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HQ 110382

August 30, 1989

VES-3-CO:R:P:C 110382 GV

CATEGORY: CARRIER

Mr. John R. Bogert
President
Alaska Apollo Gold Mines Limited
Post Office Box 10438
Phoenix, Arizona 85064

RE: M/V PUMPKIN

Dear Mr. Bogert:

This is in response to your letter of July 17, 1989, requesting a ruling as to whether your company vessel, the M/V PUMPKIN, is considered to be engaged in the coastwise trade.

FACTS:

The M/V PUMPKIN is a U.S.-built vessel owned by Alaska Apollo Gold Mines Limited ("AAGML"), a company incorporated in the State of Nevada. The subject vessel is used exclusively by designated, trained employees of AAGML to carry company supplies (mostly diesel fuel) from the town of Sand Point, Alaska, on Papof Island, to mining property of AAGML on adjacent Unga Island, Alaska, a distance of approximately 15 miles each way. The only passengers and merchandise carried on the subject vessel are the aforementioned company employees and supplies. The subject vessel is never rented, chartered or leased for any monetary, or other consideration of any kind. It is engaged in the operation described above only from March through September of each year. During the winter months the M/V PUMPKIN is beached above the high tide line in Baralof Harbor and mothballed. There are no liens or mortgages on the vessel.

ISSUE:

Whether the transportation of a U.S. corporation's employees and cargo between United States points on a U.S.-built vessel owned by said company constitutes an engagement in the coastwise trade within the meaning of 46 U.S.C. App. 289 and/or 883. 2

LAW AND ANALYSIS;

The Customs Service enforces various navigation laws, some of which deal with the coastwise trade. Title 46, United States Code Appendix, section 883 (46 U.S.C. App. 883), often called the Jones Act, provides, in part, that no merchandise shall be transported between points in the United States embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any vessel other than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States (i.e., a coastwise-qualified vessel). Pursuant to 19 U.S.C. 1401(c), the word "merchandise" means goods, wares and chattels of every description and includes merchandise, the importation of which is prohibited. Furthermore, Public Law 100-329 (102 Stat. 588) amended section 883 to apply to the transportation of "valueless material...". It should be noted that Customs has never held that cargo which is owned by the owner of a vessel and is transported solely for the use of the owner is not "merchandise" for purposes of section 883. Indeed, we have held that "[i]t is immaterial [for purposes of section 883] that any cargo so transported [i.e., transported between coastwise points] may be owned by the vessel owner." This position is consistent with the intent of the Congress as shown in its enactment of the so-called sixth proviso to section 883 (the Acts of September 21, 1965, and August 11, 1968; Public Law 89-194, 79 Stat. 823 and Public Law 90-474, 82 Stat. 700, respectively).

Section 289 of title 46 (46 U.S.C. App. 289), as interpreted by the Customs Service, prohibits the transportation of passengers between points in the United States embraced within the coastwise laws, either directly or by way of a foreign port, in a non-coastwise-qualified vessel (see above). For purposes of section 289, "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" (19 CFR 4.50(b)).

Accordingly, while the M/V PUMPKIN may or may not be considered to be transporting passengers within the meaning of section 289, it would be considered to be transporting merchandise within the meaning of section 883.

It should be noted, however, that although this transportation constitutes an engagement in the coastwise trade, it would appear that the subject vessel could be documented to engage in such trade based on the record submitted (i.e., it appears to be U.S.-built and owned). However, the U.S. Coast Guard, not Customs, is responsible for the administration of vessel documentation requirements and we defer to that agency regarding that matter.
3

HOLDING:

The transportation of a U.S. corporation's cargo between United States points on a U.S.-built vessel owned by said company constitutes an engagement in the coastwise trade within the meaning of 46 U.S.C. App. 883.

Sincerely,

B. James Fritz

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