HQ 0111289 - Coastwise; Passengers; Gondolas; Waiver; Bareboat Charter; 46 U.S.C. App. 289; 19 C.F.R. 4.80(a). - United States International Trade Commision Rulings

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HQ 111289

September 14, 1990

VES-3-02 CO:R:P:C 111289 JBW

CATEGORY: CARRIER

Mr. Thomas J. Cullerton
That's Amore Gondolas
2058 West Rascher
Chicago, Illinois 60625

RE: Coastwise; Passengers; Gondolas; Waiver; Bareboat Charter; 46 U.S.C. App. 289; 19 C.F.R. 4.80(a).

Dear Mr. Cullerton:

Congressman Frank Annunzio has forwarded your letter of August 22, 1990, to the Customs Service for reply regarding the use of a foreign-built gondola for the transportation of passengers on the Chicago River. Included with your letter was supporting documentation relating to your proposed activities.

FACTS:

As stated in your letter, you intend to use a gondola to transport passengers on the Chicago River. The gondola was built in Venice, Italy, and was purchased in and imported from Toronto, Ontario, Canada.

ISSUE:

Whether a foreign-built gondola may be used to transport passengers in United States waters.

LAW AND ANALYSIS:

The coastwise passenger law (46 U.S.C. App. 289 (1988) (frequently referred to as the Jones Act)) 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.

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). The gondola under consideration, being foreign built, falls under this prohibition.

The function of the Customs Service is to interpret and administer this law. We do not possess the power or authority to waive application of the coastwise laws unless a statutory exemption permits us to do so. The only legislative authority to waive the coastwise laws appears in Act of December 27, 1950, 64 Stat. 1120 (note preceding Chapter 1 of Title 46 Appendix, United States Code). Under this Act, the Customs Service, through authority delegated by the Secretary of the Treasury, must waive application of the Jones Act upon the request of the Secretary of Defense in the interest of national defense and to the extent required. Upon his own initiative or upon the written recommendation of the head of any other United States agency, the Secretary of Treasury has the discretion to waive application of the coastwise laws "whenever he deems that such action is necessary in the interest of national defense." The Customs Service makes recommendations to the Assistant Secretary of Treasury for Enforcement on these waivers. No national defense interest appears in the facts as presented, and we are unable to issue a waiver.

The Customs Service has also 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 bareboat charter is defined to be one in which the owner of the vessel completely and exclusively relinquishes "possession, command, and navigation" to the charterer. Guzman v. Pichirilo, 369 U.S. 698, 699-670 (1962). 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. Again, from the facts presented, the gondola will not be chartered as a bareboat charter.

HOLDING:

A foreign-built gondola is prohibited by the coastwise laws from transporting passengers on the Chicago River. Absent national defense considerations, the Customs Service lacks authority to waive application of the coastwise laws. Finally, from the facts presented, the gondola is not being chartered as a bareboat charter for pleasure use only.

Sincerely,

B. James Fritz
Chief

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