VES- 3-RR:BSTC:CCI H084098 GOB
Richard A. Stanford, Esq.
Stanford Law Firm
P.O. Box 42430
Houston, TX 77242-2430
RE: 46 U.S.C. § 55102; Coastwise Trade; Floating Dry Dock
Dear Mr. Stanford:
This letter is in reply to your submission of October 30, 2009 on behalf of your client (the “requester”). Our ruling on this matter is set forth below.
FACTS:
The subject vessel (referred to hereinafter as the “vessel” or the “dry dock”) is a floating, non-coastwise-qualified dry dock. Your client proposes to have the vessel disconnected from its location at a shipyard and moved, by lashing tugs to its side, to a location within the territorial waters of the United States (referred to hereinafter as the “location”). At the location, the dry dock would be submerged, drilling rigs would be floated over the submerged dry dock by tugs, and the dry dock would then be deballasted. The dry dock with drilling rigs laden aboard would then be moved by tug to a shipyard where repair and refurbishment operations would be conducted on the drilling rigs. The drilling rigs will remain aboard the dry dock at all times during the duration of these operations. Upon completion of the repair and refurbishment operations, the dry dock with the drilling rigs aboard would be moved by tug back to the location, where the dry dock would be submerged and the drilling rigs unladen by refloating. The drilling rigs would then be moved away by tugs. At that point, the dry dock would be deballasted and moved back to the shipyard.
You state that all movements of the dry dock and the drilling rigs will be conducted by coastwise-qualified tugs. The drilling rigs may arrive at the location under tow after departing from a U.S. port, a location on the Outer Continental Shelf, or from a foreign port. The dry dock will be moored or
attached to the sea bottom at the location to facilitate the lading and unlading of the drilling rigs. As an alternative to being attached or moored to the sea bottom at the location, the dry dock may be held in place by coastwise-qualified tugs.
ISSUE:
Whether the proposed activities involve 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. In this letter, we will use the term “territorial waters” to include internal waters and navigable waters of the U.S.
Title 46, United States Code, § 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 that 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.”
Title 19, United States Code, § 1401(c) (19 U.S.C. § 1401(c)) defines “merchandise,” in pertinent part, as follows: “goods, wares, and chattels of every description...” Title 46, United States Code, § 55102(a)(2) provides that “the term ‘merchandise’ includes valueless material.”
CBP has consistently held that no coastwise transportation occurs in violation of 46 U.S.C. § 55102 when merchandise is laden at one coastwise point, transported to another coastwise point where it remains aboard the vessel, and is subsequently unladen at the point of lading. See, e.g., Headquarters Ruling Letter (“HQ”) H047936, dated December 30, 2008; HQ H054167, dated March 17, 2009; and HQ 110127, dated April 5, 1989. See also HQ W115601, dated February 28, 2002, where CBP determined that merchandise unladen a vessel width from the dock where it was laden (with no contact with the dock at any point) was in violation of 46 U.S.C. § 55102. In HQ H028458, dated June 19, 2008, CBP held that merchandise transported on a non-coastwise-qualified vessel from Dock #2 of a U.S. facility to Dock #1 of the same facility, via a foreign port, was a violation of 46 U.S.C. § 55102.
In the subject case, the drilling rigs are proposed to be laden and unladen at the same coastwise point. The drilling rigs are merchandise within the meaning of 46 U.S.C. § 55102. Because the lading and unlading of the drilling rigs will occur at the same coastwise point, the proposed use of the dry dock does not constitute a transportation of merchandise between coastwise points. Therefore, such activity by a non-coastwise-qualified vessel is not violative of 46 U.S.C. § 55102. We stress that it is essential that the drilling rigs be laden and unladen from the dry dock at the exact same point.
With respect to our determination, the result is the same whether the dry dock is moored or attached to the sea bottom at the location or held in position at the location by coastwise-qualified tugs.
Because all towing of vessels will be performed by coastwise-qualified tugs, there will be no violation of the coastwise towing statute, 46 U.S.C. § 55111.
HOLDING:
The proposed activities, as described above, are not violative of 46 U.S.C. § 55102.
Sincerely,
Glen E. Vereb
Chief
Cargo Security, Carriers and Immigration Branch