HQ 0112434 - 46 U.S.C. App. 289; 46 U.S.C. App. 883; Coastwise Trade; Passengers; Foreign-Built Vessel; Sailing School; NYAMBA - United States International Trade Commision Rulings

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HQ 112434

September 11, 1992

VES-3-02/07 CO:R:IT:C 112434 MLR

CATEGORY: CARRIER

James M. Burwick
Box 195
Teton Village, Wyoming 83025

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

Dear Mr. Burwick:

This is in reference to your letter of August 24, 1992, concerning the use of your vessel as a sailing school.

FACTS:

In your letter, you state that you intend to use the NYAMBA, an Australian-built sailing vessel, U.S. Doc. #665236, as a sailing school at Fernandina Beach, Florida. You plan to have six students.

ISSUE:

Whether the use of a non-coastwise-qualified vessel as a sailing school would be in violation of the coastwise laws, 46 U.S.C. App. 289, and 46 U.S.C. App. 883.

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 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. 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. Therefore, 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.

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." 19 CFR 4.50(b). Section 4.80a, Customs Regulations (19 CFR 4.80a) is interpretive of section 289.

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. Customs Rulings 109850, dated December 27, 1988; and 109287, dated February 24, 1988.

Therefore, the sole use of a non-coastwise-qualified 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 the restrictions placed on the transportation of merchandise under 46 U.S.C. App. 883.

Further, 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 use of a non-coastwise-qualified vessel as a sailing school is not in violation of the coastwise laws, 46 U.S.C. App. 289, and 46 U.S.C. App. 883.

This letter addresses only those federal requirements that are administered by the United States Customs Service. While we are unaware of any federal or state agency requirements that might pertain to the undertaking you describe, it is possible that such requirements exist.

Sincerely,

B. James Fritz

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