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HQ 111842

October 11, 1991

VES-3-07-CO:R:IT:C 111842 RAH

CATEGORY: CARRIER

Mr. Mel Fitzhugh
P.O. Box 1813
Gig Harbor, WA 98335

RE: Coastwise Trade; 46 U.S.C. App. 883

Dear Mr. Fitzhugh:

This is in response to your letter of August 1, 1991, in which you ask whether your proposed business transaction constitutes coastwise trade.

FACTS:

The business would consist of selling food and sundries from a floating houseboat to other boats on the Puget Sound waterways and lakes. On some occasions, the houseboat would be moored during these transactions.

ISSUE:

Whether selling food and sundries from a floating or moored houseboat on the Puget Sound waterways and lakes constitutes coastwise trade under 46 U.S.C. App. 883.

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. Title 46, United States Code Appendix, section 883 provides in pertinent part that:

"no merchandise shall be transported ... between points in the United States, including Districts, Territories and possessions thereof 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..."

A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws ("coastwise point") is unladen at another coastwise point. 19 C.F.R. 4.80b. Points embraced within the coastwise laws include all points within the territorial and navigable waters of the United States. United States territorial waters are defined as the belt, three 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.

The term "merchandise" as used in 46 U.S.C. App. 883, is not defined for purposes of that provision. We have used the definition of "merchandise" found in 19 U.S.C. 1401(c) in our administration of section 883. "Merchandise" is defined in section 1401(c) as meaning "goods, wares, and chattels of every description, and [including] merchandise the importation of which is prohibited...."

In your case, merchandise (food and sundries) will be laden on the houseboat at a point on the Puget sound waterways. The vessel will float around those waters and sell the merchandise which will be unladen/transferred to the purchasers' boat at another point on the Puget Sound waterways. This transaction constitutes a coastwise transportation and is prohibited by 46 U.S.C. App. 883.

On the other hand, Customs has held that a vessel not qualified for the coastwise trade, which is permanently moored, may be used as a restaurant or hotel without violating the statute. See, Headquarters Decisions 110202, 110239 and 110236. We find your proposed business transaction while the vessel is moored similar to the operation of a moored restaurant or hotel. Therefore, selling food and sundries from your houseboat while it is moored would not violate the coastwise laws.

HOLDING:

Selling food and sundries from a moored houseboat on the Puget Sound waterways and lakes does not constitute coastwise trade under 46 U.S.C. App. 883. However, selling such items while the vessel is floating around those waters would be prohibited under that statute.

Sincerely,

B. James Fritz
Chief

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