H314401

U.S. Department of Homeland Security Washington, DC 20229 U.S. Customs and Border Protection HQ H314401 November 12, 2020 VES-3-02-OT:RR:BSTC:CCR H314401 MNM CATEGORY: Carriers Ms. Barbara L. Holland General Counsel Everett Ship Repair, LLC 2730 Federal Avenue Everett, WA 98201 RE: 46 U.S.C. §§ 55102, 55103, and 55111; Coastwise Transportation; Towing; drydock. Dear Ms. Holland: This letter is in response to your correspondence dated October 12, 2020, on behalf of Everett Ship Repair, LLC (“ESR”), in which you inquire about whether your ESR’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 email to this office, dated October 29, 2020. ESR owns and operates a ship repair facility with a foreign-built, registry-endorsed, floating drydock, the FAITHFUL SERVANT barge (“drydock”), which is moored to a permanent pier at the Port of Everett in Washington State. ESR anticipates that it will need to move the drydock on occasion from its fixed position in the Port of Everett (“Pier 3”); these movements are described in further detail in the Law and Analysis section below. The proposed operation is anticipated to commence on [ ] (raising the customer’s vessel out of the water for repairs), and [ ] (refloating the customer’s vessel after completion of repairs). The drydock will be towed to and from another location at the Port of Everett (“deepwater docking location”), where the water depth is sufficient to load and unload these deep draft vessels, on those dates. ISSUES Whether the proposed transportation of merchandise by a non-coastwise-qualified vessel would constitute a violation of 46 U.S.C. § 55102? Whether the proposed operation would constitute towing in violation of 46 U.S.C. § 55111? Whether the proposed transportation of individuals would constitute a violation of 46 U.S.C. § 55103, and 19 CFR § 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 You state that ESR is seeking this ruling to confirm that ESR’s use of the drydock for deep-water dockings, “using very similar procedures to those approved in a previous CBP Ruling Letter provided to the drydock’s prior owner in 2009,” will not constitute coastwise trade. You identified the ruling letter issued to the subject drydock’s prior owner is HQ H070662 (Aug. 28, 2009). You also state in your initial ruling request that the drydock holds a registry endorsement, but it is foreign-built, and as such does not qualify for a coastwise endorsement. 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 ESR’s shipyard (Pier 3). The drydock is partially submerged by flooding its ballast tanks, then the vessel in need of repair is floated over the drydock and the drydock’s ballast tanks are pumped out, raising the drydock and thus, lifting the vessel in need of repair out of the water. The drydock remains stationary at Pier 3 in Everett while work is performed on the lifted vessel. Once the work on the vessel is completed, the drydock is re-submerged and the repaired vessel is floated off the drydock. The drydock remains stationary and moored to the same pier at all times during the operation. 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 contemplated is not a violation of 46 U.S.C. § 55102. ESR anticipates needing to move the drydock from another location, while it has vessels on board, to Pier 3 to perform repairs and maintenance on vessels that are unable to safely navigate alongside the drydock’s moored location (primarily due to lack of water depth at the drydock’s berth), occurring approximately four times per year. Any foreign vessel (e.g. a foreign-built floating drydock) that transports another vessel aboard it 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). In order to safely perform these jobs, ESR proposes to tow the drydock, using a coastwise-qualified tug, to another location at the Port of Everett (“deepwater docking location”) where the water depth is sufficient to load and u

section below. The proposed operation is anticipated to commence on [ ] (raising the customer’s vessel out of the water for repairs), and [ ] (refloating the customer’s vessel after completion of repairs). The drydock will be towed to and from another location at the Port of Everett (“deepwater docking location”), where the water depth is sufficient to load and unload these deep draft vessels, on those dates. ISSUESWhether the proposed transportation of merchandise by a non-coastwise-qualified vessel would constitute a violation of 46 U.S.C. § 55102?Whether the proposed operation would constitute towing in violation of 46 U.S.C. § 55111?Whether the proposed transportation of individuals would constitute a violation of 46 U.S.C. § 55103, and 19 CFR § 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