VES-3-02-OT:RR:BSTC:CCR H332920 HKC
Neil Quartaro & Michael E. Deutsch
Cozen O’Connor
1200 19th Street, NW
Washington, DC 20036
RE: Coastwise Transportation; 46 U.S.C. § 55102; 19 CFR § 4.80.
Dear Messrs. Quartaro and Deutsch,
This letter is in response to your June 13, 2023, ruling request on behalf of your client
[ ] regarding whether the recovery and transportation of re-usable rocket boosters by a non-coastwise-qualified vessel from a point outside of U.S. territorial waters to a point in the United States as described below, would violate the coastwise laws. Our decision follows.
FACTS
The following facts are from your June 13, 2023, ruling request. Your client is a space launch company that currently launches rockets form Cape Canaveral Space Force Station, Florida (“Cape Canaveral”) and Vandenberg Space Force Base, California (“VSFB”), servicing both commercial and governmental customers. Your client is currently developing a new rocket which will utilize a reusable booster stage. Following launch, the booster components will detach from the rocket when the rocket is at least 60 miles above Earth’s mean sea level. The booster components will then reenter the atmosphere and land in locations in the ocean outside of U.S. territorial waters. [ ] contemplates utilizing a foreign-flagged, non-coastwise-qualified vessel to recover the booster components as they are floating outside U.S. territorial waters, and transport them directly to Cape Canaveral, VSFB, or some other port within the United States. During recovery operations, the foreign-flagged vessels will be dynamically positioned with no attachment to the seabed.
LAW AND ANALYSIS
The coastwise law applicable to the transportation of merchandise, known as the Jones Act, is found at 46 U.S.C. § 55102, and provides in pertinent part:
Except as otherwise provided in this chapter or chapter 121 of this title, 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 United States for purposes of engaging in the coastwise trade; and
has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
(Emphasis added)
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. The term “territorial waters” is defined in regulation as synonymous with the term “navigable waters”, and encompasses both the U.S. territorial sea and U.S. internal waters. OCSLA Section 4, as amended by the 2021 NDAA, extends U.S. law to “installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources, including non-mineral energy resources.”
The Jones Act specifically prohibits the coastwise transportation of “merchandise” between coastwise points by non-coastwise qualified vessels. Pursuant to 46 U.S.C. § 55102(a): “[m]erchandise includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material.” 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.” For purposes of the Jones Act, the rocket booster components would be considered merchandise.
To determine if the proposed transportation occurs between coastwise points, we must examine the points at which the subject merchandise will be laden and unladen. Here, the rocket boosters will be laden onto the vessels at points on the open ocean beyond the territorial sea. Because these points are beyond the territorial sea, (defined as “the belt, three nautical miles wide, seaward of the territorial sea baseline”), they do not constitute coastwise points. It is CBP’s longstanding position that transportation of merchandise from a point outside of the U.S. territorial sea to a coastwise point, such as a U.S. port, does not constitute coastwise trade. In HQ H038355, CBP held that use of a non-coastwise-qualified vessel to transport an Orion Crew Module from a landing site 200 miles off the coast of California to San Diego did not violate 46 U.S.C. § 55102 because a point outside of U.S. territorial waters does not constitute a coastwise point. Similarly, in HQ 116586, CBP held the use of a non-coastwise qualified vessel to recover toppled drilling platforms located on the OCS seafloor to be permissible because such wreckage could not form a coastwise point beyond U.S. territorial waters.
Accordingly, we find that the proposed transportation of rocket booster components from a point on the ocean outside of the U.S. territorial sea to a U.S. port or other U.S. point would not be in violation of 46 U.S.C. § 55102.
HOLDING
Inasmuch as the proposed recovery of rocket booster components described above would occur beyond the U.S. territorial sea, the transportation of rocket booster components by a non-coastwise-qualified vessel would not violate 46 U.S.C. § 55102, because no transportation of merchandise between coastwise points would occur.
Sincerely,
W. Richmond Beevers, Chief
Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade, Regulations and Rulings
U.S. Customs and Border Protection