HQ 109879: Applicability of the coastwise trade laws to fish loading, processing, and transporting activities by foreign-flag United States built vessels, soon to be re-documented under United States law

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 109879

                        January 10, 1989


VES-7-CO:R:P:C 109879 LLB

CATEGORY: Carriers

James B. Ellis II, Esq.
Dyer, Ellis, Joseph, and Mills
600 New Hampshire Avenue, NW.
Washington, D.C. 20037

RE:  Applicability of the coastwise trade laws to fish loading,
     processing, and transporting activities by foreign-flag
     United States built vessels, soon to be re-documented under
     United States law

Dear Mr. Ellis:

     This is in response to your letter of November 17, 1988, in
which you request a ruling on the applicability of the coastwise
merchandise transportation statute to various fisheries-related
activities proposed to be engaged in by your client.

FACTS:

     It is proposed that two United States-built, foreign-flag
vessels will be purchased for the purpose of having them rebuilt
in United States shipyards to make them suitable to operate as
fish processing vessels, documented under the U.S.- flag with
fisheries licenses.  It is contemplated that they will be
operated off the coast of Alaska, and while in that service will
engage in one or more of the following activities:

          1. Receive and process fish in either international
          waters or in waters within the Exclusive Economic Zone
          (EEZ).

          2. Receive and transport fish from
          international waters or from the EEZ, to a
          point within U.S. territorial waters or to a
          U.S. port.

          3. Receive and process fish in territorial
          waters, while moving, and unload the
          processed fish at the same point at which the
          unprocessed fish were initially received.
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ISSUE:

     May a vessel built in the United States currently documented
under foreign-flag and to be documented for the fisheries engage
in the above-described activities without violating the coastwise
laws of the United States.

LAW AND ANALYSIS:

     Title 46, United States Code App., section 883 (46 U.S.C.
App. 883), provides that only coastwise-qualified vessels may
transport merchandise between coastwise points.  Such points
include points within the territorial waters of the United
States.

     Vessels which are eligible for coastwise documentation are
those which have been built in the United States, are owned by
citizens of the United States, and pursuant to the first proviso
to section 883, have never been sold to foreign interests or
documented under a foreign flag.  The incoming letter requesting
a ruling in this matter acknowledges that the vessels presently
under consideration are not entitled to be documented to engage
in coastwise activities by virtue of their having been documented
under the laws of a foreign country.  This fact does not,
however, affect the ability of the vessels to be documented for
the fisheries.

     The EEZ is defined in Presidential Proclamation 5030 of
March 10, 1983 (48 FR 10605), as extending outward for 200
nautical miles from the baseline from which the breadth of the
territorial sea is measured.

     Of the three earlier enumerated activities, the first two
take place, at least in relevant part, outside the territorial
waters of the United States.  In the first case, fish are
received and processed outside the territorial waters.  In the
second, fish are received outside territorial waters and
transported to a point within those waters.  Neither of these
situations contemplate transportation between two or more
coastwise points.

     In the third example given, it is contemplated that fish
will be received at a point within the territorial waters and
processed while the vessel is in motion.  It is stated that the
processed fish would be unloaded at the same point at which the
unprocessed fish were originally received.  This is a critical
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point since the fish are considered merchandise for purposes of
section 883.  As such, they may not be transported by an
unqualified vessel between coastwise points.  If, however,
loading and unloading occur at the same point, there will have
been no transportation between two or more coastwise points, and
no violation of section 883. (We note, however, that the United
States District Court for the District of Columbia has held, in a
case involving the lading of merchandise - a drilling vessel - at
a point in territorial waters, movement of the merchandise to a
second point in the United States where it was worked on while on
the carrying vessels, and movement back to the original point in
territorial waters where the merchandise was unladen, that
section 883 would be violated, notwithstanding that the
merchandise was not unladen at a second coastwise point; see
Shipbuilders Council of America, et al. v. United States, Civil
Action No. 87-0972 (D.D.C. January 13, 1988, Judge George H.
Revercomb presiding).  This case is on appeal in the Court of
Appeals for the District of Columbia.  If Judge Revercomb's
decision is upheld, an operation such as that under consideration
could be determined to violate section 883 even if the fish is
laden at the same point in territorial waters where the processed
product is unladen.)  To the extent that fish are picked up at
various coastwise points, processed, and delivered back to the
points of original loading, it is incumbent upon a person engaged
in such activities to segregate the fish and to devise a system
which demonstrates to the satisfaction of the District Director
of Customs that fish are not being transported between coastwise
points.

HOLDING:

         A vessel documented for the fisheries only may:

     1. Receive and process fish in either international waters
or within the EEZ (as defined in Presidential Proclamation 5030
of March 10, 1983).

     2. Receive and transport fish from international waters or
from the EEZ, to a coastwise point.

     3. Receive and process fish in territorial waters, so long
as the processed fish are discharged at the same coastwise point
at which they are received, and so long as (to the extent
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such may be necessary) fish received at different coastwise
points are kept segregated to the satisfaction of the District
Director of Customs (but see Shipbuilders Council v. United
States, Civil Action Number 87-0972, D.D.C. January 13, 1988,
currently under appeal).

                              Sincerely,




                              B. James Fritz
                              Chief
                              Carrier Rulings Branch