HQ 0111292 - Coastwise Trade; Passengers; Foreign-Flag Vessel; 46 U.S.C. App. 289 - United States International Trade Commision Rulings

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HQ 111292

February 22, 1991

VES-3-02/07-CO:R:IT:C 111292 BEW

CATEGORY: CARRIER

Mr. Kaare Bakke
Superintendent, Maritime Operations
Kloster Cruise Limited
Norwegian Cruise Line * Royal Viking Line 95 Merrick Way
Coral Gables, Florida 33134

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

Dear Mr. Bakke:

This is in response to a letter dated September 12, 1990, from Captain Gulleik Svalastog, requesting a ruling concerning the application of the Jones Act to a proposed eight (8) and ten (10) day cruise itinerary on a foreign flag vessel as set forth below.

FACTS:

The letter states that in the 8-day cruise, the passengers would embark on a cruise on a foreign-flag in Honolulu. The vessel travels from Honolulu to various intermediate U.S. ports, Nawiliwili and Lahaina, the vessel is at sea for two days and calls at Christmas Island, a distant foreign port, and the cruise concludes at Honolulu where the passengers disembark.

The letter states that in the 10-day cruise, the passengers would embark on a cruise on a foreign-flag in Honolulu. The vessel travels from Honolulu to various intermediate U.S. ports, Nawiliwili, Lahaina, Hilo, and Kona, the vessel is at sea for two days and calls at Christmas Island, Republic of Kiribati, a distant foreign port, and the cruise concludes at Honolulu where the passengers disembark.

On each cruise, the passengers would presumably either disembark or go ashore temporarily to take sight-seeing excursions at the said intermediate U.S. ports. The letter states that it is your understanding that the proposed itineraries would not violate 46 U.S.C. App. 289 or section 4.80a of the Customs Regulations.

ISSUE:

Whether the transportation of passengers on a foreign-flag vessel as described above constitutes violations of 46 U.S.C. App. 289 if the passengers are allowed to remain on shore at an intermediate U.S. port for a period of one day, but are on board when the vessel leaves port?

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," as used in section 883, includes any article, including valueless merchandise pursuant to the recent amendment of section 883 by the Act of June 7, 1988 (Public Law 100-329; 102 Stat. 588).

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.

If passengers embark at a coastwise point and either disembark (see the definitions of "embark" and "disembark" set forth in 19 CFR 4.80a(a)(4)) or go ashore temporarily to take sight-seeing excursions at an intermediate U.S. port there would be no violation of section 289 if they are allowed to remain on shore at the intermediate U.S. port for an extended period of time (e.g., several days), but are on board when the vessel leaves the United States port for a distant foreign port, in the subject case, Christmas Island. Transportation from the distant foreign port to the port of original embarkation would not be a coastwise transportation of passengers for purposes of section 289. The relevancy of whether an intermediate foreign port is a "nearby foreign port" (as defined in 19 CFR 4.80a(a)(2)) or a "distant foreign port" (as defined in 19 CFR 4.80a(a)(3)) is crucial in determining whether or not a violation of section 289 has occurred. In both fact patterns set forth above, the passengers embark at a coastwise point (Honolulu) on a voyage to several coastwise points in Hawaii and a distant foreign port (Christmas Island), returning to the United States port of original embarkation. Accordingly, there would be no violation of section 289 (see 19 CFR 4.80a(b)(3)).

HOLDING:

The transportation of passengers on foreign-flag vessels as described in the itineraries above does not constitute violations of 46 U.S.C. App. 289 as discussed above.

Sincerely,

B. James Fritz

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