampness resultant from warehousing problems rendering it unsuitable for animal consumption to which it was destined.
ISSUE:
Whether the use of the non-coastwise-qualified GREEN ARROW for any portion of the transportation of the corn to a point in the United States other than its point of lading would constitute a violation of 46 U.S.C. § 55102?
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. A vessel that is built
in, documented under the laws of, and owned by citizens of the United States, and which obtains a coastwise endorsement from the U.S. Coast Guard, is referred to as "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.
Title 46, United States Code, section 55102 (46 U.S.C. § 55102), the coastwise merchandise statute often called the “Jones Act,” provides in part 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 is wholly owned by citizens of the U.S. for purposes of engaging in the coastwise trade and has been issued a certificate of documentation with a coastwise endorsement under chapter 121 of title 46 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
Section 4.80b(a), Customs and Border Protection (“CBP”) Regulations (19 CFR § 4.80b(a)) provides, in pertinent part:
A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point, regardless of the origin or ultimate destination of the merchandise.
The plain meaning of the statute prohibits merchandise from being transported on a non-coastwise-qualified vessel between points in the United States. The words "either directly or via a foreign port" were inserted in the original statute by the Congress in 1893. Congress, seeing how easily the protection to American shipping would be vitiated by a simple transshipment of the same cargo, inserted these words to prohibit such transshipments.
In determining whether merchandise which is transported from one point in the United States, to a point in a foreign country, and then to another point in the United States is subject to the prohibition in 46 U.S.C. § 55102 by virtue of being transported between coastwise points "via a foreign point," we have relied upon the holding of the Supreme Court in The Bermuda, 70 U.S. 514 (1865). In that decision, the Court held that:
A transportation from one coastwise point to another remains continuous, so long as intent remains unchanged, no matter what stoppages or transshipments intervene (70 U.S. at 553).
The Court went on to reaffirm the longstanding rule that:
[E]ven the landing of goods and payment of duties does not interrupt the continuity of the voyage of the cargo, unless there be an honest intention to bring them into the common stock of the country. If there be an intention, either formed at time of original shipment, or afterwards, to send the goods forward to an unlawful destination, the continuity of the voyage will not be broken, as to the cargo, by any transactions at the intermediate port (70 U.S. at 554).
The Attorney General of the United States relied upon The Bermuda in his consideration of the applicability of the Jones Act to certain transportation. In 34 Op. Atty. Gen. 335 (1924) (See also 32 Op. Atty. Gen. 350 (1920), concerning the transportation of fish from Alaska to a United States point via Vancouver, British Columbia, Canada.), the Attorney General considered the
applicability of section 883 (the predecessor to 46 U.S.C. § 55102) to the transportation of grain from Chicago or Milwaukee to a Canadian port in non-coastwise-qualified vessels. The grain was unladen into an elevator where it remained for an indefinite time until it was loaded into railroad cars for transportation by rail to points in New England. In some instances the grain had already been sold for delivery at an American port when it reached the Canadian port, while in other instances there was an existing intent to ship the grain to the Canadian elevator for storage in anticipation of demands for future deliveries for domestic consumption in Canada, for export abroad, or for sale and delivery in the United States.
The Attorney General's opinion was requested as to whether the transportation of the grain in the manner described violated 46 U.S.C. App. § 883, the predecessor to the current statute, 46 U.S.C. § 55102. As to grain which had been consigned through the Canadian port to a point in the United States or which had been shipped with the intention that the grain should ultimately be shipped to a point in the United States, it was the Attorney General's opinion "that such transportation is without a doubt in violation of [section 883]." 34 Op. Atty. Gen. at 357. When there was no intent by the shipper to transship the grain to a United States port or place, it was the Attorney General's opinion that "only general rules of law may be laid down." 34 Op. Atty. Gen. at 362. The general rule of law given by the Attorney General in this case was that "the intention of the shipper is the controlling factor." 34 Op. Atty. Gen. at 363.
The Attorney General also stated that:
. . . [W]hether the facts presented in any particular case come within such rules must be determined by the officer charged with the administration of that Act. 34 Op. Atty. Gen. at 362.
CBP is the agency charged with the administration of 46 U.S.C. § 55102. We have issued a number of rulings on the applicability of 46 U.S.C. § 55102 to the transportation of merchandise between coastwise points via a foreign port. In these rulings, we have held, as did the Supreme Court in The Bermuda, that an "honest intention to bring the goods [transported] into the common stock of the [intermediate foreign] country" is required to break the continuity of transportation between coastwise points via a foreign point. We have held that an intent to export merchandise after its transportation from the United States to an intermediate foreign port is not, by itself, sufficient to break the continuity of the transportation, when the merchandise is transported onward from the intermediate foreign port to a second point in the United States. We have also held that when, at the time of shipment of merchandise from the United States to an intermediate foreign port, there existed the expectation that a substantial portion of the merchandise would not be consumed in the country of the foreign port, entry through the foreign country's customs and payment of duty is not considered to break the continuity of the transportation when any of the merchandise is transported onward to a second point in the United States.
In the proposal currently under consideration, Gulfwind contends that “the continuity of transportation of the subject cargo was broken in this case by the Venezuelan authorities. Therefore, Gulfwind respectfully submits that CBP should not require Gulfwind to discharge directly at the same point where the cargo was originally loaded. Moreover, Gulfwind respectfully submits that it should be allowed to discharge at the Port of New Orleans as opposed to Myrtle Grove which is located in the Port of Plaquemines.”
In HQ 116518, dated August 9, 2005, HQ 116533 dated September 8, 2005, and HQ 116557, dated October 25, 2005, we determined that, with respect to numerous shipments of corn from the United States to Japan aboard non-coastwise-qualified vessels, the ruling requester had provided documentation which was sufficient to establish that there was an intention on the part of the
various involved parties for the corn to enter the commerce of Japan. Its subsequent rejection by the Japanese authorities was therefore sufficient to break the continuity of transportation such that it could be returned to the United States at other than its point of lading aboard non-coastwise-qualified vessels.
With respect to the instant case, upon a review of all of the relevant facts and supporting documentation, we conclude that the record is sufficient to establish that there was a legitimate intention on the part of the relevant parties that the subject corn enter the commerce of Venezuela. Therefore, we find that the continuity of transportation of the goods was broken by denial of entry in Venezuela by the Venezuelan authorities. Accordingly, the use of the non-coastwise-qualified GREEN ARROW for any portion of the transportation of the goods which were rejected in Venezuela to a U.S. point other than the U.S. point of lading will not be a violation of 46 U.S.C. § 55102.
HOLDING:
The use of the non-coastwise-qualified GREEN ARROW for any portion of the transportation of the corn which was rejected in Venezuela to a U.S. point other than the U.S. point of lading will not be a violation of 46 U.S.C. § 55102.
Sincerely,
Glen E. Vereb
Chief
Cargo Security, Carriers and Immigration Branch