VES-3-07-CO:R:IT:C 111892 LLB
Mr. Chris Hurst
Transmarine Navigation Corporation
301 East Ocean Blvd., Suite 570
Long Beach, California 90802
RE: Coastwise transportation; Vessel fenders; Vessel equipment;
Merchandise; 46 U.S.C. App. 883
Dear Mr. Hurst:
Reference is made to your request for a ruling, submitted by
facsimile transmission, dated September 10, 1991. The matter
under consideration concerns the proposed coastwise
transportation of "Yokohama fenders" from California to
Washington State, and back to California.
FACTS:
It is proposed that three so-called "Yokohama fenders" be
either rented or purchased at the port of San Francisco and
loaded aboard the foreign-flag tanker PALMSTAR POPPY at that
location. The tanker would carry the fenders to the port of
Anacortes, Washington, where the PALMSTAR POPPY would meet the
foreign-flag tanker WEI SHAN HU. Both vessels would be subject
to charter agreements with a company known as Westport Petroleum
during the period in question.
While at the port of Anacortes, the PALMSTAR POPPY (carrying
fuel oil laden at an unnamed port on the United States West
Coast), will engage in ship-to-ship lightering operations with
the WEI SHAN HU, by taking on board a cargo of foreign-laden fuel
oil from that vessel. The ten-foot diameter Yokohama fenders
would be utilized to provide the necessary buffer between the two
vessels during the proposed lightering operation.
Upon completion of the lightering operations, the PALMSTAR
POPPY would unlade the three Yokohama fenders in Anacortes. The
further transportation of the fenders would depend upon whether
they had been rented or had been purchased by Westport Petroleum.
If rented, the fenders would be transported back to San Francisco
from Anacortes by a United States trucking company. If they were
to be purchased, the fenders would be transported by an unnamed
Westport-chartered foreign-flag tanker to the company facility in
Long Beach, California, for the company's use in that port.
ISSUE:
Whether the transportation of vessel fenders between
coastwise points by a vessel which intends to utilize them prior
to their discharge at the second coastwise point, constitutes a
transportation of merchandise under the provisions of the
merchandise transportation statute (46 U.S.C. App. 883), also
known as the Jones Act.
Further, following use of the fenders as described, whether
either their land transportation as cargo back to the original
coastwise port or vessel transportation as cargo to a third
coastwise port would be a violation of section 883.
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).
Not included within the general meaning of merchandise,
however, is the equipment of a vessel. Such materials have been
defined as articles, "...necessary and appropriate for the
navigation, operation or maintenance of the vessel and for the
comfort and safety of the persons on board." (Treasury Decision
49815(4), March 13, 1939). Customs has specifically ruled that,
"Vessel equipment placed aboard a vessel at one United States
port may be removed from the vessel at another United States port
at a later date without violation of the coastwise laws."
(Customs Ruling Letter 102945, November 8, 1978). The remaining
questions are, whether the fenders in question are such
equipment, and for which portions of the proposed itinerary they
may be so considered.
The Yokohama fenders in question are to be utilized by the
first carrying vessel in order to provide a buffer between itself
and the second tanker vessel involved in the proposed lightering
operation. This is clearly a use in furtherance of the operation
of the vessel as well as the safety of the crew. As such, they
meet the definition of vessel equipment as stated above.
We turn now to the matter of the carriage of the fenders
back to California from Anacortes, Washington. If not in the
status of vessel equipment, the fenders must be considered
merchandise. Their carriage between United States points by a
United States-owned and based trucking concern would not be
considered a violation of the regulations concerning point-to-
point truck transportation. The same is not the case, however,
if the subsequent transportation of the fenders is accomplished
by vessel. Since the fenders not in use as vessel equipment are
considered merchandise, their carriage between coastwise points
must be accomplished by a coastwise-qualified vessel.
HOLDING:
Vessel fenders laden at one coastwise point and used as
necessary equipment of the transporting vessel during the course
of a voyage, may be unladen at a second coastwise point without
violating 46 U.S.C. App. 883. Subsequent carriage of the fenders
to a coastwise point by vessel would, however, be considered to
be coastwise trade when the fenders revert to the status of
merchandise. Such water transportation must be accomplished by
a coastwise-qualified vessel.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch