HQ 110402

August 18, 1989

VES-3-06-CO:R:P:C 110402 GV

CATEGORY: Carriers

Shant J. Harootunian, Esq.

American Telephone and Telegraph Company

295 North Maple Avenue

Basking Ridge, New Jersey 07920

RE: Applicability of coastwise merchandise law, 46 U.S.C. App.

883, to proposed carriage of cable by a foreign-built vessel

Dear Mr. Harootunian:

This is in response to your letter of August 2, 1989,

requesting a ruling or a waiver regarding the permissibility of

the proposed carriage of cable by a foreign-built vessel.

FACTS:

Transoceanic Cable Ship Company (\"Transoceanic\"), a wholly

owned subsidiary of American Telephone and Telegraph Company

(\"AT&T\"), proposes to use two of its vessels, the C.S. BROWN and

the C.S, LONG LINES, for the transportation and installation of

telecommunications cable. Both of the aforementioned vessels are

foreign-built. Under the proposal, approximately 41 km. of SL

telecommunications cable would be laded at its site of

manufacture, Newington, New Hampshire, aboard the C.S. LONG LINES

which would transport the cable to Honolulu, Hawaii. Upon

arrival in Honolulu it is contemplated that the cable would be

directly transferred from the C.S. LONG LINES to the C.S. BROWN

and then be laid between the Loihi Seamount and the Island of

Hawaii by the C.S. BROWN. Because the C.S. BROWN is assigned to

cable repair duties in the Pacific Ocean, it is possible that the

C.S. BROWN may be engaged in a repair when the C.S. LONG LINES

arrives at Honolulu on August 19, 1989, its present estimated

time of arrival. In such event, the cable would be temporarily

off-loaded into a storage depot for subsequent loading aboard the

C.S. BROWN upon its availability.

The installation of this cable is being offered by AT&T to

the Hawaii Institute of Geophysics (\"HIG\") of the University of

Hawaii, Manoa, as a part of the Hawaii Undersea Geo-Observatory

Project (\"project Hugo\"). Project Hugo involves the design,

construction, installation, testing and operation of a permanent

2

deep-ocean scientific laboratory on the Loihoi underwater

volcano. Project Hugo will permit the study of submarine

volcanic, biologic and oceanographic processes. By establishing

the observatory on the Loihi Seamount, HIG will be able to add

significantly to its knowledge of the morphology, eruptive

characteristics, lava volatile, water chemistry, seismicity,

internal structure, life processes at volcanic vents and slope

stability. Project Hugo would become part of the larger Hawaiian

Volcanic Observatory seismic network and would add continuity to

the snapshots of information obtained by short Ocean seismic

studies, submergible dives and surface mapping studies.

Project Hugo has been submitted by HIG to the National

Science Foundation (\"NSF\") for support. As part of that process,

AT&T has conducted a peer review in which it has concluded that

the conceptual design of Project Hugo is feasible. AT&T is

willing to support Project Hugo by supplying the SL cable and

installing it by the C.S. BROWN, thereby reducing the cost

support required from NSF by over \$320,000. AT&T would not

charge any sum for freight, or the value of the cable or its

services in installing the cable. Rather, AT&T would be donating

its services as a part of Project Hugo in the interest of

furthering submarine volcanic research and the gathering of

scientific data.

ISSUE:

Whether the carriage of cable by a foreign-built cable

laying and repair vessel from its point of lading in the United

States to a second point in the United States where it will be

either temporarily unladed into an onshore storage depot or

unladed directly onto another foreign-built cable-laying and

repair vessel located within U,S. territorial waters which will

subsequently install the cable constitutes a violation of 46

U.S.C. App. 883.

LAW AND ANALYSIS:

Title 46, United States Code, Appendix 883 (46 U,S,C. App.

883), provides, in pertinent part, that no merchandise shall 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 vessel other than a vessel

built in and documented under the laws of the United States and

owned by citizens of the United States (i.e., a coastwise

qualified vessel).

For purposes of section 883, a point in the United States

territorial waters is considered a point embraced within the

coastwise laws. The territorial waters of the United States

consist of the territorial sea, defined as the belt, 3 nautical

3

miles wide, adjacent to the coast of the United States and

seaward of the territorial sea baseline.

The Customs Service has held that the sole use or a non

coastwise-qualified vessel to lay cable between points in the

United States or in international waters does not violate the

coastwise laws. Such cable is not only laid, and not

\"transported,\" between points in the United States, but is also

being used in furtherance of the primary mission of the cable

laying vessel and is therefore similar to vessel equipment. The

Customs Service has ruled that equipment laden on a non

coastwise-qualified vessel at a coastwise point and used by the

vessel for reasons relating to the operation of the vessel may be

later unladen at a second coastwise point without violation of 46

U.S.C. App. 883. The use of the equipment between American ports

will have broken the continuity of the transportation between

American ports. This rule applies to any small amount of similar

equipment that was laden for use but was not in fact needed

during the operation of the vessel.

While the use of cable in connection with the operation of a

cable-laying vessel does not violate the coastwise laws, the

transportation and landing of cable that was not placed on the

vessel to be used in a cable-laying operation, other than cable

retrieved to be repaired, at a port in the United States other

than at the port at which the cable was laden aboard the vessel

constitutes a violation of 46 U.S.C. App. 883.

Accordingly, the transportation of cable from Newington, New

Hampshire (the point of lading) to Honolulu, Hawaii (the point of

unlading) by the C.S. LONG LINES (a non-coastwise-qualified

vessel) constitutes a violation of 46 U.S.C. App. 883 in view of

the fact that it was not laden for use on board that particular

vessel. The transportation is merely a movement of merchandise

between two coastwise points not in furtherance of the primary

mission of the vessel so transporting (i.e., cable-laying). The

fact that AT&T is providing its services free of charge is

irrelevant. We emphasize that a violation of section 883 occurs

in both alternatives presented (either when the unlading is to an

onshore storage facility in Hawaii or directly onto the C.S.

BROWN located within U.S, territorial waters).

Counsel cites three prior Customs rulings in support of his

position to permit the operation described above. All three

rulings are distinguishable from the case now under

consideration. In ruling 103217 we held that no violation of

section 883 occurs when repair cable is laden at a coastwise

point on a cable-laying and repair vessel not qualified to engage

in the coastwise trade, carried on the vessel for a substantial

period as part of its cable repair inventory, and offladen at a

second coastwise point. In that particular case the cable in

question was aboard the vessel under consideration for

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approximately 3 years, a period deemed sufficient to break the

continuity of the transportation between coastwise points. In

rulings 108985 and 105644 we held that a small percentage of the

total amount of cable laded aboard a non-coastwise-qualified

cable-laying and repair vessel and unladed at a second coastwise

point did not constitute a violation of section 883 in view of

the fact that such cable was laded in anticipation of actual need

and treated at the time of unlading as equipment of the vessel

doing the transporting in question.

In all three of the cases cited above by counsel, the cable

in question was originally laded aboard the particular vessels in

anticipation of actual need of the vessels in order to further

their primary mission of cable-laying and repair. In the case

now under consideration, the lading of cable aboard the C.S. LONG

LINES is not in furtherance of its primary mission as a cable

laying and repair vessel. The sole purpose of the lading is to

transport merchandise between two different coastwise points, a

violation of section 883.

We recognize that the proposed use of the C.S. LONG LINES

appears to be indirectly related to Project Hugo. Although the

Customs Service has ruled that the use of a vessel in

oceanographic research and survey, or teaching courses such as

oceanography is not coastwise trade, the C.S. LONG LINES is not

itself being used for that purpose. Accordingly, the exemption

from the coastwise laws recognized by Customs in this area does

not apply.

You request, as an alternative to a ruling permitting this

transportation, a waiver of the coastwise laws. Other than

legislation enacted by Congress to explicitly exempt a particular

vessel from the application of the navigation laws, the only

other waiver authority is that contained in the Act of

December 27, 1950 (64 Stat. 1120), under which the navigation

laws may be waived by the Secretary of the Treasury in the

interest of national defense. This Act, among other things,

directs the granting of a waiver upon the request of the

Secretary of the Defense and permits such a waiver upon the

written recommendation of the head of any other United States

Government agency.

Although we are not of the opinion that the proposed use of

the C.S. LONG LINES would justify a waiver of section 883, should

you wish to pursue this matter further we suggest you direct your

request to the following:

The Honorable

Jack Katzen

Assistant Secretary of Defense (P&L)

Pentagon, Room 3E808

Washington, D.C. 20301-8000

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HOLDING:

The carriage of cable by a foreign-built cable-laying and

repair vessel from its point of lading in the United States to a

second point in the United States where it will be either

temporarily unladed into an onshore storage depot or unladed

directly onto another foreign-built cable-laying and repair

vessel located within U.S. territorial waters which will

subsequently install the cable constitutes a violation of 46

U.S.C. App. 883 in view of the fact that the cable was not laded

for the purpose of furthering the primary mission of the

transporting vessel but merely for the transportation of such

cable between coastwise points.

Sincerely,

B. James Fritz

Chief

Carrier Rulings Branch