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HQ 110954

August 29, 1990

VES-3-02 CO:R:P:C 110954 JBW

CATEGORY: CARRIER

Ms. Gayle Johns
Vessel Documentation Services
291 W. 22nd Street, Suite 206
San Pedro, California 20229

RE: Coastwise; Pleasure; Documentation; Passengers; LIMITLESS; 46 U.S.C. App. 289; 19 C.F.R. 4.80.

Dear Ms. Johns:

This letter is in response to your letter of March 26, 1990, in which you request information on the carriage of passengers for hire by a vessel documented as a pleasure vessel.

Section 177.2(b)(2)(iv) of the Customs Regulations sets forth the information that must be submitted to obtain a binding ruling from the Customs Service on the use of a vessel in the coastwise trade. This section states:

If the transaction involves a vessel, the request for a ruling should include information relating to the place of build and nationality of registration and, if to be used in waters under the jurisdiction of the U.S., the exact place or places of intended use, if known. If the request for a ruling involves a determination as to whether or not the primary object of a contemplated voyage would be considered to be coastwise transportation in violation of 46 U.S.C. [App.] 289 (see 4.80a of this chapter), the request should completely identify the voyage, including the proposed time of arrival at and departure from every port on the itinerary and any coordination of the voyage with special events at coastwise ports, and should be accompanied by samples, if available, of brochures, advertising, and other information that may be relevant to a determination of the primary object of the proposed voyage.

In your letter, you make general inquiries regarding the carriage of passengers by vessels operating with pleasure documentation. We assume for purposes of this analysis that by pleasure documentation, you mean a recreational endorsement. You also make inquiries regarding the vessel LIMITLESS, a United States-built vessel that cannot obtain a coastwise endorsement because the chain of title cannot be traced. Your inquiry does not meet the informational requirements of the regulations; we are consequently unable to issue a binding ruling. We can, however, provide you with general information regarding your request.

The coastwise passenger law 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 a penalty of $200 for each passenger so transported.

46 U.S.C. App. 289. The Customs Service has consistently interpreted this proscription to apply to any vessel except a United States built, owned, and properly documented vessel. See 46 U.S.C.A. 12106 & 12110 (West Supp. 1990), 46 U.S.C. App. 289, and 19 C.F.R. 4.80(a) (1989). Even vessels that may not be documented by the United States Coast Guard because they measure less than five net tons must otherwise qualify to engage in the coastwise trade--that is, they must be United States-built and owned. 19 C.F.R. 4.80(a)(2). Vessels that have acquired the right to engage in coastwise trade by virtue of the fact that they were built in the United States lose such right if sold or transferred to foreign persons or entities or if placed under foreign registries. 19 C.F.R. 4.80(e). These laws and regulations apply regardless of the number passengers transported. Headquarters Ruling Letter 109509, dated August 3, 1988.

The vessel LIMITLESS is currently operating under a recreational endorsement, for it may not qualify for a coastwise endorsement because of an incomplete chain of title. The Customs Service has consistently held that when a vessel is chartered under a bona fide bareboat charter, the bareboat charterer is treated as the owner of the vessel for the period of the charter, and, because the owners are not considered "passengers" for purposes of the coastwise laws, 19 C.F.R. 4.50(b) (1989), the charterer is not proscribed by the coastwise laws from using the vessel during the charter for pleasure purposes only. Headquarters Ruling Letter 109638, dated July 22, 1988. A non-coastwise qualified vessel chartered under a charter arrangement other than a bareboat charter (e.g., a time or voyage charter) and used in coastwise transportation would be subject to penalties under the coastwise laws. Id. A vessel chartered under a bareboat charter would also be subject to penalties if the bareboat charterer used it in the coastwise trade (e.g., to transport persons other than bona fide guests between coastwise points or entirely within territorial waters). Id.

We hope this information will be of assistance to you. Upon receipt of the required information, we shall gladly issue a binding ruling.

Sincerely,

B. James Fritz
Chief

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