VES-10-03-RR:IT:EC 226658 GEV
Kevin P. Callahan
Alaska Cargo Transport, Inc.
6700 W. Marginal Way S.W.
Seattle, Washington 98106
RE: Towing; Registry-endorsed tug; Coastwise-endorsed barge;
Guam; Midway; Continuous Tow; 46 U.S.C. App.
316(a); 46 U.S.C. 12105(b); T.D. 70-223(19)
Dear Mr. Callahan:
This is in response to your letter dated December 27, 1995,
requesting a ruling regarding 46 U.S.C. App. 316(a). The
ruling you request is set forth below.
FACTS:
Your company is contemplating the use of a U.S.-flag towing
vessel (i.e., tug) endorsed by the U.S. Coast Guard (USCG) with a
registry endorsement pursuant to 46 U.S.C. 12105. The vessel
it would tow is a U.S.-flag barge endorsed by the USCG with a
coastwise endorsement pursuant to 46 U.S.C. 12106. You inquire
as to the applicability of the towing statute (46 U.S.C. App.
316(a)) in the following scenarios:
1. The voyage originates in Mexico; the vessels are fully-loaded and you
wish to discharge cargo in two or more U.S. ports
without picking up
any additional cargo;
2. The voyage originates in Mexico where the vessels are
again fully-loaded;
they depart for a U.S. port where the barge is fully
discharged of cargo.
This voyage is then completed. However, you then wish
to tow the barge
to a different U.S port to pick up cargo; after loading
the cargo, the vessels
would then proceed to Mexico for discharge;
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3. The voyage originates in Mexico where the vessels are
loaded with cargo,
part of which is destined for one U.S. port and the
remainder is destined
for another U.S. port. After discharging part of the
cargo in the first U.S.
port, you wish to pick up cargo in that first U.S. port
which is destined
for Mexico. After discharging cargo in the second U.S.
port, the vessels
would sail to Mexico; and,
4. The voyage originates in Guam or Midway where the
vessels are loaded
with cargo and sail for Seattle, the vessels' home
port. You would like
to stop in Hawaii and pick up lashing, dunnage, and
perhaps, empty
containers to transport same back to Seattle. The
vessels, dunnage,
lashing and containers are all owned by corporations
which are affiliated
through common ownership.
5. Presenting the same factual situation as in question 4,
may part or all of
the cargo be discharged in Hawaii?
ISSUE:
Whether the towing of a coastwise-qualified barge by a non-coastwise-qualified tug as described in any of the above
scenarios constitutes a violation of 46 U.S.C. App. 316(a).
LAW AND ANALYSIS:
Title 46, United States Code Appendix, 316(a) (46 U.S.C.
App. 316(a), the coastwise towing statute) prohibits the use of
any vessel not having in force a certificate of documentation
endorsed for the coastwise or Great Lakes trades (46 U.S.C.
12106, 12107, respectively) to tow any vessel other than a vessel
in distress, from any point or place embraced within the
coastwise laws of the United States to another such port or
place, either directly or by way of a foreign port or place, or
for any part of such towing.
Title 46, United States Code Appendix, 883 (46 U.S.C. App.
883), the coastwise merchandise statute often called the "Jones
Act"), provides in 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
persons who are citizens of the United States (i.e., a coastwise-qualified vessel). Pursuant to title 19, United States Code,
1401(c) (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."
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Points embraced within the coastwise laws include all points
within the territorial waters of the United States, including
points within a harbor. The territorial waters of the United
States consist of the territorial sea, 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, in cases where the baseline and coastline differ.
Pursuant to 46 U.S.C. 877, the coastwise laws are
applicable to island territories and possessions of the United
States. However, as provided in 46 U.S.C. 12105(b), a vessel
for which a registry endorsement is issued may be employed in
foreign trade or trade with Guam, American Samoa, Wake, Midway,
or Kingman Reef.
In regard to the interpretation of 46 U.S.C. App. 316(a),
it is the position of the Customs Service that this provision is
to be construed consistently with 46 U.S.C. App. 883. (Treasury
Decision (T.D.) 70-223(19)) Consequently, Customs has held that
316(a) does not prohibit the continuous towing by the same
foreign-flag (or other non-coastwise-qualified) tug of a vessel
engaged in foreign trade on a voyage from a foreign port to a
United States port or ports, or from a United States port or
ports to a foreign port, merely because both the tug and towed
vessel stop at other United States ports to load export cargo or
unload import cargo. (Customs ruling 110236 citing T.D. 70-223(19))
As applied to the five scenarios you propose, Customs
interpretation of 46 U.S.C. App.
316(a) yields the following results:
The first scenario would not result in a violation of 46
U.S.C. App. 316(a) inasmuch as the the tow would begin at a
non-coastwise point (Mexico) and proceed from there to United
States ports for the purpose of unloading import cargo (i.e.,
akin to the loading of cargo at a foreign port and its subsequent
unloading at U.S. ports which, if done by a single non-coastwise-qualified vessel, does not constitute a violation of 46 U.S.C.
App. 883). The tug in this scenario is deemed to be engaged in
foreign trade as discussed in T.D. 70-223(19).
The second scenario also does not result in a violation of
46 U.S.C. App. 316(a). As with the first scenario discussed
above, the tow would originate at a non-coastwise port (Mexico).
On the inbound leg the tug would be merely towing the barge from
a foreign port to a United States port for the purpose of
unloading import cargo. The outbound leg would be a tow from a
different United States port where export cargo is to be loaded
to a foreign port. With respect to the tow of the empty barge
from the U.S. port of complete discharge to a different U.S. port
to lade the aforementioned export cargo, Customs has held that
such a tow by a non-coastwise-qualified tug is not prohibited by
46 U.S.C. App. 316(a), "...provided, that the entire tow from
the foreign port to the United States point of discharge to the
point of loading and then foreign is one continuous tow and the
movement between [coastwise points] is for no other purpose than
to tow the barge to the [second coastwise point] for the lading
of the export cargo." (Customs ruling 109974 PH, dated February
24, 1989)
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In view of the fact that the tow in question would be continuous
(i.e., the same tug would be used throughout this movement), the
tow to the second U.S. port would be for no other purpose than
for the loading of export cargo, and subsequent to such loading
the vessels would sail to Mexico, the subject tug is deemed not
to be in violation of 46 U.S.C. App. 316(a) and is engaged in
foreign trade as discussed in T.D. 70-223(19).
The third scenario would also be an engagement in foreign
trade notwithstanding the towing between different U.S. ports in
view of the fact that the tow would begin in a foreign port, only
foreign-laden cargo would be unladen at U.S. ports (i.e., the
unloading of import cargo) and only U.S.-laden cargo would be
unladen at foreign ports (i.e., loading of export cargo). Again,
the use of the tug is solely in foreign trade pursuant to T.D.
70-223(19).
The fourth scenario involves towing between various points
all of which are embraced within the coastwise laws (see
discussion of Guam and Midway, above). Pursuant to 46 U.S.C.
12105(b), a U.S.-flag tug with a registry endorsement may tow a
barge from Guam or Midway to Seattle via Hawaii. (Customs rulings
113196 GOB, dated August 16, 1994, and 113298 GOB, dated December
29, 1994). Consequently, this scenario does not constitute a
violation of 46 U.S.C. App. 316(a).
For the reasons stated above, the fifth scenario you pose
also does not give rise to a violation of 46 U.S.C. App.
316(a).
Parenthetically, we note that in each of the five scenarios
under consideration you state that "...the vessels
are...loaded..." (Emphasis added) Furthermore, the fourth and
fifth scenarios address the transportation of merchandise between
points embraced within the coastwise laws. While the points of
loading and unloading of merchandise are determinative as to
whether there is a movement in the coastwise trade, such factors
are of no consequence for purposes of the administration of 46
U.S.C. App. 316(a), the statute which is the focus of your
ruling request. You should know, however, that if in fact the
subject barge is coastwise documented, its transportation of
cargo between any of the coastwise points under consideration
would not give rise to a violation of 46 U.S.C. App. 883. With
respect to the tug, if in fact you contemplate using it not only
for towing but also for the actual transportation of cargo on
board it, since it is registry-endorsed pursuant to 46 U.S.C.
12105(b), of the scenarios you pose only the movement of
merchandise loaded on it at Hawaii and unloaded in Seattle would
give rise to a violation of 46 U.S.C. App. 883.
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HOLDING:
The towing of a coastwise-qualified barge by a non-coastwise-qualified tug as described in any of the above
scenarios does not constitute a violation of 46 U.S.C. App.
316(a).
Sincerely,
William G. Rosoff
Chief
Entry and Carrier Rulings Branch