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HQ 115613





March 6, 2002

VES-3-24-RR:IT:EC 115613

CATEGORY: CARRIER

Randy Barrie
President
1000 Island Hovercraft Tours Inc.
1188 Mallorytown, Ontario, Canada K0E 1R0

RE: Coastwise Trade; Hovercraft; 46 U.S.C. App. §§ 289, 883

Dear Mr. Barrie:

This is in response to your letter dated February 27, 2002, requesting a ruling regarding the use of a Canadian-built hovercraft. Our ruling on this matter is set forth below.

FACTS:

British Petroleum (Alaska) Inc. (BP) has a need for vessel transportation services for their Northstar Production Facility (Northstar) on the North Slope of Alaska. Northstar is an offshore oil field, encompassing about 60 square miles, located in the Alaskan Beaufort Sea. It is about 4 miles northwest of the Point McIntyre field and 6 miles from Prudhoe Bay. Northstar is an island to which personnel, supplies, drilling equipment and repair parts must be transported. You propose the use of your company’s Canadian-built hovercraft to accomplish this service.

ISSUE:

Whether the use of a Canadian-built hovercraft to transport passengers and merchandise as described above violates 46 U.S.C. App. § 289 and 883.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, § 289 (46 U.S.C. App. § 289) as interpreted by the Customs Service, prohibits the transportation of passengers between points in the United States embraced within the coastwise laws, either directly or by way of a foreign-port, in a non- coastwise-qualified vessel (i.e., any vessel that is not built in and documented under the laws of the United States, and owned by persons who are citizens of the United States).

Title 46, United States Code Appendix, § 883 (46 U.S.C. App. § 883, the merchandise coastwise law often called the “Jones Act”), provides, in 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 one that is coastwise-qualified.

In regard to the proposed use of your company’s hovercraft, it is readily apparent that such use would be an engagement in the coastwise trade. Consequently, since the vessel is not U.S.-built, such use would be prohibited by the above-referenced laws neither of which provides an exemption for a scenario such as this, including temporary usage to which you refer.

We note your statements that no company in the United States produces hovercraft of the size required by BP, and that your particular hovercraft does not qualify for an administrative waiver of the coastwise laws for small commercial passenger vessels pursuant to Title V of Public Law 105-383 (a statute administered by the Maritime Administration). Unfortunately, these factors do not obviate compliance with the provisions of the coastwise laws.

You should also know that the navigation laws (including 46 U.S.C. App. §§ 289 and 883) can only be waived under the authority provided by the Act of December 27, 1950 (64 Stat. 1120; note preceding 46 U.S.C. App. § 1). This statute provides that “[t]he head of each department or agency responsible for the administration of the navigation and vessel inspection laws is directed to waive compliance with such laws upon the request of the Secretary of Defense [and] [t]he head of such department or agency is authorized to waive compliance with such lawseither upon his own initiative or upon the written recommendation of the head of any government agency whenever he deems that such action is in the interest of national defense.”

With respect to the above-cited national defense criterion, the standard by which a waiver of the coastwise laws is reviewed by the Department of Defense is whether the failure to approve such a request results in an immediate and adverse impact to the national defense. It would appear from the facts contained within your letter that such a criterion could not be met at this time.

HOLDING:

The use of a Canadian-built hovercraft to transport passengers and merchandise as described above violates 46 U.S.C. App. § 289 and 883.

Sincerely,

Larry L. Burton

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