July 17, 2009 CBP Bulletin Notice Proposes Stricter "Jones Act" Limits on Coastwise Transportation and Vessel Equipment
In the July 17, 2009 issue of the U.S. Customs and Border Protection Bulletin (Vol. 43, No. 28), CBP published a notice proposing to modify 19 rulings, revoke one ruling, and revoke a treatment as follows:
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Proposed modification and revocation of rulings; proposed revocation of treatment. CBP is proposing to modify four rulings and revoke one ruling concerning transportation of merchandise, and modify 15 rulings concerning vessel equipment as they pertain to coastwise law ("the Jones Act".) Additionally, CBP proposes that this notice covers any rulings raising these issues that may exist but have not been specifically identified. CBP is also proposing to revoke any treatment it has previously accorded to substantially identical transactions.
CBP states that any party who has received an interpretive ruling or decision on the issues that are subject to the proposed modifications and revocations, or any party involved with a substantially identical transaction, should advise CBP by August 16, 2009, the date that written comments on the proposed ruling are due. Furthermore, CBP states that an importer's failure to advise CBP of such rulings, decisions, or substantially identical transactions may raise issues of reasonable care on the part of the importer or its agent for importations subsequent to the effective date of the final decision in this notice.
Coastwise transportation of "merchandise". The coastwise law pertaining to the transportation of merchandise, 46 USC 55102, also known as the "Jones Act," prohibits the transportation of merchandise between points in the United States 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.
CBP is proposing to issue HQ H061697 in order to modify HQ 115185, HQ H061698 in order to revoke HQ 115218, and HQ H061700 in order to modify HQ 115311 and apply the holding in Subparagraph (4) of T.D. 78-387 as explained further below. In addition, CBP also proposes to modify HQ 115522 and HQ 115771, which do not address or apply the correct holding in T.D. 78-387.
CBP is proposing to modify its position regarding which merchandise may be transported between coastwise points without violating the Jones Act, and accordingly, is proposing to strictly interpret T.D. 78-387.
In prior rulings, CBP's application of T.D. 78-387 allowed the transportation of merchandise such as pipeline connectors by a foreign-flagged vessel engaged in connecting the foregoing merchandise to previously laid or installed pipelines, flowlines, or wellheads on the Outer Continental Shelf (OCS). In interpreting T.D. 78-387, CBP held that such transportation was permissible if the work was done on or from the vessel transporting the article to be installed.
CBP now recognizes that allowing foreign-flagged vessels to transport merchandise from one U.S. point and install that merchandise at another point on the OCS on the condition that it merely be accomplished "on or from that vessel" would be contrary to the legislative intent of 46 USC 55102.
According to CBP sources, since T.D. 78-387 has been applied to a wider range of circumstances than the subject matter of the T.D., this stricter interpretation would affect the transportation of other types of merchandise between coastwise points.
Vessel equipment. CBP also intends to modify its position regarding how it determines what constitutes "vessel equipment" as defined in T.D. 49815(4) and the application of T.D. 49815(4) in cases involving the transportation of merchandise under 46 USC 55102. CBP is proposing to interpret T.D. 49815(4) to limit the definition of equipment, as it relates to the transportation of merchandise under 46 USC 55102, to articles necessary and appropriate for the navigation, operation, or maintenance of the vessel itself and the safety and comfort of the persons on board, as opposed to being necessary and appropriate for a vessel to engage in a particular activity.
CBP now recognizes that allowing a foreign-flagged vessel to transport articles that are not needed to navigate, operate, or maintain that vessel or for the safety and comfort of the persons on board that vessel, but rather to accomplish an activity for which that vessel would be engaged, would be contrary to the legislative intent of 46 USC 55102.
CBP sources note that this stricter interpretation would affect any vessel equipment transported between coastwise points.
CBP now proposes to issue HQ H061934 in order to modify HQ 111889, HQ H061935 in order to modify HQ 113841; HQ H061992 in order to modify HQ 115938, HQ H061933 in order to modify HQ H029417, and HQ H061944 in order to modify HQ H032757. In addition, CBP is proposing to modify the following rulings with respect to their findings that certain merchandise is vessel equipment, or that otherwise apply the paraphrased version of T.D. 49815(4), as described above. The additional rulings are identified as HQ 110402, HQ 111892, HQ 112218, HQ 113838, HQ 114305, HQ 114435, HQ 115333, HQ 115381, HQ 115487, and HQ 116078.
July 17, 2009 CBP Bulletin (Vol. 43, No. 28) available athttp://www.cbp.gov/xp/cgov/trade/legal/bulletins_decisions/bulletins_2009/