H311601

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H311601 November 13, 2020 VES-3-02-OT:RR:BSTC:CCR H311601 MNM CATEGORY: Carriers Mr. Greg Mendenhall G B Mendenhall Pllc 3278 Franklin Avenue, Suite 5 P.O. Box 65 Millbrook, New York 12545 RE: 46 U.S.C. §§ 55102, 55103, and 55111; Coastwise Transportation; Towing; drydock. Dear Mr. Mendenhall: This letter is in response to your correspondence dated June 3, 2020, on behalf of your client [ ], in which you inquire about whether your client’s proposed use of a foreign-built floating drydock to transport vessels within U.S. territorial waters constitutes a violation of the coastwise laws. Our decision follows. FACTS The following facts are from your ruling request and emails to this office, dated September 1, 2020 and September 22, 2020. Your client owns and operates a floating drydock at its shipyard facilities in [ ]. The drydock is approaching the end of its useful life, and your client seeks to purchase a foreign-built floating drydock to moor at a shipyard facility in [ ]. Upon delivery, the new drydock will be flagged under a foreign flag. The drydock will be used exclusively for the purpose of raising vessels from the water for inspection, maintenance, and repairs at the shipyard. The proposed operation is anticipated to commence in 2024. Your client anticipates that it will need to move the drydock on occasion from its fixed position in the shipyard (the “home position”); these movements are described in further detail in the Law and Analysis section below. ISSUES Whether the proposed transportation of merchandise by a non-coastwise-qualified vessel described in the FACTS section above would constitute a violation of 46 U.S.C. § 55102? Whether the proposed operation described in the FACTS section above would constitute towing in violation of 46 U.S.C. § 55111? Whether the proposed transportation of individuals described in the FACTS section above would constitute a violation of 46 U.S.C. § 55103, and 19 C.F.R. § 4.50(b)? LAW AND ANALYSIS Pursuant to 46 U.S.C. § 55102, which 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 foreign port, unless the vessel— (1) is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and (2) 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. 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 46 U.S.C. § 55102(a), “merchandise, includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material.” As such, any cargo, regardless of its value or ownership, would be considered merchandise for the purpose of 46 U.S.C. § 55102. The regulations promulgated under the authority of 46 U.S.C. § 55102(a), provide in pertinent part: 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. 19 C.F.R. § 4.80b(a). Similarly, the coastwise law applicable to the carriage of passengers is found in 46 U.S.C. § 55103 which provides: (a) In General. Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not transport passengers between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel- (1) is wholly owned by citizens of the United States for purposes of engaging in coastwise trade; and (2) 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. The CBP regulations, promulgated under the authority of 46 U.S.C. § 55103, provide, “[a] passenger within the meaning of this part is any person carried on a vessel who is not connected with the operation of the vessel, her navigation, ownership, or business.” Issue 1: Transportation of Merchandise under 46 U.S.C. § 55102 Pursuant to § 55102, supra, the coastwise laws prohibit a non-coastwise-qualified vessel from transporting merchandise between points in the United States to which the coastwise laws apply, either directly or via a foreign port. A vessel transported on another vessel is merchandise for purposes of 46 U.S.C. § 55102. “When a vessel is carried aboard another vessel, it assumes the character of merchandise whose carriage is governed by the same requirements applicable to any other category of goods.” HQ 113176 (Sept. 6, 1994). The subject drydock will be moored at a fixed location at [ ] shipyard (home position), will be non-self-propelled, and will be affixed to permanent concrete mooring dolphins that prevent any movement of the dock, other than to ballast up and down to allow vessels to enter and exit the dock. While the drydock is pinned into its mooring location, the drydock will be able to raise and lower vertically on structural rails constructed onto the drydock. The drydock will be lowered by allowing sea water to enter ballast tanks through sea-chests on the drydock. The drydock will be raised by pumping out sea water contained inside the ballast tanks. The drydock will not move laterally or transit out to deeper waters during its operations at its home position. We have previously held that the use of a moored drydock in raising vessels out of the water for repairs and subsequently replacing the vessels back in the water at the same point from which they were elevated is not considered the transportation of merchandise between two coastwise points. See HQ H298029 (Sept. 10, 2018); HQ 116312 (Sept. 21, 2004), HQ 114439 (Aug. 21, 1998), HQ 113208 (Sept. 19, 1994), and HQ 110283 (Nov. 17, 1989). Therefore, the proposed transportation of the subject drydock would not be a violation of 46 U.S.C. § 55102. With the new drydock and dolphins, [ ] anticipates needing to move the drydock from its home position for each launch and each graving dock float out, occurring 2-3 times per year. Any foreign vessel (e.g. a foreign-built floating drydock) that moves with another vessel aboard between coastwise points is in violation of 46 U.S.C. § 55102, whether it moves on its own power or is towed by a coastwise-qualified vessel. If, instead, the foreign vessel is towed and returns to the same location where the vessel was laden, there is no violation of 46 U.S.C. § 55102. See HQ H273946 (Apr. 13, 2016); and HQ H269478 (Jan. 11, 2016). The subject drydock will be towed by coastwise-qualified tugboats to a new temporary location to be prepared near Lot 20 in [ ]’s shipyard. The drydock could also be towed to another pier within the shipyard or to a third-party location, depending on the work in the shipyard. This towing of the drydock will be for the purpose of allowing [ ]’s shipyard to launch new buildings from its building ways and building dock. When the drydock is towed by tugboats, it could hold a laden vessel under repair, and it will carry drydock personnel between the home position and the temporary position. The primary temporary positions used (Lot 20, Berth 2, and Berth 6) are within [ ]’s shipyard. However, in the unlikely event [ ] is unable to accommodate the drydock at a position within its [ ] 

section below. ISSUESWhether the proposed transportation of merchandise by a non-coastwise-qualified vessel described in the FACTS section above would constitute a violation of 46 U.S.C. § 55102?Whether the proposed operation described in the FACTS section above would constitute towing in violation of 46 U.S.C. § 55111?Whether the proposed transportation of individuals described in the FACTS section above would constitute a violation of 46 U.S.C. § 55103, and 19 C.F.R. § 4.50(b)?LAW AND ANALYSISPursuant to 46 U.S.C. § 55102, which 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 foreign port, unless the vessel—(1) is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and (2) 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.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 46 U.S.C. § 55102(a), “merchandise, includes (1) merchandise owned by the United States Government, a State, or a subdivision of a State; and (2) valueless material.” As such, any cargo, regardless of its value or ownership, would be considered merchandise for the purpose of 46 U.S.C. § 55102. The regulations promulgated under the authority of 46 U.S.C. § 55102(a), provide in pertinent part: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 (