VES-3-24-RR:IT:EC 227121 GEV
Ray Meyer
Clean Channel Association
111 East Loop North, Room 270
Houston, Texas 77029
RE: Coastwise Trade; Oil Skimming; Foreign-built vessel; Less
than 5 net tons; Rebuilt in U.S.; 46 U.S.C. App.
883
Dear Mr. Meyer:
This is in response to your letter dated July 27, 1996, with
attachments, requesting a ruling that the foreign-built, 19' work
boat your company recently purchased be considered built in the
United States for purposes of the coastwise laws. Your letter is
in furtherance of your prior letter to us dated March 28, 1996,
and provides additional information regarding this matter in
response to our correspondence to you dated June 25, 1996.
FACTS:
The vessel in question is a foreign-built, 19' work boat
with a LORI oil skimming system and one cubic meter of storage
capacity. It was purchased from Hyde Products Inc., of
Cleveland, Ohio, for $2,500. Clean Channel Corporation proposes
to have the vessel modified at Empire Boat Works in Mont Belvieu,
Texas, as follows:
1) Just forward of the forward engine compartment
bulkhead, cut boat
into two pieces. Weld approximately 6.5' of new
marine grade aluminum
with reinforced longitudinal members to strengthen
the hull. All aluminum
areas will be prepared using proper aluminum
welding procedures.
2) Reposition the superstructure or control station,
consisting of steering
console, which will house steering components,
motor controls, horn,
electrical panel and fire extinguisher, to a
position to achieve proper
water line to gunwale height. This will require
all hydraulic hose and
engine control cables to be replaced or lengthened.
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3) Fabricate storage compartment for approximately 20
barrels or 840
gallons of oil/water mix. This compartment will be
located just forward
of the engine compartment in the newly-lengthened
hull area. Install
towing hitch for oil spill containment boom towing.
4) The permanent fuel system and engine compartment
consisting of tanks,
hoses, fills and vents will be modified to ensure
safety and compliance
with state and federal laws as required.
5) The marine electrical system consisting of marine
batteries, wiring,
switches, gauges, panel, navigation lights,
blower, etc., will be modified
to conform to current standards, if required.
Additional deck lighting
will be added for night operation.
6) Radio equipment, both VHF marine and VHF spill
response, U.S.-built
radios and antennas will be installed. Other
safety equipment will be
installed.
The approximate cost of the above work is as follows:
Modification to hull and fabrication of storage
compartment $6,940
Radio equipment $1,162
Safety/Electrical equipment
$3,092
Reposition superstructure and steering controls $1,800
The following documentation was submitted in support of the
requested ruling:
Attachments 1(a) & (b) - Sketches of the vessel
Attachment 2 - Photos
Attachment 3 - Hyde Products invoice
Attachment 4 - NADA price sheets
Attachment 5 - Hyde Products LORI proposal
Attachment 6 - Empire Boat Works price quote
Attachment 7 - Able Communications price quote
Attachment 8 - Safety/Electrical Equipment
ISSUE:
Whether the above-described work done in the United States
to the subject foreign-built vessel is sufficient for it to be
considered to be built in the United States for purposes of the
coastwise laws.
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LAW AND ANALYSIS:
The coastwise law pertaining to the transportation of
merchandise, 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, in pertinent part, 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 transportation,
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...
(Emphasis added)
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
internal waters, landward of the territorial sea baseline, in
cases where the baseline and the coastline differ. The term
"merchandise" as used in 883 includes valueless material (see
amendment to 883 by the Act of June 7, 1988, Pub.L. 100-329;
102 Stat. 588). Furthermore, the statute provides that the
prohibitions set forth therein apply to the transportation of
"valueless material or any dredged material regardless of whether
it has commercial value, from a point or place in the United
States or a point or place on the high seas within the Exclusive
Economic Zone [(EEZ)] as defined in the Presidential Proclamation
of March 10, 1983, to another point or place in the United States
or a point or place on the high seas within that [EEZ]." Id.
The March 10, 1983, Presidential Proclamation defined the EEZ as
a zone contiguous to the territorial sea extending to a distance
200 nautical miles from the territorial sea baseline.
From the above statutory framework, the Customs Service has
concluded that the removal of surface oil by skimming constitutes
a lading of merchandise (see Headquarters Ruling 111420, dated
June 17, 1991). The deposit of the skimmed oil at a point other
than which it is laded would constitute an unlading of
merchandise. The merchandise coastwise law (46 U.S.C. App.
883) prohibits the use of a non-coastwise-qualified vessel
(i.e., one that is not U.S.-built, owned and documented) for such
recovery and transportation of oil in waters within its
jurisdiction as discussed above (see Headquarters Ruling 110386,
dated September 29, 1989).
However, vessels which, although originally built abroad,
have been modified or rebuilt in the United States, may be
considered built in the United States for purposes of the
coastwise laws. Whether such work done to a vessel of 5 net tons
or greater is sufficient for it to be
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considered built in the United States is a determination of the
USCG pursuant to 67.97, USCG Regulations (46 CFR 67.97) which
provides as follows:
To be considered built in the United States a vessel
must meet both
of the following criteria:
(a) All major components of its hull and superstructure
are fabricated
in the United States; and
(b) The vessel is assembled entirely in the United
States.
The Customs Service has adopted the above provisions as
guidelines for its determinations of whether a vessel (such as
the one under consideration), exempt from documentation because
it is less than 5 net tons, may be considered built in the United
States for purposes of the coastwise laws. (Customs Ruling
Letters 110196, dated August 28, 1989, and 111674, dated July 12,
1991) Customs considers the alterations and modifications done
to the hull and fittings and superstructure of the vessel in the
United States the crucial factor in making its determination as
to whether a foreign-built vessel was rebuilt in the United
States. (Customs Ruling Letter 109050, dated November 4, 1987)
In addition, Customs also takes into account the value added to
the vessel in the United States. (Customs Ruling Letter 108906,
dated June 5, 1987, copy enclosed)
With respect to the proposed work under consideration, we
note as follows. Attachment 8 covering safety/electrical
equipment is not an invoice or price quote from a vendor but
rather is a mere listing of various items and prices without
indication as to who prepared it. Furthermore, not only is most
of the safety equipment listed thereon irrelevant for purposes of
determining whether the subject vessel was rebuilt in the United
States (e.g., first aid kit, life vests, etc.), the electrical
equipment listed may not ultimately be purchased in view of the
statement on the attachment that such purchases will only be made
"if required." In addition, the record is devoid of
documentation to substantiate the $1800 claimed as the cost to
reposition the superstructure and steering controls since it is
stated to be a "phone estimate per Empire Boatworks."
However, in regard to the remainder of the work in question,
the modification to the hull and fittings (the most crucial
factor to be considered) will result in the vessel's length being
increased by approximately 1/3 of its current length. In
addition, its storage capacity will be increased from one cubic
meter to approximately 840 gallons. Both of these work items
alone will cost $6940.00 (see Attachment A), more than twice the
cost of the boat ($2500.00). In addition, the cost of the new
radio equipment purchased ($1162) will increase the value added
to the vessel to $8102.00.
Accordingly, in view of the modification to the hull and
fittings of the vessel as described above, and the value added to
the vessel, we find the proposed work to be sufficient for the
vessel to be considered built in the United States for purposes
of the coastwise laws.
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HOLDING:
The above-described work done in the United States to the
subject foreign-built vessel is sufficient for it to be
considered to be built in the United States for purposes of the
coastwise laws.
Sincerely,
Chief
Entry and Carrier Rulings Branch