HQ 113365: Coastwise Trade; Third Proviso to 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 113365

                          March 10, 1995

VES-3-17-CO:R:IT:C 113365 GEV

CATEGORY: Carriers

Carl D. Cammarata, Esq.
Law Offices of George R. Tuttle
Three Embarcadero Center, Suite 1160
San Francisco, California 94111

RE: Coastwise Trade; Third Proviso to 46 U.S.C. App.  883

Dear Mr. Cammarata:

     This is in response to your letter dated March 7, 1995 (file reference no. 1861), on behalf
of your client, Kennecott Holdings Corporation ("Kennecott") requesting a ruling regarding the
applicability of the third proviso to 46 U.S.C. App.  883 to a proposed transportation of ore
concentrates.  The ruling you request is set forth below.

FACTS:

     Kennecott proposes to ship ore concentrates on non-coastwise-qualified vessels from
Hawke Inlet, Alaska to Vancouver Wharves, British Columbia, Canada where it will be
transferred onto rail cars and moved, at least in part, over Canadian rail lines en route to
Kennecott's customer's facilities in Montana.  The following documentation was submitted in
support of Kennecott's  ruling request: a copy of an interoffice memorandum dated February 8,
1995, from Burlington Northern Railroad to Kennecott advising that the route and published rates
are on file and approved by the Interstate Commerce Commission (ICC) and that the routing
utilizes Canadian rail lines (Exhibit 1); and a copy of a letter dated February 7, 1995, from the
Canadian company, CN North America, to Kennecott describing their connection with the
Canadian water facilities and routing through Canada on Canadian rail lines to connect with
Burlington Northern for delivery in Montana (Exhibit 2).
                              - 2 -

ISSUE:

     Whether the proposed transportation of ore concentrates between coastwise points,
accomplished in part by  non-coastwise-qualified vessels, is in compliance with the third proviso
to 46 U.S.C. App.  883.

LAW AND ANALYSIS:

     Title 46, United States Code Appendix,  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...

     The third proviso to 46 U.S.C. App.  883 provides that:

          [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 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 to the third proviso are met, that is:

     a)  through routes are utilized which have hereto or are hereafter recognized 
          by the I.C.C.
                              - 3 -

     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.

     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 regardless of whether those facilities connect directly with the Canadian rail line
covered by that through route.  

     Upon reviewing the documentation submitted it is readily apparent that the proposed
service is in accord with the third proviso to 46 U.S.C. App.  883.  Accordingly, Kennecott's use
of non-coastwise-qualified vessels in the transportation of ore concentrates as discussed above
will not constitute a violation of the coastwise merchandise law.

HOLDING:

     The proposed transportation of ore concentrates, accomplished in part by non-coastwise-qualified vessels, is in compliance with the third proviso to 46 U.S.C. App.  883.

                              Sincerely,




                              Arthur P. Schifflin
                              Chief
                              Carrier Rulings Branch