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HQ 109537


September 26, 1988

VES-4-01/VES-5-07 CO:R:P:C 109537 PH

CATEGORY: CARRIER

Mr. Thomas Mattina
District Director of Customs
77 Southeast 5th Street
Miami, Florida 33131

RE: Definition of the term "Licensed Yacht or Undocumented American Pleasure Vessel" for Purposes of 19 U.S.C. 1441(3) and 46 U.S.C. App. 91

Dear Mr. Mattina:

This is with reference to your memorandum of May 11, 1988 (Your Reference: VES-5-DD:I:S AKL), concerning the status of a state-numbered vessel owned and operated by a foreign citizen who is a resident of the United States.

ISSUE:

What is a "licensed yacht or undocumented American pleasure vessel," within the meaning of the provisions in 19 U.S.C. 1441(3) and 46 U.S.C. App. 91 exempting such vessels from entry and clearance under certain circumstances?

LAW AND ANALYSIS:

Section 441(3), Tariff Act of 1930, as amended (19 U.S.C. 1441(3)), provides, in pertinent part, that:

The following vessels shall not be required to make entry at the customhouse:

(3) ... licensed yachts or undocumented American pleasure vessels not engaged in trade: Provided, That such vessels do not in any way violate the customs or navigation laws of the United States and have not visited any hovering vessel: Provided further, That the master of any such vessel which has on board any article required by law to be entered shall be required to report such article to the appropriate customs officer within twenty-four hours after arrival.

The statute requiring vessel clearance of a vessel bound to a foreign port or place (46 U.S.C. App. 91) contains a similar pro- vision under which "a licensed yacht or an undocumented American pleasure vessel not engaged in any trade nor in any way violating the customs or navigation laws of the United States" is exempt from clearance.

In interpreting the meaning of the term "undocumented American pleasure vessel," we have held that:

To be considered an undocumented American pleasure vessel (see 19 U.S.C. 1441(3)), a vessel must be wholly owned by a citizen and resident of the United States .... [A]n undocu- mented pleasure vessel is not considered "American" by the Customs Service merely because it receives a state number
.... [Ruling letter dated April 22, 1982, File: 105332.]

More recently, we stated, in this regard, that:

For purposes of the navigation laws administered by the Customs Service, a pleasure boat not documented by a foreign nation which has been issued a state number is considered to be an undocumented American pleasure vessel, regardless of its ownership. [Ruling letter dated August 29, 1986, File: 108354.]

You ask that we clarify these interpretations of the term "undocumented American pleasure vessel" with regard to an undocu- mented pleasure vessel numbered under a state numbering system and owned by someone other than a United States citizen.

Initially, we note that a pleasure vessel documented by the United States Coast Guard under 46 U.S.C. Chapter 121 would be considered a "licensed yacht" under 19 U.S.C. 1441(3) and 46 U.S.C. App. 91 (see 46 U.S.C. 12109, providing for the issuance of recreational vessel licenses, and 46 U.S.C. 2101(10), defining "documented vessel" as a vessel for which a certificate of docu- mentation has been issued under Chapter 121 of Title 46). A pleasure vessel documented under a foreign flag would not be con- sidered a licensed yacht or undocumented American pleasure vessel under sections 1441(3) and 91 regardless of whether it was li- censed under a state numbering system (see 46 U.S.C. 2101(12), defining "foreign vessel" as a vessel of foreign registry or operated under the authority of a country except the United States; see also, Whiteman, Digest of International Law, vol. 9, pp. 25-27). An undocumented pleasure vessel owned by a citizen and resident of the United States would, of course, be considered an undocumented American pleasure vessel under sections 1441(3) and 91 (see Whiteman, supra., Vol. 9, p. 37).

With regard to an undocumented pleasure vessel owned by a citizen who is not a resident of the United States, we note that we stated in the April 22, 1982, letter ruling quoted above that "[t]o be considered an undocumented American pleasure vessel ..., a vessel must be wholly owned by a citizen and resident of the United States. (Emphasis added.) (See also, ruling letter to the District Director of Customs in Seattle, Washington, dated March 26, 1968, and letter dated April 29, 1982, File: 105288.)

We have thoroughly considered this issue. It is not apparent to us from the legislative history of the amendment (section 501, Customs Simplification Act of 1954; 68 Stat. 1140) which added the provision regarding undocumented American pleasure vessels to sections 1441(3) and 91 that such vessels must be owned by a United States citizen and resident (see Senate Report No. 2326, August 6, 1954, printed at 1954 U.S.C.C.A.N. 3900; see also, the memorandum providing the views of the Department of the Treasury on a similar provision transmitted to the Chairman of the House Committee on Ways and Means with a letter dated April 23, 1954, from the Acting Secretary of the Treasury). Nor do our early is- suances concerning this provision contain such an interpretation (see, e.g., letter to Senator George Smathers dated February 18, 1955, and Marine Circular No. 143, dated May 19, 1955).

We believe that the most rational resolution of this issue is to be found in the United States vessel documentation require- ments. An undocumented American pleasure vessel should be the same as a documented American pleasure vessel except that it is not documented. To be eligible for documentation, a vessel must be: (1) of at least 5 net tons; (2) not registered under the laws of a foreign country; and (3) owned by a citizen of the United States (see 46 U.S.C. 12102; 46 CFR Subpart 67.03; see al- so, 19 CFR 4.80(a)(2) and (3) in which allowance is made for ves- sels which may not be documented because of their tonnage). There is no residency requirement for United States vessel docu- mentation. On this basis, we conclude that an undocumented plea- sure vessel which is owned by a United States citizen would be considered an undocumented American pleasure vessel for purposes of sections 1441(3) and 91, regardless of whether or not that United States citizen is a United States resident.

Consistent with this conclusion, we believe that an undocumented pleasure vessel which is numbered under a State num- bering system may not be considered an undocumented American pleasure vessel unless it qualifies, except for tonnage, for documentation under 46 U.S.C. 12102 (i.e., it must be United States owned and may not be registered under the laws of a foreign country). Thus, the August 29, 1986, ruling letter (File: 108354), is modified. This position is consistent with footnote 9 to section 4.3, Customs Regulations, and other authorities on this subject (see The Chiquita, 19 F.2d 417 (1927); Moore, International Law, vol. 2, pp. 1002-1009, cited in The Chiquita; and 80 Corpus Juris Secundum 569, citing The Chiquita; but see, contra, 46 U.S.C. 2101(46) defining "vessel of the United States" to include numbered vessels for purposes of 46 U.S.C. Subtitle II).

With regard to the above determination, we note that under the Coast Guard Regulations on state numbering, a state numbering system may require the numbering of any vessel subject to the ju- risdiction of the state, with certain exceptions not applicable in this case (see 33 CFR 174.11(b)). Thus, the fact that an un- documented pleasure vessel may be numbered under a state number- ing system is not conclusive evidence that the vessel qualifies, except for tonnage, for documentation under 46 U.S.C. 12102.

HOLDINGS:

1. A "licensed yacht or undocumented American pleasure vessel," within the meaning of the provisions in 19 U.S.C. 1441(3) and 46 U.S.C. App. 91 exempting such vessels from entry and clearance under certain circumstances, includes:

(a) A pleasure vessel documented by the United States Coast Guard under 46 U.S.C. Chapter 121; and

(b) An undocumented pleasure vessel owned by a citizen of the United States, regardless of whether the United States citizen is a resident of the United States and regardless of whether the vessel is numbered under a state numbering system.

2. A "licensed yacht or undocumented American pleasure vessel," within the meaning of the provisions in 19 U.S.C. 1441(3) and 46 U.S.C. App. 91 exempting such vessels from entry and clearance under certain circumstances, does not include:

(a) A pleasure vessel documented under a foreign flag, regardless of whether it is owned by a citizen of the United States and regardless of whether it is numbered under a state numbering system; and

(b) An undocumented pleasure vessel owned by a foreign citizen, regardless of whether it is numbered under a state numbering system.

EFFECT ON OTHER RULINGS:

Ruling letter dated August 29, 1986 (File: 108354), is modified.

Sincerely,

John E. Elkins
Acting Director, Regulatory
Procedures and Penalties Division

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