HQ 0111168 - Coastwise Trade; Passengers; Foreign-Flag Vessel; Sailing School; 46 U.S.C. App. 289; 46 U.S.C. App. 883 - United States International Trade Commision Rulings

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HQ 111168

March 20, 1991

VES-3-02/07-CO:R:IT:C 111168 BEW

CATEGORY: CARRIER

Mr. Normand Desbiens
Damacha Yachting
300, rue Guizot Est
Montreal (Quebec) Canada H2P 1M4

RE: Coastwise Trade; Passengers; Foreign-Flag Vessel; Sailing School; 46 U.S.C. App. 289; 46 U.S.C. App. 883

Dear Mr. Desbiens:

This is in response to a letter dated July 4, 1990, requesting a ruling concerning the application of the Jones Act to a proposed use of a foreign-flag vessel as a sailing school as set forth below.

FACTS:
Your letter states that "Damacha yachting/Academie de voile du Quebec" is a sailing school, and that you would like to use one of your foreign-flag sailboats to navigate along the Maine coast, from Portland northward, for sailing school purposes. You state the students would drive to Portland, buy their groceries for the week in Portland and embark the vessel in Portland for a week course. On board the vessel the students would receive sailing and navigation courses, and constitute crew under the supervision of a French-Canadian sailing instructor. You state that from Portland, they would sail north along the coast, then return to Portland where the students would disembark. You ask whether the students would be permitted to go ashore temporarily to purchase groceries at another coastwise port, e.g., Rockport, Maine, before returning to Portland.

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 (e.g., 46 U.S.C. App. 289 and 883, and 46 U.S.C. 12106 and 12110) 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 and documented under the laws of the United States, and owned by persons who are citizens of the United States.

The coastwise law pertaining to the transportation of merchandise, section 27 of the Act of June 5, 1920, as amended (41 Stat. 999; 46 U.S.C. App. 883, often called the Jones Act), provides that:

No merchandise shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the transportation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to be transported), between points in the United States ... embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any other vessel than a vessel built in and documented under the laws of the United States and owned by persons who are 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.

"Merchandise" is defined in section 1401(c) of title 19, United States Code, to include goods, wares, and chattels of every description, and includes fish, fish products, and fish packaging materials that are assembled into packages containing fish. Section 883 specifically provides that, for purposes of its provisions, "merchandise" includes valueless material (Pub.L. 100-329; 102 Stat. 588). The transportation of valueless material, whether or not it has commercial value, from a point or place in the United States or point or place on the high seas within the Exclusive Economic Zone (EEZ) as defined in the Presidential Proclamation of March 10, 1983, to another point or place in the United States or a point or place on the high seas within that EEZ would also be prohibited under the provisions of section 883.

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.) Section 4.80a, Customs Regulations (19 CFR 4.80a) is interpretive of section 289.

In its administration of 46 U.S.C. App. 289, the Customs Service has ruled that the carriage of passengers entirely within territorial waters, even though the passengers disembark at their point of embarkation and the vessel touches no other coastwise point, is considered coastwise trade subject to coastwise laws. However, the transportation of passengers to the high seas (i.e., beyond U.S. territorial waters) and back to the point of embarkation, assuming the passengers do not go ashore, even temporarily, at another United States point, often called a "voyage to nowhere", is not considered coastwise trade. It should be noted that the carriage of fishing parties for hire, even if the vessel proceeds beyond territorial waters and returns to the point of the passenger's embarkation, is considered coastwise trade.

In interpreting the coastwise laws, Customs has ruled that a point in United States territorial waters is considered a point embraced within the coastwise laws. The coastwise laws generally apply to points in the territorial sea, defined as the belt, three (3) nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ.

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 meaning of 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 Rulings 109850, dated December 27, 1988 and 109287, dated February 24, 1988).

We have consistently held that vessel equipment and stores are not considered "merchandise" for purposes of section 883 when transported in the vessel by which they are used (see Customs letter rulings 106910, dated July 9, 1984, and 108223, dated March 13, 1986).

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. Legitimate equipment and stores of the sailing school vessel for its use, including groceries purchased by the students are not considered merchandise covered by section 883. However, articles transported on the vessel between points embraced within the coastwise laws which are not legitimate stores and equipment of the vessel are subject to section 883.

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.

HOLDING:

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.

Legitimate equipment and ship stores for use of the vessel and crew may be transported from a coastwise port to other coastwise points without violating the coastwise laws. Groceries purchased by the students for their use would be considered ship stores.

Sincerely,

B. James Fritz

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