HQ 0109765 - Applicability of the coastwise laws to proposed passenger vessel movements between the Federated States of Micronesia and Guam - United States International Trade Commision Rulings

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HQ 109765

October 6, 1988

VES-3/VES3-02-CO:R:P:C 109765 KMF

CATEGORY: CARRIER

Passenger Ship Project Department
Tsuneishi Shipbuilding Co., Ltd.
1083 Tsuneishi, Numakuma, Hiroshima Pref. Japan Postal Code 720-03

ATTN: A. Kurimoto

RE: Applicability of the coastwise laws to proposed passenger vessel movements between the Federated States of Micronesia and Guam

GENTLEMEN:

Reference is made to your telex of September 22, 1988, in which you request a ruling on whether United States laws permit a Japanese Shipping Company to conduct the tour described below.

FACTS:

You state that as part of an air/cruise program tour to begin and terminate in Japan passengers would be flown from Japan to Guam. At Guam they would board a foreign-built and flagged passenger ship for a six-day island tour of Micronesia with calls at Ulithi Atoll and Woleai Atoll of the Federated States of Micronesia. The vessel in question would be flagged under Panama. The cruise portion of the tour would terminate at Guam, and the passengers would then be flown back to Japan.

ISSUE:

Whether the coastwise passenger statute prohibits the transportation of passengers in a foreign-flagged vessel from Guam to Ulithi Atoll and Wolleai Atoll in the Federated States of Micronesia and back to Guam.

LAW AND ANALYSIS:

Generally speaking, the coastwise laws (46 U.S.C. App. 289 and 883, and 46 U.S.C. 12106 and 12110) prohibit the
transportation of pasengers between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. Pursuant to 46 U.S.C. App. 877, the coastwise laws are made applicable to Guam, although under 46 U.S.C. 12102, a vessel documented with a United States registry may be employed in trade with Guam.

In interpreting the coastwise laws as applied to the transportation of passengers, the Customs Service has ruled that the carriage of passengers entirely within territorial waters, even though the passengers disembark at their point of embarkation and the vessel touches no other point, is considered coastwise trade subject to the coastwise laws. The transportation of passengers solely to foreign locations and back to the point of embarkation is not considered coastwise trade. (See generally 19 C.F.R. 4.80a (1988)). The territorial waters of the United States consist of the territorial sea, defined as the belt, 3 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline. This definition also applies to the waters adjacent to Guam.

Application of United States law to the Federated States of Micronesia is governed by Article VII of the Compact of Free Association between the United States and the governments of the Marshall Islands and the Federated States of Micronesia (Compact), as approved in the Compact of Free Association Act of 1985. Pub. L. 99-239 (Jan. 14, 1986), 99 Stat. 1770, as amended Pub. L. 99-396, Section 20(a) (Aug. 27, 1986), 100 Stat. 844, Pub. L. 99-658, Title I, Sections 103, 104 (c), 100 Stat. 3675, 3676, cited at note following 48 U.S.C. 1681.

Pursuant to section 171 of the Compact, "[e]xcept as provided in this Compact or its related agreements, the application of the laws of the United States to the Trust Territory of the Pacific Islands by virtue of the Trusteeship Agreement ceases with respect to the Marshall Islands and the Federated States of Micronesia as of the effective date of this Compact."

The Compact makes no provision for the application of United States coastwise laws to the Federated States of Micronesia. We are aware of no agreement extending the coastwise laws of the United States to the members of that Compact. By proclamation 5564, appearing in the Federal Register of November 7, 1986 (51 Fed. Reg. 40,399 (1986)), the President declared that as of November 3, 1986, the Federated States of Micronesia are "self-governing and no longer subject to the Trusteeship," and that the Compact of Free Association is in effect. Because the proposed tour will embark from an American port, Guam, with stops
solely in foreign ports, Ulithi Atoll and Wolleai Atoll, with return to the port of embarkation, Guam, it is not considered coastwise trade.

HOLDING:

Accordingly, in response to your specific inquiry, and in consideration of the foregoing facts, law, and analysis, the proposed transportation of passengers from Guam to Ulithi Atoll and to Wolleai Atoll in the Federated States of Micronesia, with return to Guam, may be accomplished with the use of a foreign- flagged vessel without violating 46 U.S.C. App. 289.

Sincerely,

B. James Fritz

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