Use of Foreign Vessels to Transport Petroleum from the

Virgin Islands to the United States Mainland

U nder the M erchant Marine Act of 1920, the President is authorized to extend the 

coastwise laws of the United States to the Virgin Islands, and thus mandate the use of 

U.S. vessels for transportation of passengers and merchandise from the Virgin Islands 

to the U.S. mainland.

There is a strong argument that the President is em pow ered to make the coastwise laws 

applicable to the Virgin Islands solely for the carriage of petroleum and petroleum 

products.

January 30, 1980

MEMORANDUM OPINION FOR TH E ASSISTANT TO THE 

PRESIDENT FOR DOMESTIC AFFAIRS AND POLICY

Several months ago, we were informally asked by your staff to 

consider whether the President can require the use of U.S. vessels to 

transport petroleum products from the Virgin Islands to the U.S. mainland. The question is whether the President has the authority to declare 

that the coastwise laws of the United States shall extend to the Virgin 

Islands solely for the carriage of petroleum and petroleum products. 

While we understand that the matter is not under active review at this 

time, we have been advised that the results of our research are nonetheless relevant to your staffs consideration of proposals that may be 

considered in the future.

In general, the coastwise laws require that passengers and merchandise be transported between points in the United States in vessels built 

in and documented under the laws of the United States and owned by 

citizens of the United States.1 46 U.S.C. §§ 289, 877, 883. They are 

intended “to provide protection for American shipping by excluding 

foreign shipping from performance of domestic maritime business.” 42 

Op. A tt’y Gen. 189, 196 (1963). At present the Virgin Islands are 

excepted from these coastwise laws. Therefore, petroleum refineries 

located in the Virgin Islands can transport petroleum products to 

United States ports on less expensive foreign vessels, thus enjoying a 

competitive advantage over refineries located on the U.S. mainland.

1 T here is no statutory definition o f coastwise laws but they are considered to refer to laws 

regulating the “coastwise trade," meaning domestic trade between ports in the United States. 42 Op. 

A tt’y Gen. 189, 192 (1963).

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We have had the benefit of separate letters prepared by the Commerce Department and the Maritime Administration expressing the 

view that the President has the authority to issue a proclamation 

making the coastwise laws applicable to petroleum.. Based on our 

review, we agree with that conclusion. However, the case that can be 

made for issuance of a proclamation involves significant legal problems. 

These should be considered in evaluating this course of action, since it 

is probable that the proclamation will be challenged in litigation.

At the outset it will be useful to describe the various laws that bear 

on this matter and how they came to be enacted. The exception from 

the coastwise laws for the Virgin Islands has a complicated history, 

resulting from the relationship of two spearate laws: The Merchant 

Marine Act of 1920 and the Organic Act of the Virgin Islands, enacted 

in 1936.

The Merchant Marine Act of 1920 extended the coastwise laws of 

the United States, as of February 1, 1922, to the “island Territories and 

possessions of the United States not covered thereby on June 5, 1920.” 

46 U.S.C. § 877. This language covered the Virgin Islands, but the Act 

provided for an exception, if “adequate shipping service”—both commercial and passenger—was not yet established for any island territory 

or possession. The President was given the authority to extend the 

period of exemption from the coastwise laws “for such time as may be 

necessary for the establishment of adequate shipping facilities.”

Between 1922 and 1936 every President acted, on a yearly basis, to 

exempt the Virgin Islands from the coverage of the coastwise laws.

H.R. Rep. No. 2281, 74th Cong., 2d Sess. 1 (1936). In 1936, the 

Merchant Marine Act of 1920 was amended by the addition of a 

specific exception for the Virgin Islands:

And provided further, That the coastwise laws of the 

United States shall not extend to the Virgin Islands of the 

United States until the President of the United States 

shall, by proclamation, declare that such coastwise laws 

shall extend to the Virgin Islands and fix a date for the 

going into effect of same.

46 U.S.C. § 877. The result of this added provision was no longer to 

require affirmative presidential action to continue the exemption, but 

rather to require that the exemption would remain in effect until the 

President takes action to terminate it.

The 1936 Virgin Islands proviso does not refer to the need for a 

finding by the President that “adequate shipping service” has been 

established before he could invoke the coastwise laws. The Senate had 

provided for such a requirement. The House Committee on Merchant 

Marine and Fisheries pointed out, however, that it had “no intention of 

weakening in any way the coastwise laws” and that “the establishment

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of an adequate shipping service to the islands might be prevented by 

the continued suspension of the coastwise laws.” The Committee noted 

that the President would be denied “sufficient flexibility” by the requirement in the Senate bill that there first be adequate shipping before 

restricting the Virgin Islands trade to American shipping. Thus, under 

the House proviso “the President would be authorized at any time, by 

proclamation, to declare that the coastwise laws should extend to the 

Virgin Islands and fix a date for the going into effect of the same.” 

(Emphasis added.) The language of the proviso was therefore viewed 

as a formula which would make reimposition of the coastwise laws 

more likely. H.R. Rep. No. 2281, 74th Cong., 2 Sess. 2 (1936).

It appears that the Executive Branch was motivated to support the 

bill for different reasons—the importance to the economy of the Virgin 

Islands of bunkering foreign vessels. Letter from Interior Secretary to 

House Committee on Merchant Marine and Fisheries, Jan. 9, 1935, 

reprinted in H.R. Rep. No. 2281, supra at 2-3.2 Although the House 

Committee took note of this fact, id. at 2, as a reason for supporting the 

bill it is apparent that the precise language adopted by the House and 

ultimately accepted by the Senate was motivated by a desire to grant 

the President discretion easily to extend the coastwise laws.3

About two months later, June 22, 1936, the same Congress passed the 

Organic Act of the Virgin Islands, which contained a provision relating 

to application of laws concerning navigation and commerce:

. . . except as otherwise expressly provided, all laws of 

the United States for the protection and improvement of 

the navigable waters of the United States and the preservation of the interest of navigation and commerce shall 

apply to the Virgin Islands.

49 Stat. 1808. It is not clear what effect this amendment had on 

application of the coastwise laws to the Virgin Islands. Repeals by 

implication are not favored, however, 1A Sutherland Statutory Construction §23.10 (Sands ed. 1972), and since the exemption from the coastwise laws was “expressly provided” for, it is fair to conclude that the 

Organic Act did not reimpose the coastwise laws. It hardly seems that 

Congress would have reversed a policy adopted only two months 

earlier without explaining that it. meant to do so.

It was feared, nevertheless, that the Organic Act would interfere 

with the shipping trade in the Virgin Islands because of other federal

2 Evidence of the same kind was collected in hearings held in 1932 on an earlier version of the 

legislation that did not pass. Relating to the Application o f the Coastwise Laws to the Virgin Islands.

Hearings on H.R. 10329 before the House Committee on Merchant Marine. Radio, and Fisheries. 72d 

Cong., 1st Sess. (1932).

3 T he Senate report relied on the Executive position, S. Rep. 1010, 74th Cong., 1st Sess. (1935), but, 

since Congress enacted the bill in the precise form recom m ended by the House, that report should be 

view ed as more authoritative. T he Senate concurred in the House amendment w ithout comment. 

80 Cong. Rec. 5069 (1936).

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laws which it imposed. In 1939 legislation was passed amending the 

Organic Act so that these laws were no longer applicable. Specific 

language expressly exempted the Virgin Islands from tonnage duties, 

light money, and entrance and clearance fees. 53 Stat. 1242, 48 U.S.C. 

§ 1405c(c). Moreover, the language in the Organic Act which had 

incorporated federal laws “for the preservation of the interest of navigation and commerce” was deleted. 53 Stat. 1242. Nothing in the 1939 

amendment made the coastwise laws specifically inapplicable, which 

would have been technically necessary if the Organic Act had been 

thought to have repealed the 1936 proviso to the Maritime Act. The 

President was, however, again authorized to make the coastwise laws 

applicable at a future time. 48 U.S.C. § I405c(d).4

Thus, as of 1939 there was one law making the coastwise laws 

inapplicable—the 1936 proviso to the Merchant Marine Act of 1920, 46 

U.S.C. § 877—but two which permitted the President to make them 

applicable, the same proviso and the 1939 amendment to the Organic 

Act, 48 U.S.C. § 1405c(d).

As of today, it seems that the Organic Act may no longer be relied 

on as authority to apply the coastwise laws. This is because the 1936 

Organic Act was replaced by a Revised Organic Act in 1954, which 

states:

The laws of the United States applicable to the Virgin 

Islands on July 22, 1954, including laws made applicable 

to the Virgin Islands by or pursuant to the provisions of 

the Act of June 22, 1936 . . . shall, to the extent they are 

not inconsistent with this chapter, continue in force and 

effect until otherwise provided by Congress. . . .

48 U.S.C. § 1574(c). This provision requires some interpretation as to 

what is meant by “laws made applicable” to the Virgin Islands by the 

1936 Organic Act. There is thus a question whether this provision 

effectively repealed § 1405c, or whether it, in fact, carried forward the 

President’s proclamation power. In the only case so far to address the 

issue of repeal, the Third Circuit said “[i]t . . . seems clear that the 

Revised Organic Act of 1954 operated to repeal the Organic Act of 

1936.” Virgo Corp. v.Paiewonsky, 384 F.2d 569, 578 (3d Cir. 1967), cert,

denied, 390 U.S. 1041 (1968).

4 T he reports on the 1939 amendment do not indicate that the coastwise laws had been imposed 

after 1936 or that the amendment was necessary to make them inapplicable. T hey state that the 

purpose of the amendment was to make inapplicable "Federal navigation and other laws" which 

prevent the Virgin Islands from com peting with other ports. S. Rep. No. 808, 76th Cong., 1st Sess. 1 

(1939); H.R. Rep. No. 1314, 76th Cong., 1st Sess. 1 (1939). This seems to be a reference not to the 

coastwise laws but to the various fees specifically covered by the amendment. T he fact that the 

coastwise laws had not been imposed is supported by the statement in the report that the bunkering 

business “may be adversely affected" unless the bill passed. (Emphasis added.) If they had been applied 

then the trade would have been largely eliminated.

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Nevertheless, the court also observed: “We find no indication in the 

Revised Organic Act that the Congress intended any part of the Act of 

1936 to remain in force after the Revised Organic Act took effect, 

except those provisions of the Act of 1936 which had made certain 

laws of the United States applicable to the Virgin Islands.” Id. at 576. 

Since the holding of the case did not involve these provisions, it is not 

clear whether a court would find that the President, under “applicable” 

law, could still issue a proclamation under the Organic Act or whether 

only Congress could do so.

The closest direct authority appears to be a footnote in an opinion of 

the Attorney General stating that the President could no longer amend 

Executive Order No. 9170 as a result of the passage of the Revised 

Organic Act. 42 Op. A tt’y Gen. 189, 190 n.2 (1963). As a result any 

attempt to use the old Organic Act as authority is clouded.5

This sketch of the tangled legislative history of these Acts strongly 

suggests that whatever authority there is for the President’s ending the 

exemption derives from the Merchant Marine Act of 1920. It leads to 

two further questions: (1) whether the President can apply only one of 

the coastwise laws, i.e., 46 U.S.C. § 877, relating to carriage of merchandise, to the exclusion of other coastwise laws; and (2) whether he 

can apply it to a particular type of vessel—oil tankers.

The language of the Merchant Marine Act does not answer the 

questions clearly. It states, 46 U.S.C. §877, “[t]hat the coastwise laws of 

the United States shall not extend to the Virgin Islands . . . until the 

President . . . shall . . . declare that such coastwise laws shall extend. . . .” The amended (and presumably repealed) Organic Act, 48 

U.S.C. § 1405c(d), stated: “the President shall have power to make 

applicable to the Virgin Islands such of the navigation, vessel inspection, and coastwise laws . . . as he may find and declare to be necessary in the public interest. . . .” The difference between the former 

(“such coastwise laws”) and the latter (“such of the . . . coastwise 

laws”) may be more than semantic: the latter seems to give the President the authority to apply “parts” of the coastwise laws, while the 

former does not as readily lend itself to this interpretation.

This alone should not be determinative. In deciding what Congress 

intended one should keep in mind that the “coastwise laws” are not a 

simply defined body of law but a traditional reference to a series of acts 

passed at different times for different reasons. For example, the Foreign 

Dredge Act, 46 U.S.C. §292, has been found by the Attorney General 

to be one of the coastwise laws. 42 Op. A tt’y Gen. 189 (1963). Since 46 

U.S.C. § 877 seems to be primarily concerned with adequate shipping

5 This also undercuts the argument made by both the Com m erce D epartm ent and the Maritime 

Adm inistration that Executive O rder No. 9170, M ay 21, 1942, serves as a precedent for selective 

Presidential action in this area. That order was based upon the language o f the old Organic Act. Even 

if this were not so, it is not at all clear that the order applied selective parts o f statutes. See 42 Op. 

A tt’y Gen., supra at 198-99.

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service, it would seem, for example, that the President might issue a 

proclamation relating to the coastwise laws as they related to shipping 

but not include the Foreign Dredge Act. It is our conclusion that the 

coastwise laws should not be considered indivisible but should be 

judged in light of congressional intent.

A more difficult question is whether the President could make the 

coastwise laws applicable only to oil tankers. Again, there is a strong 

argument that Congress sanctioned such action. When it enacted the 

Virgin Islands proviso in 1936, Congress was interested in giving the 

President “flexibility” in restoring the coastwise laws and authorized 

him to issue a proclamation “at any time.” H.R. Rep. No. 2281, 74th 

Cong., 2d Sess. 2 (1936). If the President were faced with a situation 

where there was a glut of domestic tanker capacity due to decreased 

shipments from abroad, but no prospect that any other type of domestic 

shipping would be adequate to meet the needs of the Virgin Islands, it 

may well be that Congress, in protecting the domestic fleet, would 

rather have the coastwise laws apply in limited fashion to oil tankers 

rather than not have it apply at all. This theory is untested, of course, 

and would be subject to judicial challenge, but we cannot say that it 

would be unsuccessful.6

We would be pleased to provide whatever further assistance you 

may require. In light of the complexity of this particular statutory 

structure, and given the probability of eventual litigation, it is apparent 

that careful consideration of any proposal is merited.

J o h n M . H a r m o n

Assistant Attorney General

Office o f Legal Counsel

6 A question may be raised as to w hether Congress may constitutionally delegate to the President 

flexibility o f the kind argued for here. This provision, how ever, is considerably narrow er in its scope 

than others permitting the President to determ ine the terms on w hich foreign and domestic com m erce 

may compete and which have been held to meet constitutional standards. United States v. Yoshida

International. Inc.. 526 F.2d 560, 582 (C.C.P.A. 1975); c f FEA v. Algonquin SNG. Inc., 426 U.S. 548, 

558 (1976); United States v. Curtiss-Wright Export Corp.. 299 U.S. 304, 320 (1936).

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