VES-3-01-OT:RR:BSTC:CCI H054167 JLB
Mr. David J. Domogala
Manager, Fuel Supply and Trading
PSEG Energy Resources & Trade LLC
80 Park Plaza, T-19
Newark, New Jersey 07102-4194
RE: Coastwise Transportation; 46 U.S.C. § 55102
Dear Mr. Domogala:
This letter is in response to your correspondence dated March 10, 2009, and supplemental information, in which you inquire about whether merchandise lightered to a non-coastwise-qualified vessel at a U.S. point may be transported to a Canadian storage facility and then returned by a non-coastwise-qualified vessel to the U.S. without violating the Jones Act, 46 U.S.C. § 55102. Our ruling on your request follows.
FACTS
Public Service Enterprise Group Energy Resources & Trade LLC (“PSEG ER&T”) imports Adaro Envirocoal coal from Indonesia to comply with various U.S. environmental regulations. The coal is loaded at various ports in Indonesia onto non-coastwise-qualified gearless Panama-Class Ocean Going Vessels (“OGV”), Handy/ Panama-Class Self-Unloading Vessels (“SUV”), or Handy/ Panamax-Class Transloading Vessels (“TV”). These vessels transit various waterways directly en route to the Bridgeport Anchorage, located on the U.S. East Coast in the Long Island Sound.
The vessels have different unlading processes. The TV’s and SUV’s are lightered directly to U.S.-flagged barges and tugs assemblies. The non-coastwise-qualified OGV, however, will transit to the Bridgeport Anchorage from Indonesia and drop anchor. Then the vessel will be met by a non-coastwise-qualified TV. The TV will lighter from the OGV to either non-coastwise-qualified barges or onto the TV itself. The subject TV and barges will then depart for unlading at a storage facility in Canada.
Several months or years later, PSEG ER&T will remove the coal from the Canadian storage facility and transport it to the United States for use in their electrical generating facilities. At that point, a non-coastwise-qualified vessel, either a TV or SUV, will be loaded at the Canadian storage site and will transit directly to the Bridgeport Anchorage. The vessel will drop anchor and lighter to the U.S.-flagged barge and tug assemblies for delivery to the various electrical generating facilities in the United States.
ISSUE
Whether the transportation of the merchandise by the non-coastwise-qualified vessels as described above constitutes 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 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). U.S. Customs and Border Protection (“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).
CBP has long held that the use of a non-coastwise-qualified crane vessel to load and unload cargo is not coastwise trade, provided, that any movement of the merchandise is effected exclusively by the operation of the crane and not by movement of the vessel, except for necessary movement which is incidental to a lifting operation while it is taking place. However, movement of merchandise while it is suspended from the crane, even between two points within a harbor, which is effected by a movement of the vessel which is neither necessary nor incidental to a lifting operation by the crane would constitute coastwise transportation of merchandise under 46 U.S.C. § 55102. See, e.g., Headquarters Ruling Letter 109831, dated November 14, 1988; Headquarters Ruling Letter 116302, dated September 15, 2004; Headquarters Ruling Letter 111445, dated March 11, 1991.
Furthermore, CBP has found no distinction between lightering by means of a crane or derrick vessel and lightering through the use of a handymax belt-transloader. See Headquarters Ruling Letter 115591, dated February 25, 2002. Thus, the use of the non-coastwise-qualified TV as a lightering vessel between the OGV and the non-coastwise-qualified barges does not constitute a violation of 46 U.S.C. § 55102, provided that the same movement restrictions apply. This means that the TV must remain stationary during the actual lightering operations, with the only movement being effected by the operation of the conveyor belt.
As stated above, the CBP Regulations 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). These regulations further clarify the term coastwise points as “including points within a harbor.” See 19 C.F.R. § 4.80(a). As a result, CBP has narrowly construed what constitutes the same coastwise point. See Headquarters Ruling Letter W115601, dated February 28, 2002 (where CBP determined that merchandise unladen even a vessel width from the dock where it is laden (with no contact with the dock at any point) is in violation of 46 U.S.C. § 55102); see also Headquarters Ruling Letter H028458, dated June 19, 2008 (merchandise transported from one coastwise point, namely, Dock #2 of a U.S. facility, on a non-coastwise-qualified vessel to Dock #1 of the same U.S. facility, another coastwise point, via a foreign port was a violation of 46 U.S.C. § 55102).
You state that the merchandise will be laden aboard a non-coastwise-qualified vessel at the Bridgeport Anchorage, a U.S. point, transported to a Canadian storage facility and then, several months or years later, transported from the Canadian storage facility and unladen at the Bridgeport Anchorage. You assert that the merchandise will be transported aboard the non-coastwise-qualified vessel to the “same point” at the Bridgeport Anchorage for unlading. As such, there would be no engagement in coastwise trade since the merchandise would be laden and unladen at the same coastwise point.
HOLDING
The transportation of the merchandise by the non-coastwise-qualified vessels as described above does not constitute a violation of 46 U.S.C. § 55102.
Sincerely,
Glen E. Vereb, Chief
Cargo Security, Carriers and Immigration Branch