HQ 111987: Applicability of the third proviso of 46 U.S.C. App. 883

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 111987

                        December 2, 1991



VES-3-17-CO:R:IT:C 111987 MLR

CATEGORY:  Carriers

Vince Addington
Alaska Maritime Agencies, Inc.
Suite 315
300 Elliott Avenue West
Seattle, Washington  98119-4151

RE:  Applicability of the third proviso of 46 U.S.C. App. 883

Dear Mr. Addington:

     This is in response to your letter of November 11, 1991,
concerning the applicability of the coastwise merchandise law to
the proposed transportation of ore concentrate by foreign-flag
vessel from Alaska to Vancouver B.C. and then by rail from
Vancouver B.C. to Montana.

FACTS:

     The proposed transportation involves shipping ore
concentrates by a vessel which is not built in and documented
under the laws of the United States and owned by United States
citizens (i.e., a non-coastwise-qualified vessel), from Hawke
Inlet, Alaska, U.S.A., to Vancouver B.C.  The ore will then be
transferred onto rail cars and moved to Montana, U.S.A.

ISSUE:

     Whether, by virtue of the third proviso to 46 U.S.C. App.
883, merchandise may be transported from a point in Alaska to a
point within the continental United States, accomplished in part
by the service of a non-coastwise-qualified vessel and in part by
rail transport in Canada.

LAW AND ANALYSIS:

     Title 46, United States Code Appendix, section 883 (46
U.S.C. App. 883, the coastwise merchandise statute, 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 ....

     One exception to the prohibition in section 883 against the
transportation of merchandise between coastwise points is
contained in the third proviso.  It provides:

          [T]his section shall not apply to merchandise
          transported between points within the continental
          United States, including Alaska, over through routes
          heretofore or hereafter recognized by the Interstate
          Commerce Commission [I.C.C.] for which route rate
          tariffs have been or shall hereafter be filed with said
          Commission when such routes are in part over Canadian
          rail lines and their own or other connecting water
          facilities...

     Simply stated, section 883 would not prohibit the
transportation of merchandise if all the conditions to the third
proviso are met, that is:

     a) through routes, recognized by the I.C.C., are utilized;

     b) routes rate tariffs have been or shall hereafter be filed
     with the I.C.C., and have not subsequently been rejected for
     filing, have become effective according to their terms, and
     have not been subsequently suspended, or withdrawn by the
     Commission; and

     c) the routes utilized are in part over Canadian rail lines
     and their own or other connecting water facilities.

     The Customs Service has held that "over Canadian rail
lines" means over rail trackage in Canada and that "their own or
other connecting water facilities" means water facilities covered
by a through route whether or not those facilities connect
directly with the Canadian rail line covered by that through
route.  Customs Ruling Letter 105721 dated July 23, 1982.
Accordingly, the proposed service will qualify under the third
proviso and will not constitute a violation of the coastwise laws
of the United States provided the through route is recognized by
the I.C.C. as set forth in the preceding paragraph.

     For your information, if the I.C.C does not recognize the
through route or approve the route rate tariff, or if the
movement from Vancouver to Montana is by truck, the third proviso
would not apply and the transportation would be prohibited by
section 883.  Further, the Act of December 27, 1950 (64 Stat.
1120) provides that the navigation laws (such as section 883) may
only be waived when deemed necessary in the interest of national
defense.  A waiver of the provisions of the coastwise laws cannot
be issued solely for economic reasons.  In the absence of grounds
to invoke a waiver in the interest of national defense, the only
other method by which a waiver may be granted would be through
Congressional action.

HOLDING:

     Under the above-stated facts, the proposed transportation
would be permitted under the third proviso to 46 U.S.C. App. 883,
provided that all the requirements set forth above have been met.

                                   Sincerely,




                                   B. James Fritz
                                   Chief
                                   Carrier Rulings Branch