HQ 0110757 - Coastwise trade; foreign-built vessel; sailing school - United States International Trade Commision Rulings

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HQ 110757

February 21, 1990

VES-3-19-CO:R:P:C 110757 KVS

CATEGORY: CARRIER

Mr. Mike Compton
The Inn at St. Thomas Court
101 South Second Street
Wilmington, NC 28401

RE: Coastwise trade; foreign-built vessel; sailing school

Dear Mr. Compton:

This is in response to your letter of December 29, 1990, in which you request a ruling which permits the use of a foreign- built sailing vessel in U.S. territorial waters.

FACTS:

You propose to operate a 41-foot, British-built, sailing vessel, the GULF SIROCCO, as a sailing school vessel. You state that you intend to transport up to six students at a time for day, and possibly some night sailing exercises. This instruction will be given in conjunction with onshore classroom lessons.

You state that the sailing waters will be the Cape Fear River, the Intracoastal Waterway, and the inshore coastal waters of North Carolina, up to 20 miles offshore. You state that the ports of departure/arrival will be Wilmington, North Carolina, Wrightville Beach, North Carolina (which you mention as the vessel's probable home port), and possibly Beaufort, North Carolina, and Charleston, South Carolina.

Although the GULF SIROCCO is currently under British registry, you indicate that you intend to re-register the vessel under the American flag in the near future.

ISSUE:

Whether, under the stated facts, the use of a foreign-built vessel as a sailing school would be in violation of the coastwise passenger law, 46 U.S.C. App. 289.

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) and 19 CFR 4.80(a)(2)and (3)).

Points in the United States embraced within the coastwise laws include the United States territorial waters. The territorial waters of the United States consist of a belt, three nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline. The Customs Regulations define "passenger" for purposes of section 289 as "any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business" (see 19 CFR 4.50(b).

Given the foregoing definition of "passenger", the Customs Service has held that a person being trained or receiving instruction in the handling or navigation of a vessel, and whose presence on board the vessel is necessarily required in order to receive such training or instruction, is not a "passenger" within the coastwise laws. Accordingly, if the vessel is used only for such training it would not be required to have a license to engage in the coastwise trade (see Customs Letter Ruling 109850 LLB (dated December 27, 1988) and Customs Letter Ruling 109287 DHR (dated February 24, 1988)).

Therefore, the sole use of a foreign sailing vessel in connection with a bona fide instructional course in sailing and navigation does not constitute coastwise trade within the meaning
of 46 U.S.C. App. 289.

However, all persons being carried in the vessel must be involved with the operation, navigation, or business of the vessel. A person who is carried on board a vessel for recreational purposes and who pays a fee for such carriage would be considered a "passenger" and his carriage between places in the United States or entirely within U.S. waters would be in violation of the coastwise laws.

Your letter also expresses your intention to re-register the vessel under the American flag in the near future. Questions regarding documentation should be addressed to:

Mr. Thomas Willis
Chief, Vessel Documentation
U.S. Coast Guard (GMVI-6/13)
2100 Second Street, S.W.
Room 1312
Washington, D.C. 20593-0001

HOLDING:

The sole use of a foreign sailing vessel in connection with a bona fide instructional course in sailing and navigation is not coastwise trade in violation of 46 U.S.C. App. 289.

Sincerely,

B. James Fritz

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