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HQ 227121

October 8, 1996

VES-3-24-RR:IT:EC 227121 GEV


Ray Meyer
Clean Channel Association
111 East Loop North, Room 270
Houston, Texas 77029

RE: Coastwise Trade; Oil Skimming; Foreign-built vessel; Less than 5 net tons; Rebuilt in U.S.; 46 U.S.C. App. ? 883

Dear Mr. Meyer:

This is in response to your letter dated July 27, 1996, with attachments, requesting a ruling that the foreign-built, 19' work boat your company recently purchased be considered built in the United States for purposes of the coastwise laws. Your letter is in furtherance of your prior letter to us dated March 28, 1996, and provides additional information regarding this matter in response to our correspondence to you dated June 25, 1996.


The vessel in question is a foreign-built, 19' work boat with a LORI oil skimming system and one cubic meter of storage capacity. It was purchased from Hyde Products Inc., of Cleveland, Ohio, for $2,500. Clean Channel Corporation proposes to have the vessel modified at Empire Boat Works in Mont Belvieu, Texas, as follows:

1) Just forward of the forward engine compartment bulkhead, cut boat into two pieces. Weld approximately 6.5' of new marine grade aluminum with reinforced longitudinal members to strengthen the hull. All aluminum areas will be prepared using proper aluminum welding procedures.

2) Reposition the superstructure or control station, consisting of steering console, which will house steering components, motor controls, horn, electrical panel and fire extinguisher, to a position to achieve proper water line to gunwale height. This will require all hydraulic hose and engine control cables to be replaced or lengthened.

3) Fabricate storage compartment for approximately 20 barrels or 840 gallons of oil/water mix. This compartment will be located just forward of the engine compartment in the newly-lengthened hull area. Install towing hitch for oil spill containment boom towing.

4) The permanent fuel system and engine compartment consisting of tanks, hoses, fills and vents will be modified to ensure safety and compliance with state and federal laws as required.

5) The marine electrical system consisting of marine batteries, wiring, switches, gauges, panel, navigation lights, blower, etc., will be modified to conform to current standards, if required. Additional deck lighting will be added for night operation.

6) Radio equipment, both VHF marine and VHF spill response, U.S.-built radios and antennas will be installed. Other safety equipment will be installed.

The approximate cost of the above work is as follows:

Modification to hull and fabrication of storage compartment $6,940
Radio equipment $1,162
Safety/Electrical equipment $3,092
Reposition superstructure and steering controls $1,800

The following documentation was submitted in support of the requested ruling:

Attachments 1(a) & (b) - Sketches of the vessel Attachment 2 - Photos
Attachment 3 - Hyde Products invoice
Attachment 4 - NADA price sheets
Attachment 5 - Hyde Products LORI proposal Attachment 6 - Empire Boat Works price quote Attachment 7 - Able Communications price quote Attachment 8 - Safety/Electrical Equipment


Whether the above-described work done in the United States to the subject foreign-built vessel is sufficient for it to be considered to be built in the United States for purposes of the coastwise laws.


The coastwise law pertaining to the transportation of merchandise, ? 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, in pertinent part, 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...
(Emphasis added)

The coastwise laws generally apply to points in the territorial sea, defined as the belt, three 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 term "merchandise" as used in ? 883 includes valueless material (see amendment to ? 883 by the Act of June 7, 1988, Pub.L. 100-329; 102 Stat. 588). Furthermore, the statute provides that the prohibitions set forth therein apply to the transportation of "valueless material or any dredged material regardless of whether it has commercial value, from a point or place in the United States or a 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]." Id. The March 10, 1983, Presidential Proclamation defined the EEZ as a zone contiguous to the territorial sea extending to a distance 200 nautical miles from the territorial sea baseline.

From the above statutory framework, the Customs Service has concluded that the removal of surface oil by skimming constitutes a lading of merchandise (see Headquarters Ruling 111420, dated June 17, 1991). The deposit of the skimmed oil at a point other than which it is laded would constitute an unlading of merchandise. The merchandise coastwise law (46 U.S.C. App. (i.e., one that is not U.S.-built, owned and documented) for such recovery and transportation of oil in waters within its jurisdiction as discussed above (see Headquarters Ruling 110386, dated September 29, 1989).

However, vessels which, although originally built abroad, have been modified or rebuilt in the United States, may be considered built in the United States for purposes of the coastwise laws. Whether such work done to a vessel of 5 net tons or greater is sufficient for it to be
considered built in the United States is a determination of the USCG pursuant to ? 67.97, USCG Regulations (46 CFR ? 67.97) which provides as follows:

To be considered built in the United States a vessel must meet both of the following criteria:

(a) All major components of its hull and superstructure are fabricated in the United States; and

(b) The vessel is assembled entirely in the United States.

The Customs Service has adopted the above provisions as guidelines for its determinations of whether a vessel (such as the one under consideration), exempt from documentation because it is less than 5 net tons, may be considered built in the United States for purposes of the coastwise laws. (Customs Ruling Letters 110196, dated August 28, 1989, and 111674, dated July 12, 1991) Customs considers the alterations and modifications done to the hull and fittings and superstructure of the vessel in the United States the crucial factor in making its determination as to whether a foreign-built vessel was rebuilt in the United States. (Customs Ruling Letter 109050, dated November 4, 1987) In addition, Customs also takes into account the value added to the vessel in the United States. (Customs Ruling Letter 108906, dated June 5, 1987, copy enclosed)

With respect to the proposed work under consideration, we note as follows. Attachment 8 covering safety/electrical equipment is not an invoice or price quote from a vendor but rather is a mere listing of various items and prices without indication as to who prepared it. Furthermore, not only is most of the safety equipment listed thereon irrelevant for purposes of determining whether the subject vessel was rebuilt in the United States (e.g., first aid kit, life vests, etc.), the electrical equipment listed may not ultimately be purchased in view of the statement on the attachment that such purchases will only be made "if required." In addition, the record is devoid of documentation to substantiate the $1800 claimed as the cost to reposition the superstructure and steering controls since it is stated to be a "phone estimate per Empire Boatworks."

However, in regard to the remainder of the work in question, the modification to the hull and fittings (the most crucial factor to be considered) will result in the vessel's length being increased by approximately 1/3 of its current length. In addition, its storage capacity will be increased from one cubic meter to approximately 840 gallons. Both of these work items alone will cost $6940.00 (see Attachment A), more than twice the cost of the boat ($2500.00). In addition, the cost of the new radio equipment purchased ($1162) will increase the value added to the vessel to $8102.00.

Accordingly, in view of the modification to the hull and fittings of the vessel as described above, and the value added to the vessel, we find the proposed work to be sufficient for the vessel to be considered built in the United States for purposes of the coastwise laws.


The above-described work done in the United States to the subject foreign-built vessel is sufficient for it to be considered to be built in the United States for purposes of the coastwise laws.



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