HQ 0111674 - Use of a foreign-built vessel measuring less than 5 net tons to carry offshore fishing parties for hire - United States International Trade Commision Rulings

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HQ 111674

July 12, 1991

VES-3-23/4-03-CO:R:IT:C 111674 KVS

CATEGORY: CARRIER

Mr. Ron Dettlaff
12952 Candela Place
San Diego, CA 92130

RE: Use of a foreign-built vessel measuring less than 5 net tons to carry offshore fishing parties for hire

Dear Mr. Dettlaff:

This is in response to your letter dated April 21, 1991, which requests a ruling regarding the use of a foreign-built vessel measuring less than 5 net tons for charter fishing operations. Our findings are set forth below.

FACTS:

Your letter states that the RELENTLESS, is a Pacific Bluefin, model 35, which was built in Honduras in 1978. Recent admeasurement services completed by the American Bureau of Shipping indicate that the vessel measures less than five net tons. Your proposed usage of the RELENTLESS would entail offering the vessel for hire to carry 4-6 people for sport fishing.

ISSUE:

Whether a foreign-built vessel measuring less than 5 net tons may be used to carry offshore fishing parties.

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.

Under the provisions of 46 U.S.C. App. 289, no foreign vessel shall transport passengers between ports or places in the

United States, either directly or by way of a foreign port. The penalty for violating this section of the law is $200 for each passenger so transported and landed.

In interpreting section 289, we have 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 point, is considered coastwise trade subject to the coastwise laws. The transportation of passengers to the high seas or foreign waters and back to the point of embarkation, often called a "voyage to nowhere," is not considered coastwise trade, assuming the passengers do not go ashore, even temporarily, at another coastwise point. We have ruled, however, that the carriage of fishing parties for hire, even if the vessel proceeds beyond territorial waters and returns to the point of the passengers' original embarkation, is considered coastwise trade subject to the coastwise laws (see T.D. 55193(2)).

As you may be aware, pursuant to 67.11-1, Coast Guard Regulations (46 CFR 67.11-1) vessels which are of less than 5 net tons cannot be documented under the United States flag by the Coast Guard. However, qualified vessels of less than 5 net tons are not precluded from engaging in the coastwise trade simply because they cannot be documented under the laws of the United States. Section 4.80(a), Customs Regulations (19 CFR 4.80(a)), enumerates the vessels which are qualified to engage in the coastwise trade. Subparagraph (2) of this section (19 CFR 4.80(a)(2)) provides that no vessel exempt from documentation (e.g., of less than 5 net tons) shall transport any passengers or merchandise between United States coastwise points unless the vessel is owned by a citizen of the United States and is entitled to or, except for its tonnage, would be entitled to be documented with a coastwise license. As stated above, to be entitled to be documented with a coastwise license a vessel must, among other things, be built in the United States (46 U.S.C. 12106(a)(2)), with an exception inapplicable in this case.

Therefore, although the RELENTLESS is exempt from documentation by reason of its size, it would not otherwise be coastwise qualified since the vessel was built in Honduras. Therefore, it may not engage in coastwise trade, i.e., carry fishing parties for hire.

However, the Customs Service has ruled that a vessel measuring less than 5 net tons which undergoes substantial rebuilding or modification, although originally built abroad, may be considered built in the United States for purposes of the coastwise laws. Therefore, if the RELENTLESS undergoes such substantial rebuilding in the United States so that Customs considers it to have been built in the United States, and if the vessel meets the other applicable criteria (i.e. is owned by a
citizen of the United States), the vessel would, but for its tonnage, be a coastwise-qualified vessel, and would be permitted to engage in the coastwise trade, i.e. carry fishing parties for hire.

In making a determination as to whether a vessel may be considered built in the United States for purposes of the coastwise laws, and therefore, be used in coastwise trade (i.e. to carry fishing parties for hire), the Customs Service has adopted the provisions in section 67.09-3 of the Coast Guard Regulations (46 CFR 67.09.3), as a guideline. Section 67.09.3 states:

A vessel is considered built in the United States if:

(a) All major components of its hull and superstructure are fabricated in the United States; and

(b) The vessel is assembled entirely in the United States.

We stress, however, that such determinations are made on a case-by-case basis. The Customs Service considers the alterations and modifications done to the hull, fittings and superstructure of the vessel the crucial factor in making its determination as to whether an imported vessel was rebuilt in the United States. Customs also takes into account the value added to the vessel in the United States. Any ruling request which requests that we make such a determination, therefore, must necessarily contain a detailed account of all work performed, itemized invoices indicating the cost of such work, and evidence of the value of the vessel upon its previous importation into the United States.

HOLDING:

In the absence of a determination that the vessel has been "substantially rebuilt" in the United States, a foreign-built vessel measuring less than 5 net tons may not be used to carry offshore fishing parties for hire.

Sincerely,

B. James Fritz

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