HQ 226964: Towing; Distress; Continuous Tow; Foreign-flag tug; 46U.S.C. App. 316(a)

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 226964

                           May 17, 1996

VES-10-03-RR:IT:EC 226964 GEV

CATEGORY: Carriers

Edward L. Merrigan, Esq.
Jones, Walker, Waechter, Poitevent, 
  CarrŠre & DenŠgre, L.L.P.
Suite 245, Republic Place
1776 Eye Street, N.W.
Washington, D.C. 20006

RE:  Towing; Distress; Continuous Tow; Foreign-flag tug; 46
U.S.C. App.  316(a) 

Dear Mr. Merrigan:

     This is in response to your letters dated May 13 and 14,
1996, and your telefax memoranda of May 15 and 17, 1996, on
behalf of your client, Waterman Steamship Corporation
("Waterman") regarding the use of a foreign-flag tug in towing
the ROBERT E. LEE to a U.S. drydock facility for repairs.  Our
ruling on this matter is set forth below.

FACTS:

     On May 8, 1996, at approximately 3:00 a.m., when the ROBERT
E. LEE was in the Atlantic Ocean approximately 90 miles off
Charleston, South Carolina, en route to Morehead City, North
Carolina, the vessel suddenly lost all operating power and was
unable to proceed.  At the time, the vessel was carrying 75 LASH
barges loaded with approximately 23,600 long tons of cargo, and
was scheduled to stop in Morehead City to pick up 13 additional
LASH barges containing approximately 2,200 long tons of cargo
prior to departing for foreign.

     Subsequent to the subject vessel's loss of power, it dropped
its anchors and a dive boat was summoned to determine the cause
of this occurrence.  Divers from the dive boat discovered that
the vessel's shaft bolts had been sheared resulting in the
inability to generate propulsion.  In view of the fact that the
vessel was rendered "dead in the water" in the open Atlantic,
Waterman officials were notified of the incident and immediately
began to contact towage companies in order to procure the
services of an ocean going tug capable of towing the disabled
vessel to a drydock facility for repairs.  Waterman subsequently
determined that there were no suitable 

                              - 2 -

coastwise-qualified tugs available to render such services and
that the only available tug capable of performing the tow in
question was the SOLANO, a Panamanian-flag vessel owned and
operated by International Transport Contractors Management B.V. 
Waterman also determined that the nearest available drydock
facility capable of repairing the ROBERT E. LEE was GMD Shipyard
in Brooklyn, New York.

     Upon obtaining the services of the SOLANO, Waterman directed
that the tug tow the ROBERT E. LEE from its position in the
Atlantic to Morehead City to off-load its LASH barges which were
to be loaded upon a different Waterman vessel for subsequent
foreign delivery.  The tug was then to tow the ROBERT E. LEE,
without cargo, to the GMD Shipyard for repairs.  Upon arriving at
Morehead City at approximately 11:30 p.m. on Sunday, May 12,
1996, the cargo was off-loaded.  The vessels remained at that
location with their towing lines connected until Thursday, May
16, 1996, when the SOLANO proceeded to tow the ROBERT E. LEE to
anchorage just offshore of Morehead City (at the Pilot House
location) pending the final resolution of the legality of the tow
to Brooklyn.

     In response to Customs request for documentation supporting
Waterman's request to allow the SOLANO to tow the ROBERT E. LEE
to the GMD Shipyard, the following has been submitted: an
affidavit of Ronald R. Rose, Senior Vice President, Operations,
Waterman Steamship Corporation, dated May 14, 1996; copies of the
log of the ROBERT E. LEE from May 8 and 9, 1996 (Exhibits A-1, A-2); a copy of a U.S. Coast Guard Report of Vessel Casualty or
Accident (CG-2692) (Exhibit A-3); an affidavit of W. M. Harrison,
Fleet Manager, LASH Marine Services, Inc., Agent for Waterman
Steamship Corporation, dated May 14, 1996; a memorandum from John
Vickers, Nautical Department, The Salvage Association, to
Waterman, dated May 14, 1996 (Exhibit B); a telefax memorandum
from Waterman's counsel to Customs, dated May 14, 1996; a telefax
memorandum from Waterman's counsel to Customs, dated May 15,
1996, transmitting a letter from Ronald R. Rose, Senior Vice
President, Operations, Waterman Steamship Corporation, dated May
15, 1996; a fax from the owners of the SOLANO, dated May 11,
1996, to Mr. Hugo Hansen; a fax from Ronald R. Rose, Senior Vice
President, Operations, Waterman Steamship Corporation, to the
ROBERT E. LEE, dated May 8, 1996; a letter from Robert T.
Chambers, Manager, East Coast Operations, Waterman Steamship
Corporation, to Customs, dated May 15, 1996; a telefax from
Waterman's counsel to Customs, dated May 15, 1996, transmitting a
fax from the owners of the SOLANO to Waterman, dated May 8, 1996;
a fax from Ronald R. Rose, Senior Vice President, Operations,
Waterman Steamship Corporation, to NFA Rotterdam NL-TX, dated May
8, 1996; a fax from HFH-NFA/Rotterdam to RRR-WSC/NOLA, dated May
11, 1996; and a fax from the owners of the SOLANO to Waterman,
dated May 10, 1996, and a telefax memorandum from Waterman's
counsel to Customs, dated May 17, 1996.
                              - 3 -

ISSUE:

     Whether the tow of a disabled vessel by a foreign-flag tug
from a point beyond U.S. territorial waters to a coastwise point
where the disabled vessel's cargo is off-loaded, and then to a
different coastwise point where the disabled vessel will be
repaired, with the tow lines between the two vessels at all times
remaining connected, is prohibited by 46 U.S.C. App.  316(a).  

LAW AND ANALYSIS:

     Title 46, United States Code Appendix,  316(a) (46 U.S.C.
App.  316(a), the coastwise towing statute) prohibits the use of
any vessel not having in force a certificate of documentation
endorsed for the coastwise or Great Lakes trades (46 U.S.C.
12106, 12107, respectively) to tow any vessel other than a vessel
in distress, from any point or place embraced within the
coastwise laws of the United States to another such port or
place, either directly or by way of a foreign port or place, or
for any part of such towing.  

     Points embraced within the coastwise laws include all points
within the territorial waters of the United States, including
points within a harbor.  The territorial waters of the United
States consist of 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 coastline differ.  

     In Waterman's initial request of Monday, May 13, 1996,
counsel contended that the use of the SOLANO to tow the ROBERT E.
LEE from a point in the Atlantic Ocean beyond U.S. territorial
waters where it became disabled to Morehead City for the off-loading of it's cargo, and then to Brooklyn for repairs is not in
contravention of the above-referenced statute for the following
three reasons: (1) the ROBERT E. LEE suffered a total loss of its
propulsion system and therefore was in "distress" within the
meaning of the statute; (2) there was no drydock in Morehead City
capable of doing the repairs needed; and (2) there was no
suitable coastwise-qualified tug available.

     In regard to the first of the three above-referenced
contentions, we note that the legislative history of 46 U.S.C.
App.  316(a) is devoid of language which might be helpful in
defining "distress" for purposes of its administration.  Thereby
invested with discretion to define the term administratively in
such fashion as best to give full effect to the intent of the
statute, Customs has done so by:

          ...[defining] distress situations as those in which
immediate aid is
          necessary to prevent injury to persons or to prevent
substantial
          loss of property.  (Emphasis added)  

(Customs Ruling Letter 109631, dated July 19, 1988, citing
Customs Ruling Letter 102965, dated August 5, 1977)

                              - 4 -

     The above interpretation by Customs is in accord with the
commonly accepted definition of "distress" in the context of the
maritime arena as set forth below:

          A term used when a ship requires immediate assistance
from 
          unlooked for damage or danger, such as important
breakdown,
          lack of food, or any accident. (Emphasis added)

(International Maritime Dictionary, DeKerchove, 2d Edition, p.
226)

     As applied to the facts currently under consideration, with
respect to the first of the three reasons proffered for allowing
the tow in question, we concur that the ROBERT E. LEE was in
"distress" within the meaning of 46 U.S.C. App.  316(a) when it
became disabled in the Atlantic Ocean and that it remained so
until it arrived under tow in Morehead City and was berthed.  At
that time, the vessel ceased to be in distress in view of the
fact that the requisite immediacy for such a condition to exist
as specified in the above definitions was no longer present. 
Consequently, the towing of the ROBERT E. LEE by the SOLANO from
Morehead City to Brooklyn would not be pursuant to the "distress"
provision set forth in 46 U.S.C. App.  316(a).

     Counsel cites to Customs Ruling Letter 110977, dated July
11, 1990, which addressed the proposed use of a foreign-flag tug
to provide towing services from points originating in Canadian
waters and terminating at United States refinery sites in the
State of Washington.  Counsel cites to p. 3 the ruling which
provides, in pertinent part:

          "...we find that the towing of vessels in U.S. waters
when they are
          disabled due to engine failure is considered an aid to
a distressed
          vessel.  The statute (section 316(a)) permits the
towing by a foreign-
          flag vessel in U.S. waters of a vessel in distress."

     Counsel misinterprets the above statement as Customs
considering a disabled vessel's "distress" for purposes of 46
U.S.C. App.  316(a) to continue indefinitely until it is finally
repaired notwithstanding the fact that safe harbor was reached in
the interim.  As discussed above, a non-coastwise-qualified tug
may tow a distressed vessel in U.S. territorial waters until such
time as the condition of distress has ceased.    

     In regard to counsel's remaining two contentions that the
proposed tow by the SOLANO is in accord with 46 U.S.C. App. 
316(a) (i.e., non-availability of both a capable drydock and a
suitable coastwise-qualified tug), both are irrelevant in view of
the fact that the aforementioned statute it devoid of any
language exempting a non-coastwise-qualified tug from the
restrictions therein based on those two factors. 
Parenthetically, however, we note that notwithstanding counsel's
assertions to the contrary, the U.S. Maritime Administration has
informed us that three coastwise-qualified tugs are capable of
towing the ROBERT E. LEE from Morehead City to Brooklyn.  
          

                              - 5 -

     By counsel's telefax memorandum of Wednesday, May 15, 1996,
a new argument was offered in support of Waterman's proposal.  It
was contended that the SOLANO is engaged in a continuous tow
which commenced at the point outside U.S. territorial waters in
the Atlantic where the tow lines were originally attached to the
ROBERT E. LEE, proceeded to Morehead City where the tow lines
between the two vessels at all times remained connected, and will
ultimately end at the GMD Shipyard in Brooklyn.  In support of
this position, counsel cites Customs Ruling 113092, dated
December 6, 1994, which addressed the towing of a Canadian barge
by a Canadian-flag tug between two coastwise points.  Counsel
cites to p. 2 of that ruling which provides, in pertinent part:

          "In the matter under consideration, the initial tow
would begin in 
          Canada, proceed to a shore point in the United States
where certain
          materials would be laded aboard the barge and continue
to a point in 
          the United States waters where the barge would be
anchored.  Up to
          that point no violation would have occurred, because
even though
          the tow stopped at a U.S. point to load materials and
then proceeded
          to a second U.S. point, the vessels remain connected
and the tow
          remained continuous from the Canadian point of origin."

     Customs has previously had occasion to consider instances
where a tow by a foreign tug began at a foreign location and
touched at one or more United States ports before ending at a
United States port.  In this regard we note that Customs has
interpreted 46 U.S.C. App.  316(a) in concert with 46 U.S.C.
App.  883 (the coastwise merchandise statute known as the "Jones
Act" which prohibits merchandise loaded at one United States port
aboard a non-coastwise-qualified vessel from being transported to
another United States port and off-loaded).  Consequently, it is
Customs position that 46 U.S.C. App.  316(a) would not prohibit
the continuous towing by the same foreign (or otherwise non-coastwise-qualified) tug of a vessel engaged solely in foreign
trade on a voyage from a foreign port to a United States port or
ports merely because both tug and tow stop at other United States
ports to load export cargo or unload import cargo.  (Customs
Ruling Letters 101071, dated June 11, 1974, 103632, dated
September 13, 1978, and 108596, dated September 23, 1996, citing
Treasury Decision (T.D.) 70-223(19))

     In regard to the case under consideration, the following
facts are undisputed: (1) the tow in question commenced at a non-coastwise-point (i.e., a location approximately 90 miles off the
coast of Charleston, South Carolina); and (2) once in Morehead
City, the tow lines of the SOLANO at all times remained connected
to the ROBERT E. LEE (certified as so by Robert T. Chambers,
Waterman's Manager of East Coast Operations, in his letter of May
15, 1996, and confirmed by Customs officials in Morehead City). 
Furthermore, on Thursday, May 17, 1996, the SOLANO proceeded to
tow the ROBERT E. LEE to anchorage offshore of Morehead City (at
the Pilot House location) pending final resolution of this
matter.  In addition, upon reviewing the documentation exchanged
between Waterman and the owners of the SOLANO in procuring the                               - 6 -

services of the subject tug, it is readily apparent that Morehead
City is not the final destination of the tow, a fact confirmed by
the ROBERT E. LEE both remaining at its berth and being towed to
the aforementioned anchorage in the same state of disrepair
incurred in the Atlantic.

     Accordingly, it is Customs position that the facts and
evidence presented indicate that the tow by the subject tug is in
fact a continuous tow which originated at a non-coastwise point
beyond U.S. territorial waters in the Atlantic, touched at an
intervening coastwise point (Morehead City) for the purpose of
off-loading export cargo to be delivered foreign by another
vessel, and will proceed to another coastwise point (Brooklyn)
where the disabled vessel will enter a drydock for repairs and
the tow will be disconnected.  Such a continuous tow does not
give rise to a violation of 46 U.S.C. App.  316(a).  Pursuant to
T.D. 70-223(19), this interpretation of the aforementioned
statute is in accord with Customs position of construing it
consistently with 46 U.S.C. App.  883 inasmuch as the
application of the latter to similar facts would not result in
its being violated (i.e., a foreign-flag vessel transporting
merchandise loaded at a foreign location, proceeding to a
coastwise point to off-load the merchandise, not loading any new
merchandise at that point, and then proceeding in ballast to a
second coastwise point where it entered a drydock for repairs,
would not result in a violation of 46 U.S.C. App.  883).

HOLDING:

     The tow of a disabled vessel by a foreign-flag tug from a
point beyond U.S. territorial waters to a coastwise point where
the disabled vessel's cargo is off-loaded, and then to a
different coastwise point where the disabled vessel will be
repaired, with the tow lines between the two vessels at all times
remaining connected, is not prohibited by 46 U.S.C. App. 
316(a).  

                              Sincerely,




                              William G. Rosoff
                              Chief
                              Entry and Carrier Rulings Branch