HQ 0111828 - 46 U.S.C. App. 289; Coastwise Trade; Passenger; Territorial Waters; Submarine - United States International Trade Commision Rulings

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HQ 111828

October 21, 1991

VES-3-02-CO:R:IT:C 111828 LLB

CATEGORY: CARRIER

Mr. William Giles
Executive Vice President
Mergo Submarines (USA)
426 West Broadway
New York, New York 10012

RE: 46 U.S.C. App. 289; Coastwise Trade; Passenger; Territorial Waters; Submarine

Dear Mr. Giles:

This is in response to your letter of July 30, 1991, requesting a ruling on the applicability of the coastwise laws to a submarine tour service to be operated off the coast of Florida.

FACTS:

The operation you propose will involve a shuttle craft and tender craft which are U.S.-built and certified, as well as a foreign-built submersible. The shuttle craft will transport passengers from a docking facility located just off of Highway U.S. 1 in Key Largo, Florida. The shuttle craft will shuttle passengers from the docking facility to the submersible located in the area of Molasses Reef, approximately 6.2 nautical miles offshore from Key Largo. The passengers will be disembarked from the shuttle craft onto the submersible on the leeward side of Molasses Reef. The submersible will then proceed southeast and descend in order to view the Florida reefs. The submarine will not be operated with passengers closer than 6.2 nautical miles from the Florida coast.

It is stated that the proposed operation is identical to one already considered and ruled upon by Customs in a ruling letter of November 19, 1990 (Case Number 111288). In fact, the party to whom that ruling was issued has contracted to lease and operate a submersible built by your company. During the 10-month period of time anticipated for the construction of that vessel, your company proposes to contract for the operation of an identical vessel in the location specified. The operating site will be turned over to the recipient of our previous ruling when that party is prepared to begin operations. Actual operation of the submersible vessel during the initial 10-month start-up period will be undertaken by an operating company which may have less than 75 percent United States ownership.

ISSUES:

(1) Whether the transportation of passengers in a U.S.-built and certified vessel to a point 6.2 miles off the coast of Florida and back constitutes coastwise trade.

(2) Whether the transportation of passengers in a foreign-built submersible beginning and ending 6.2 miles off the coast of Florida constitutes coastwise trade.

(3) Whether a foreign-owned operating company may undertake to transport passengers between points located outside of the territorial waters of the United States.

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 a penalty of $200 for each passenger so transported and landed.

In interpreting the coastwise laws as applied to the transportation of passengers, 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 point, is considered coastwise trade subject to the coastwise laws. However, the transportation of passengers to the high seas or foreign 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. See, 108228 PH (4-18-86). The territorial waters of the United States consist of the territorial sea, defined as the belt, 3 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline.

The first of these positions, regarding transportation of passengers entirely within territorial waters on a voyage in which they embark and disembark at the same coastwise point is based on a 1900 decision (see Treasury Decision 22275). Our rulings have consistently followed this position.

The second of these positions, regarding transportation of passengers from a point in the United States to the high seas or foreign waters and back to the same point, is based on a 1912 opinion of the Attorney General of the United States (29 Opinions of the Attorney General 318). We have consistently followed this position.

Although you state that both the shuttle and tender vessels are U.S.-built and certified, there is insufficient information to determine whether such vessels are coastwise qualified. Nevertheless, under the facts you propose it is not necessary for the vessels to be so qualified. The passengers would be transported to a point 6.2 miles off the Florida coast, which is outside the territorial waters of the United States. The transportation would thus constitute a "voyage to nowhere", and accordingly would not violate the coastwise laws. Furthermore, the transportation of passengers in the submersible will be outside the territorial waters of the United States and will not violate the coastwise laws. The ownership of such vessels operating outside of the territorial waters is not a matter of concern under the coastwise laws.

HOLDINGS:

(1) The transportation of passengers in a U.S.-built and certified vessel to a point 6.2 miles off the coast of Florida and back does not constitute coastwise trade.

(2) The transportation of passengers in a foreign-built submersible to and from points located 6.2 miles off the coast of Florida does not constitute coastwise trade.

(3) The ownership of a submersible operating in passenger trade outside the territorial waters of the United States is not a matter of concern under the coastwise laws. This letter addresses only those federal requirements that are administered by the U.S. Customs service.

Sincerely,

B. James Fritz

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