HQ 111767: Coastwise Trade; 46 U.S.C. App. 883

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 111767

                        October 25, 1991

VES-3-07-CO:R:IT:C 111767 GEV

CATEGORY:  Carriers

Captain C.R. Leitch
Brunterm Limited
Post Office Box 70
Saint John, N.B., Canada E2L 3X1

RE:  Coastwise Trade; 46 U.S.C. App. 883

Dear Captain Leitch:

     This is in response to your facsimile transmission dated
June 20, 1991, requesting a ruling regarding the possible use of
a foreign-flag vessel in the coastwise trade.  Our ruling on this
matter is set forth below.

FACTS:

     Brunterm Limited ("Brunterm") is a Canadian corporation
located in the Port of Saint John, New Brunswick, Canada.
Brunterm is considering operating a container feeder operation
from Saint John to ports located on the East Coast of the United
States.  The intention is to feeder Canadian import and export
traffic to and from the load centers of New York, Philadelphia,
Norfolk and Jacksonville.

     The main-line carriers have in recent years elected to stop
service to the smaller ports and concentrate on load centers as a
means to capitalize on costs and save ship's time.  This has been
to the detriment of shippers in areas like eastern Canada who are
faced with problems in ensuring that their products reach world
markets at competitive rates.  Brunterm is of the opinion that
with the departure of the last of the Far East main-line carriers
from Halifax it may now be beneficial for a feeder service to
operate from Saint John.

     In order for the proposed feeder service to operate
efficiently domestic U.S./Canada traffic should be sourced as a
means to ensure regular traffic and attempt to flatten out the
peaks and valleys of the export/import trades.  As part of this
proposed service Brunterm inquires as to the legality of using a
foreign-flag vessel to transport products from Maine to various
ports on the East Coast of the United States via Saint John.
                              - 2 -

ISSUE:

     Whether the use of a foreign-flag vessel to transport
merchandise between two United States ports via a Canadian port
constitutes a violation of 46 U.S.C. App. 883.

LAW AND ANALYSIS:

     Title 46, United States Code Appendix, 883 (the merchandise
coastwise law often called the "Jones Act") prohibits the
transportation of merchandise between United States coastwise
points, either directly or via a foreign port, or for any part of
the transportation, in any vessel other 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.  (emphasis added)

     In interpreting 883, Customs has ruled that a point in
United States territorial waters is a point in the United States
embraced within the coastwise laws.  The territorial waters of
the United States consist of the territorial sea, defined as the
belt, 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.

     Accordingly, the use of a foreign-flag vessel to transport
merchandise from Maine to ports located on the East Coast of the
United States via Canada is prohibited by 46 U.S.C. App. 883.
Whether, as you suggest, Maine products are "re-exported" from
the U.S. port of unloading or directed to the U.S. domestic
market in that port's hinterland is of no consequence regarding
our position in this matter.  There would still be an illegal
coastwise movement.

HOLDING:

     The use of a foreign-flag vessel to transport merchandise
between United States ports via a Canadian port constitutes a
violation of 46 U.S.C. App. 883.

                                   Sincerely,




                                   B. James Fritz
                                   Chief
                                   Carrier Rulings Branch