By Gordon W. Prince, Esq. Whether you are selling a business as you prepare for…
Maritime Law Update for Vessels with Components Fabricated Overseas
The following was first published by The Maritime Executive, the largest business journal in the maritime industry, reaching 127 countries. Gawthrop Greenwood partner Sandy Knapp is a Maritime Executive author.
Fast on the heels of our August 17th article on vessels with foreign-built components, the U.S. Coast Guard has issued another letter ruling on the issue.
The new case involves a fish processor vessel named America’s Finest under construction in the state of Washington. Certain “cold-formed” steel plates were already installed as part of the hull and the cold-forming process was conducted overseas. A U.S. shipyard requested coastwise and fisheries trade status for the vessel, and was just denied by the U.S. Coast Guard.
The U.S. Coast Guard regulatory limitation provides that only 1.5 percent of a vessel’s steel weight may consist of foreign fabricated components. Steel plates sourced overseas but not “fabricated” overseas may be used without such a limitation. But in this case, the U.S. Coast Guard relied on precedent and numerous past determinations that “cold-forming” is considered fabrication of steel and is therefore subject to the 1.5 percent standard. The foreign fabricated steel weight in this case exceeds 1.5 percent.
America’s Finest is, therefore, not eligible for coastwise or fisheries trade status under the U.S. Coast Guard regulations and interpretation. The U.S. shipyard in this case is also seeking a waiver of U.S. build requirements through a legislative process, and will presumably continue to pursue it.
For more information, contact Sandra L. Knapp of Gawthrop Greenwood’s Maritime Law Department at firstname.lastname@example.org or 610-696-8225.