HQ 0110239 - Use of a United States-built vessel which has been sold foreign within the territorial waters of the United States as a "bed and breakfast hotel" and as a residence for the Alaskan oil clean-up workers. - United States International Trade Commision Rulings

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HQ 110239

May 24, 1989

VES-3-04 CO:R:P:C 110239 BEW

CATEGORY: CARRIER

Ms. Judith L. Renwick
Post Office Box 1066
Seward, Alaska 99664

RE: Use of a United States-built vessel which has been sold foreign within the territorial waters of the United States as a "bed and breakfast hotel" and as a residence for the Alaskan oil clean-up workers.

Dear Ms. Renwick:

This is in reference to your letter of May 11, 1989, in which you requested a ruling with regard to the application of the Jones Act to the use of a United States-built vessel which has been sold foreign, and subsequently, will be purchased and registered in the United States, as a "bed and breakfast" hotel and a residence for workers involved with the Alaskan oil spill in the territorial waters of the United States.

FACTS:

The operation which you are considering would involved the use of the subject vessel as a "bed and breakfast hotel". You state that the subject vessel was built in the United States and sold foreign, and that you intent to purchase it and document it under a United States-flag. You state specifically that you intend to use that vessel in Dutch Harbor and Seward, Alaska, as a bed and breakfast hotel, and in the Prince William Sound area as a residence for workers involved with the Alaskan oil clean- up.

ISSUE:

Are there any restrictions imposed by U.S. law on the operation of a United States-built vessel, sold foreign and subsequently U.S.-owned, as a permanently moored or anchored bed and breakfast inn and/or residence for the Alaskan oil clean-up workers in the territorial waters of the United States.

LAW AND ANALYSIS:

Generally, the coastwise laws prohibit the transportation of merchandise or passengers 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. The passenger coastwise law, 46 U.S.C. App. 289, provides that:

No foreign vessel shall transport passengers between ports or places in the United States either directly or by way of a foreign port, under penalty of $200 for each passenger so transported and landed.

Pursuant to 46 U.S.C. 12106 and 12110 and their predecessors (46 U.S.C. 65i and 65m and, before them, 46 U.S.C. 11) and consistent with 46 U.S.C. App. 883, the coastwise merchandise law, the Customs Service has consistently held that the prohibition in 46 U.S.C. App. 289, applies to all non- coastwise-qualified vessels. Non-coastwise-qualified vessels include any vessel other than a vessel built in, properly documented under the laws of, owned by citizens of the United States, and never sold foreign with certain exceptions (46 U.S.C. 12106(a)(2)(B) a 19 CFR 4.80(a)(2) and (3)).

For purposes of the coastwise laws, a vessel "passenger" is defined as "... any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business." (Section 4.50(b), Customs Regulations.)

In interpreting the coastwise laws as applied to the transportation of passengers, we have ruled that the carriage of passengers entirely within territorial waters, even though they 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 to the high seas or foreign waters and back to the point of embarkation, often called a "voyage to nowhere," is not considered coastwise trade, assuming the passengers do not go ashore, even temporarily, at another coastwise point. We have ruled that the carriage of fishing parties for hire, even if the vessel proceeds beyond territorial waters and returns to the point of the passengers' original embarkation, is considered coastwise trade subject to the coastwise laws.

A point in United States territorial waters is considered a point in the United States embraced within the coastwise laws but a point beyond those waters, even if it is within the United

States Exclusive Economic Zone (EEZ), is not considered to be such a point, with certain exceptions inapplicable in this context (see, e.g., the Outer Continental Shelf Lands Act of 1958, as amended; 43 U.S.C. 1333, and the amendments to 46 U.S.C. App. 883 regarding the transportation of valueless or dredged material effected by Public Law 100-329).

The territorial waters of the United States consist of the belt, 3 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline. The recent Presidential Proclamation (dated December 27, 1988) proclaiming a 12 nautical mile territorial sea extended the jurisdiction of the United States only for international purposes and did not extend or change existing federal and state laws. The territorial waters of the United States continue to be 3 nautical miles wide, for purposes of the applicability of the coastwise laws. Whether the use of a foreign-flag vessel anchored or moored within the territorial waters of the U.S., for overnight accommodations is a violation of the coastwise laws.

The vessel under consideration, a United States built vessel which has been sold foreign, would be precluded from engaging in the coastwise trade. Under the circumstances stated above, you may not use the vessel in the coastwise trade if, as is true in this case, it is not qualified to engage in the coastwise trade. As noted above, 46 U.S.C. App. 289, prohibits the transportation between points in the United States of passengers in a non-coastwise-qualified vessel.

"Passenger," for purposes of this provision, is defined as "...any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business" (19 CFR 4.50(b)). However, a non-coastwise-qualified vessel which is permanently moored, can be used as a "bed and breakfast hotel" or other non-maritime use without violating the statute. No law or regulation administered by the United States Customs Service would preclude the use of the subject vessel as a permanently moored lodging facility since it would not be considered engaged in transportation. The subject "hotel guest" and workers would however, be considered passengers and their transportation on the vessel within the inland harbor or territorial waters of the United States would be a violation of the coastwise laws.

HOLDING:

The use of a United States-built vessel which has been sold foreign, as a bed and breakfast hotel or as a residence for Alaskan oil clean-up workers, if permanently moored or anchored, is not a violation of the coastwise laws. The transportation of the "hotel guest" by a non-coastwise-qualified vessel, such as your vessel, from one point to another port or point in the territorial waters of the United States is a violation of the coastwise laws.

The transportation of merchandise or passengers by a coastwise-qualified vessel between coastwise points and the permanently moored or anchored vessel would not violate the coastwise laws.

Sincerely,

B. James Fritz

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