HQ 0110840 - Applicability of the United States documentation laws restricting the use of vessels in the coastwise and Great Lakes trades, to the use of a passenger vessel documented with a registry. - United States International Trade Commision Rulings

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HQ 110840
April 18, 1990

VES-3-02 CO:R:P:C 110840 LLB

CATEGORY: CARRIER

Milton J. Stickles, Jr., Esq.
Cadwalader, Wickersham & Taft
Washington, D.C. 20036

RE: Applicability of the United States documentation laws restricting the use of vessels in the coastwise and Great Lakes trades, to the use of a passenger vessel documented with a registry.

Dear Mr. Stickles:

This is in response to your letters of February 7 and April 9, 1990 in which you request a ruling on the use of the U.S.-flag vessel VICTORIAN EMPRESS in passenger service between Canadian ports on the Great Lakes, with the possibility of intermediate U.S. ports of call on the Great Lakes.

FACTS:

By letter of December 12, 1989 (Ruling No. 110619), Customs ruled on the proposed use of the U.S.-flag vessel COLONIAL EXPLORER in passenger carriage itineraries between the ports of Kingston, Ontario, and Clayton, New York. The vessel was to be operated under a registry endorsement by a corporate owner which did not meet the citizenship requirements of 46 U.S.C. App. 802. The December ruling held that a vessel documented with a registry may not engage in passenger transportation on the Great Lakes and their tributary and connecting waters between points in the U.S. and Canada, by virtue of the restrictions imposed under 46 U.S.C. 12107(b).

In the present matter, the COLONIAL EXPLORER has been renamed VICTORIAN EMPRESS. As before, the citizenship requirements under 46 U.S.C. App. 802 cannot be satisfied and the vessel is documented with a registry endorsement pursuant to 46 U.S.C. 12105. Itinerary adjustments have been made since the
prior request was considered, and the proposed movements would begin and end in Canada, with ports of call in the U.S. being made under the following circumstances:

(a) for safety, when in peril;

(b) for supplies or repairs or other services, or to sign on or discharge crew members, while in ballast or with passengers who stay aboard during the port call; and

(c) for an intermediate port call with passengers embarked in Canadian ports and who will disembark in Canadian ports. A typical voyage would be of four to eight days duration and involve five to ten calls at Canadian ports, including the port or ports of embarkation and disembarkation, and one or two intermediate calls at U.S. ports.
Passengers would go ashore at U.S. ports for approximately one and one-half hours to shop or to visit museums, historical sites and recreational facilities, but would neither begin nor terminate their passage at a U.S. port. Activities described in paragraph (b) might also take place during a port call of this nature.

ISSUE:

Whether a U.S.-flag vessel documented with a registry endorsement may operate in Great Lakes Canada to Canada passenger service, with intermediate temporary calls in United States Great Lakes ports.

LAW AND ANALYSIS:

Under section 12107 of title 46, United States Code (46 U.S.C. 12107), as amended by the Act of December 12, 1989 (Pub. L. 101-225, Sec. 301):

... only a vessel for which a certificate of documentation with a Great Lakes endorsement is issued may be employed on the Great Lakes and their tributary and connecting waters in trade with Canada. (Emphasis supplied)

The coastwise passenger transportation statute, codified in section 289 of title 46, United States Code Appendix (46 U.S.C. App. 289), as interpreted in concert with the coastwise laws generally (46 U.S.C. App. 883, and 46 U.S.C. 12106 and 12110), prohibits the transportation of passengers between coastwise points on vessels not properly admitted to that service. The statute is triggered when passengers embark at one coastwise point and disembark (terminate their voyage) at another. The February 7, 1990, ruling request expends considerable effort to distinguish between coastwise passenger transportation and the proposed transportation here under consideration. Unquestionably, the present matter does not contemplate a coastwise transportation of passengers subject to the section 289 prohibitions.

Notwithstanding the concerted effort made to distinguish coastwise trade from the contemplated itinerary, the April 9, 1990, follow up correspondence, asks us to apply the same principles applicable to coastwise trade or foreign trade to the contemplated Great Lakes venture. We are requested to find that the mere calling at intermediate, non-final-destination ports is not in the contemplation of the statute because such port calls do not constitute movement "in trade with Canada."

As concerns vessels documented under the U.S.-flag, section 12107, as amended, creates a unique operating arena for vessels in trade with Canada in the Great Lakes, reserving that trade for those with a Great Lakes endorsement. The impression is inescapable that by creating a special class of documentation for Great Lakes service, the Congress intended to draw distinctions between such service and others (coastwise trade and foreign trade). Whereas it is true that the coastwise trade passenger statute would not prohibit the movement between and temporary discharge of foreign-origin passengers at coastwise points by non-coastwise-qualified vessels operating other than in the Great Lakes, the same cannot be said for U.S.-flag vessels on the Great Lakes. This has already been partially established by our ruling number 110619 which found the movement of passengers on a U.S.- flag registry vessel to be violation of section 12107 when those persons embark in Canada and disembark in the U.S. This is a radical departure from the rules which govern passenger transportation from abroad, elsewhere than in the Great Lakes.

Section 12107, as amended, leaves undefined the phrase "in trade with Canada", the interpretation of which is central to the issue at hand. It is clear that trade with Canada indicates trade between our two countries, not necessarily originating in the United States (as evinced by our ruling number 110619).

If given its commonly accepted meaning, the term "trade" means "... earning ones living; ... commerce ..." (Webster's New World Dictionary, Second College Edition, 1968). Certainly the "commerce" aspect of a venture which proposes to deliver Canadian shoppers to American ports can be recognized.

An appropriate means of determining the status of vessels arriving in the United States is provided by reference to the laws governing their formal entry. Section 434, Tariff Act of 1930, as amended (19 U.S.C. 1434), provides that:

Except as otherwise provided by law and under such regulations as the Commissioner of
Customs may prescribe, the master of a vessel of the United States arriving in the United States from a foreign port or place shall ... make formal entry of the vessel ...

The exemptions provided by law appear in section 441, Tariff Act of 1930, as amended (19 U.S.C. 1441), which, in relevant part, exempts from formal entry:

Vessels arriving in distress or for the purpose of taking on [bunkers], sea stores, or ship's stores and which shall depart within twenty-four hours after arrival without having landed or taken on board any passengers ...

This provision relates directly to the previously listed conditions under which the VICTORIAN EMPRESS would seek to enter U.S. ports, and establishes that only where entering for safety reasons or for supplies would formal entry be unnecessary. This is because under these special circumstances, the vessel would not be arriving in a trade context. In the remainder of the proposed circumstances, the vessel is arriving in trade with Canada, enjoying the revenues generated from the carriage of passengers induced to book passage on voyages which include sojourns in U.S. ports, just as the U.S. economy also benefits from the voyages.

The vessel documentation laws are consistent in regard to trades on the Great Lakes if they are understood to permit coastwise trade only by those U.S. vessels properly documented therefor, and trade involving both U.S. and Canadian ports (trade with Canada) only by those U.S. vessels documented with a Great Lakes endorsement. (Note that under section 12107, only a vessel qualified for a coastwise license may obtain a Great Lakes endorsement on its document). Of course, vessels documented for either of these trades could qualify for the other.

HOLDING:

Vessels of the United States operating on the Great Lakes, between the U.S. and Canada in either direction, must possess a Great Lakes endorsed document under 46 U.S.C. 12107. American- flag vessels arriving at U.S. Great Lakes ports from Canadian Great Lakes ports, are engaging "in trade with Canada" if they are required to make formal vessel entry under 19 U.S.C. 1434.

In light of foregoing, the U.S.-flag registry vessel VICTORIAN EMPRESS may not engage in passenger carriage on the Great Lakes with stops in U.S. ports.

Sincerely,

Stuart P. Seidel

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