HQ 111437: The applicability of the coastwise laws to the proposed use of a foreign-flag tug and two foreign-flag barges in a dredging project and the movement of dredge sand on the Sacramento River, its adjacent sloughs and the San Francisco Bay.

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 111437

                        September 4, 1991


VES-10-02-CO:R:P:C 111437 BEW

CATEGORY:  Carriers

Stanley X. Cook, Esquire
Attorneys at Law
2156 The Alameda
San Jose, California 95126

RE:  The applicability of the coastwise laws to the proposed use
     of a foreign-flag tug and two foreign-flag barges in a
     dredging project and the movement of dredge sand on the
     Sacramento River, its adjacent sloughs and the San
     Francisco Bay.

Dear Mr. Cook:

     This is in reference to your letters of December 6, 1990,
and April 17, 1991, requesting a ruling concerning a dredging
contract from the U.S. Army Corps of Engineers in the Sacramento
River.

FACTS:

     You state that a California corporation intends to enter
into a joint venture with a California subsidiary corporation of
a major Korean corporation.  In this venture, the Korean parent
or subsidiary corporation would furnish a tug and two barges of
current Korean registry, manned by U.S. seaman who would be
employees of the joint venture.

     You state that the vessels would not transport merchandise
between U.S. ports, but that the operations would be confined
solely to the movement of the dredged sand on the Sacramento
River, its adjacent sloughs and the San Francisco Bay.  You state
that none of the vessels would leave the bay during the
operations of the venture.  At the conclusion of the dredging and
fill operations, the tug and barges would return to their home
port.  You ask the following questions:

     (1)  What, if any, restrictions, taxes or requirements are
     imposed by the U.S. Customs Service concerning the use of
     such vessels in the manner specified above?

     (2)  Does it make a difference whether such vessels are
     owned by the Korean parent corporation/U.S. subsidiary, or
     leased to the U.S. domestic corporation of my clients?

     (3)  What separate requirements, taxes, or restrictions, if
     any, are imposed with regard to any collateral equipment for
     sand dredging and movement, such as dredging equipment,
     conveyors and tractors.

     Your request goes only to the transportation and towing
aspects of the dredging project.

ISSUES:

     1.   Whether the transportation of dredge sand on a non-
     coastwise-qualified vessel from a dredge site in the
     Sacramento River and the San Francisco Bay Area to the shore
     or other points in the same waters is a violation of 46
     U.S.C. App. 883.

     2.  Whether the use of a foreign-flag vessel to tow barges
     used to haul dredge sand between coastwise points is
     prohibited under the provisions of 46 U.S.C. App. 316(a).

LAW AND ANALYSIS:

     The coastwise law pertaining to the transportation of
merchandise, section 27 of the Act of June 5, 1920, as amended
(41 Stat. 999; 46 U.S.C. App. 883, often called the Jones Act),
provides that:

          No merchandise shall be transported by water,
          or by land and water, on penalty of
          forfeiture of the merchandise (or a monetary
          amount up to the value thereof as determined
          by the Secretary of the Treasury, or the
          actual cost of the transportation, whichever
          is greater, to be recovered from any
          consignor, seller, owner, importer,
          consignee, agent, or other person or persons
          so transporting or causing said merchandise
          to be transported), between points in the
          United States ... embraced within the
          coastwise laws, either directly or via a
          foreign port, or for any part of the
          transportation, in any other vessel than a
          vessel built in and documented under the laws
          of the United States and owned by persons who
          are citizens of the United States ....

     "Merchandise" is defined in section 1401(c) of title 19,
United States Code, to include goods, wares, and chattels of
every description, and includes fish, fish products, and fish
packaging materials that are assembled into packages containing
fish.  Section 883 specifically provides that, for purposes of
its provisions, "merchandise" includes valueless material (Pub.L.
100-329; 102 Stat. 588).  The transportation of valueless
material, whether or not it has commercial value, from a point or
place in the United States or point or place on the high seas
within the Exclusive Economic Zone (EEZ) as defined in the
Presidential Proclamation of March 10, 1983, to another point or
place in the United States or a point or place on the high seas
within that EEZ would also be prohibited under the provisions of
section 883.

     In interpreting the coastwise laws, Customs has ruled that a
point in United States territorial waters is considered a point
embraced within the coastwise laws.  The coastwise laws generally
apply to points in the territorial sea, defined as the belt,
three (3) nautical miles wide, seaward of the territorial sea
baseline, and to points located in internal waters, landward of
the territorial sea baseline, in cases where the baseline and the
coastline differ.

     The transportation of dredged material on a foreign-flag
barge from a dredge site, located in the territorial waters of
the United States, to another point within the territorial waters
of the U.S. would be prohibited under the provisions of 46 U.S.C.
App. 883.  Accordingly, the proposed use of the Korean-flag
barges in question would be prohibited.

     Section 316(a), as amended by the Act of May 19, 1986 (Pub.
L. 99-307 (46 U.S.C. App. 316(a)), prohibits the towing between
coastwise points of any vessel except a vessel in distress, by
any vessel other than a vessel of the United States issued a
certificate of documentation with a coastwise or Great Lakes
endorsement (see 46 U.S.C. App. 12106, 12107).  This restriction
extends to certain territories and possessions of the United
States, to towing between points within the same harbor, and to
direct, indirect, or partial towing operations.

     In summary, the prohibitions imposed by the coastwise laws
extend to all vessels regardless of their size, and to the
internal waters of the United States as well as to the coastal
waters.  Their applicability is not affected by the fact that a
body of water may be wholly within the jurisdiction of a single
state, or whether its course or boundaries intrude on the
territory of two or more states.  Likewise, it is not a
consideration whether a body of water is tidal or non-tidal, is
accessible to the sea, is easily reached, or is man-made.

HOLDING:

     1.  The transportation of dredge sand on a non-coastwise-
     qualified vessel from a dredge site in the Sacramento River
     and the San Francisco Bay Area to the shore or other points
     in the same waters is a violation of 46 U.S.C. App. 883.

     2.  The towing between coastwise points of any vessel,
     except a vessel in distress, by any foreign-flag vessel, is
     prohibited under the provisions of 46 U.S.C. App. 316(a).

                                     Sincerely,



                                     B. James Fritz
                                     Chief
                                     Carrier Rulings Branch