HQ 110103: Applicability of the third proviso of the coastwise merchandise statute to the movement of merchandise by rail and vessel from Texas, to a point on the outer continental shelf off Alaska.

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 110103


                           May 3, 1989



VES-3-17-CO:R:P:C 110103 LLB

CATEGORY: Carriers

Mr. R. F. Calnan
Commodity Tax Section
Gulf Canada Resources Limited
Post Office Box 130
Calsary, Alberta, Canada T2P 2H7

Re:  Applicability of the third proviso of the coastwise
     merchandise statute to the movement of merchandise by rail
     and vessel from Texas, to a point on the outer continental
     shelf off Alaska.

Dear Mr. Calnan:

     Reference is made to your letter of March 6, 1989, in which
you relate the proposed movement of U.S. manufactured oilfield
casing from a point in the continental United States, via rail
(Burlington Northern and Canadian National Railroad trackage) to
Canada, and thence via vessel to a wellhead on the outer
continental shelf off the coast of Alaska.  You seek a ruling on
the permissibility of such a movement under the terms of the
coastwise merchandise statute.

FACTS:

     Approximately two railcars full of 7-inch, U.S.-made
oilfield casing is proposed to be shipped from Lone Star, Texas.
The railcars will be Canadian National Railroad stock and will
proceed to Hay River, Northwest Territories, Canada, in part over
Burlington Northern trackage.  Routes rate tariffs will be filed
with the United States Interstate Commerce Commission by Canadian
National Railroad.  From Hay River, the casing would be
transferred to Canadian-operated barges for transportation via
the McKenzie River to Tuktoyaktuk, Northwest Territories.  Once
there, depending upon weather and ice conditions, the casing
would be transported either to Canadian trucks for further
transit via ice road, or to Canadian vessels bound for Herschel
Island, Yukon Territories.  At Herschel Island, the casing would
be loaded aboard the Canadian-registered beaudril drillship
"Kulduk" for transportation to the Belcher wellsite on the outer
continental shelf off the coast of Alaska.
                                2

ISSUE:

     Whether, by virtue of the third proviso to the coastwise
merchandise statute, oilwell casing materials may be transported
between two coastwise points, in part via non-coastwise-qualified
vessels.

LAW AND ANALYSIS:

     Title 46, United States Code App., 883, provides, in
pertinent part, that:

     No merchandise shall be transported by water, or by
     land and water, on penalty of forfeiture thereof,
     between points in the United States, including
     Districts, Territories, and possessions thereof
     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...

     Section 4(a) of the Outer Continental Shelf Lands Act of
1953, as amended (43 U.S.C. 1333(a)) (OCSLA), provides, in
pertinent part, that he laws of the U.S. are:

          ...extended to the subsoil and seabed of the outer
          continental shelf and to all artificial islands,
          and all installations and other devices
          permanently or temporarily attached to the seabed,
          which may be erected thereon for the purpose of
          exploring for, developing, or producing resources
          therefrom, or any such installation or other
          device (other than a ship or vessel) for the
          purpose of transporting such resources, to the
          same extent as if the outer continental shelf were
          an area of exclusive Federal jurisdiction located
          within a State...

Thus, it is the case that both the point of origin of the
transportation (Lone Star, Texas), as well as the terminus of the
transportation (Belcher wellsite, outer continental shelf) are
points within the contemplation of the coastwise merchandise law
(883).

     The third proviso to 27 of the Merchant Marine Act, 1920,
as amended (46 U.S.C. App. 883), provides:

          That this section shall not apply to
          merchandise transported between points within
                                3

          the continental United States, including
          Alaska, over through routes heretofore or
          hereafter recognized by the Interstate
          Commerce Commission for which routes 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, 883 would not prohibit the transportation of
merchandise if all of the conditions of the third proviso are
met, that is:

     a) through routes are utilized which have hereto or are
     hereafter recognized by the I.C.C.

     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.

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

     We have held that "over Canadian rail lines" means simply
over rail trackage in Canada, and that "their own or other
connecting water facilities" means water facilities covered by a
through route regardless of whether those facilities connect
directly with the Canadian rail line covered by that through
route.  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 Interstate Commerce Commission as set forth in
the preceding paragraph.

HOLDING:

     Under the above-stated facts, the proposed transportation
would be permitted under the third proviso to U.S.C. App. 883, so
long as the I.C.C. filing requirements set forth above have been
satisfied.

                              Sincerely,




                              B. James Fritz
                              Chief
                              Carrier Rulings Branch