HQ 0110837 - Applicability of the coastwise trade laws to the transportation of passengers between United States ports or places on a United States-built vessel which has been sold foreign. - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1991 HQ Rulings > HQ 0110804 - HQ 0111053 > HQ 0110837

HQ 110837

August 16, 1990

VES 3-02 CO:R:P:C 110837 BEW

CATEGORY: CARRIER

Captain Richard A. Roberts
298 Ellesmere Avenue (North)
North Burnaby, B.C. V5B 1J8 Canada

RE: Applicability of the coastwise trade laws to the transportation of passengers between United States ports or places on a United States-built vessel which has been sold foreign.

Dear Captain Roberts:

This is in reference to your letter concerning the transportation of passengers for hire on the "EL PRIMERO" a United States-built vessel which was sold foreign to a non-U.S. citizen.

FACTS:

You state that the subject vessel has been taken out of U. S. registry because it was sold to a Ms. Trudy Kalke of West Vancouver B.C. The operation which you are considering would involve the use of a non-coastwise-qualified vessel to carry passengers on charter cruises within the territorial waters of the San Francisco Bay or Puget Sound.

ISSUE:

Are there any restrictions imposed by U.S. law on the operation of a United States-built vessel, sold foreign, in the carriage of passengers for hire between coastwise points in 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.

A United States-built vessel which has been sold foreign, would be precluded from engaging in the coastwise trade. The vessel could be used to transport passengers from a point in the United States, to the high seas beyond territorial waters and back to the same point, assuming that the vessel touched at no other coastwise point during the transportation. However, the vessel would be prohibited from carrying passengers on such a voyage if the passengers disembarked the vessel at another coastwise point.

The carriage of paying passengers within the territorial waters of the United States on the subject vessel, a non- coastwise-qualified vessel, would be a violation of the coastwise laws.
HOLDING:

The transportation of passengers for hire on a non-coastwise-qualified vessel, such as the EL PRIMERO, between coastwise points, would be a violation of the coastwise laws.

Sincerely,

B. James Fritz

Previous Ruling Next Ruling