HQ 0113101 - Coastwise Trade; Passengers; Americas Cup; 46 U.S.C. App. 289 - United States International Trade Commision Rulings

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HQ 113101

May 18, 1994

VES-3-07-CO:R:IT:C 113101 GEV

CATEGORY: CARRIER

P. Clais
Director, Marine Department
Stardust Marine
11 Rue de Cambrai
75019 Paris, France

RE: Coastwise Trade; Passengers; Americas Cup; 46 U.S.C. App. 289

Dear Mr. Clais:

This is in response to your fax dated May 10, 1994, requesting a ruling regarding the operation of a foreign-flagged passenger vessel in conjunction with the Americas Cup. Our ruling on this matter is set forth below.

FACTS:

Stardust Marine would like to bring the PANORAMA, a foreign- flagged passenger vessel, to San Diego for a 3 month visit to coincide with the Americas Cup Races. The purpose of the visit is to provide accommodations and a viewing platform for the French Americas Cup Challenging Team participating in the races and their sponsors.

The vessel will be berthed in the Port of San Diego for the duration of the races, providing accommodations and meals for the French team staff as well as providing a hospitality venue for the team and its sponsors to host various social functions.

During many of the days in port the vessel will follow the race boats out into San Diego Bay to serve as a viewing platform and to provide technical and administrative support for the French race boat. The vessel will return to its berth at the end of the day. Aboard the vessel for these short sailings will be the French race team shore staff, sponsors and the sponsors' invited guests.

The vessel will be under charter for a period of 3.5 months, commencing the end of January 1995 until the beginning of May 1995. The duration of the vessel's stay in the United States will be dependent upon the success of the French Challenging Team. If the team is defeated, or if they retire from the competition, the vessel will depart with the team.

ISSUE:

Whether the use of a foreign-flagged passenger vessel in San Diego Bay as a viewing platform and hospitality venue, as well as providing accommodations and meals for the French Americas Cup Racing Team, shore staff, sponsors and their guests during the Americas Cup Races constitutes a violation of 46 U.S.C. App. 289.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, 289 (46 U.S.C. App. 289, the passenger coastwise law), prohibits the transportation of passengers between points in the United States embraced within the coastwise laws, either directly or by way of a foreign port, in a non-coastwise-qualified vessel (i.e., a vessel that is not U.S.-built, owned and documented). For purposes of 289, "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." (see 4.50(b), Customs Regulations, (19 CFR 4.50(b))

The coastwise laws generally apply to points in the territorial sea, 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.

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 (29 O.A.G. 318 (1912)).

In addition, the Customs Service has consistently held that when a vessel is chartered under a bona fide bareboat charter, the bareboat charterer is treated as the owner of the vessel for the period of the charter, and, because the owners are not considered "passengers" for purposes of the coastwise laws, the
charterer is not proscribed by the coastwise laws from using the vessel during the charter for pleasure purposes only. A vessel chartered under a charter arrangement other than a bareboat charter (e.g., a time or voyage charter) and used in coastwise transportation (see discussion above on the carriage of passengers entirely in territorial waters or to the high seas or foreign waters) would be subject to penalties under the coastwise laws. A vessel chartered under a bareboat charter would also be subject to penalties if the bareboat charterer used it in the coastwise trade (e.g., to transport passengers (other than bona fide guests) between coastwise points or entirely within territorial waters).

In our review of charter arrangements to determine whether or not they are bareboat charters we have generally held that:

The nature of a particular charter arrangement is a question of fact to be determined from the circum- stances of each case. Under a bareboat charter or demise charter the owner relinquishes complete man- agement and control of the vessel to the charterer. On the other hand, if the owner retains a degree of management and control, however slight, the charter is a time or voyage charter, and the vessel is deemed to be engaged in trade. The crux of the matter is whether complete management and control have been wholly surrendered by the owner to the charterer so that for the period of the charter the charterer is in effect the owner. Although a charter agreement on its face may appear to be a bareboat or demise charter, the manner in which its covenants are carried out and the intention of the respective parties to relinquish or to assume complete management and control are also factors to be considered.

Upon reviewing the information submitted, it is apparent that the PANORAMA would be operated under other than a bareboat charter. Furthermore, it is apparent that the French Americas Cup Team, shore staff, sponsors and their invited guests carried aboard the vessel are "passengers" within the meaning of 4.50(b), Customs Regulations. Accordingly, the use of the vessel to transport passengers in San Diego Bay would be pro-hibited by 46 U.S.C. App. 289 unless such transportation was pursuant to a valid "voyage-to-nowhere" (i.e., the passengers would be transported from their point of embarkation in the Port of San Diego to a point beyond the 3-mile U.S. territorial seas and back to their point of embarkation without having gone ashore at any other coastwise point). The use of the vessel in pro- viding accommodations, meals and as a venue for social functions does not violate 46 U.S.C. App. 289 provided the vessel remains stationary (i.e., it does not leave its berth) during such use.

HOLDING:

The use of a foreign-flagged passenger vessel in San Diego Bay as a viewing platform and hospitality venue, as well as providing accommodations and meals for the French Americas Cup Racing Team, shore staff, sponsors and their guests during the Americas Cup constitutes a violation of 46 U.S.C. App. 289 unless the vessel remains stationary during such use or the transportation of the aforementioned passengers is pursuant to a "voyage-to- nowhere" as discussed above.

Sincerely,

Arthur P. Schifflin

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