HQ 0113105 - Coastwise Trade; Cruise Itineraries; 46 U.S.C. App. 289 - United States International Trade Commision Rulings

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HQ 113105

June 2, 1994

VES-3/5-CO:R:IT:C 113105 GEV

CATEGORY: CARRIER

John Hein
Chief Financial Officer
Yachtship Cruiseline, Inc.
520 Pike Street, Suite 1610
Seattle, Washington 98101

RE: Coastwise Trade; Cruise Itineraries; 46 U.S.C. App. 289

Dear Mr. Hein:

This is in response to your letter dated May 5, 1994, to the District Director, U.S. Customs Service, Seattle, Washington, requesting a ruling regarding several cruise itineraries you are planning. Your letter was forwarded to this office for direct reply. The ruling you request is set forth below.

FACTS:

Yachtship Cruiseline, Inc., is planning a cruise itinerary using either a U.S.-flagged or foreign-flagged vessel at various times of the year. The cruise would commence with the boarding of passengers at Seattle for a day excursion through the San Juan Islands, including a 3 hour port call at a U.S. port (Roche Harbor or Friday Harbor) and into Haro Straight. Some of the cruising would be in Canadian waters to observe whales and other marine life. The vessels would not be stopping at any Canadian port, nor would there be any physical contact with any other vessels while in Canadian waters. However, the vessels would travel to a point beyond U.S. territorial waters in order to be in compliance with the applicable laws.

The above itinerary might be revised whereby the vessels would depart Seattle, make a port call at a U.S. port in the San Juan Islands and at a Canadian port (either Victoria or Sydney), and return to Seattle.

Finally, you request that we define the requirements for a "voyage-to-nowhere". Specifically, you inquire as to whether the round trip itinerary originating and terminating in Seattle must actually reach Canadian waters (no port call) in order for a foreign-flag vessel to legally be operated in such voyages, or whether the foreign-flag vessel can begin and end its cruise in the same place without any stop en route but stay in U.S. waters at all times.

ISSUES:

Whether the use of a U.S.-flagged or foreign-flagged vessel in the cruise scenarios described above constitutes an engagement in the coastwise trade in 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 embraced within the coastwise laws of the United States, either directly or by way of a foreign port, in a non-coastwise-qualified vessel (i.e., any vessel not built in and documented under the laws of the United States and owned by persons who are citizens of the United States). 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." (19 CFR

Section 4.80a(b)(1), Customs Regulations (19 CFR 4.80a(b)(1); copy enclosed), promulgated pursuant to 46 U.S.C. App. 289, provides that a coastwise violation occurs if a passenger is on a voyage solely to one or more coastwise ports and the passenger disembarks or goes ashore temporarily at a coastwise port.

Section 4.80a(b)(2), Customs Regulations (19 CFR 4.80a(b)(2); copy enclosed), also promulgated pursuant to 46 U.S.C. App. 289, provides that a coastwise violation occurs if a passenger is on a voyage to one or more coastwise points and a nearby foreign port or ports (but at no other foreign port) and the passenger disembarks at a coastwise port other than the port of embarkation. (see 19 CFR 4.80a(a)(1)(2) and (4) for the definitions of the terms "coastwise port," "nearby foreign port," "embark," and "disembark," as those terms are used in the regulation)

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 the 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)). 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 passengers' embarkation, is considered coastwise trade (T.D. 55193(2)).

In interpreting the coastwise laws, Customs has ruled that a point in United States territorial waters is a point in the United States embraced within the coastwise laws. The territorial waters of the United States consist of the territorial sea, defined as the belt, 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.

In regard to the proposed cruise itineraries, neither one meets the criteria of a "voyage-to-nowhere" since each includes a stop, albeit temporary, at another coastwise point.

Furthermore, in regard to the first proposed cruise itinerary, the passengers will embark and disembark at the same coastwise port (Seattle) with an intervening 3 hour port call at a U.S. port (Roche Harbor or Friday Harbor). Accordingly, pursuant to 19 CFR 4.80a(b)(1) there would be a violation of 46 U.S.C. App. 289 with regard to the use of a foreign-flagged vessel on this particular cruise. However, no such violation would occur with regard to a U.S.-flagged vessel provided it is also U.S.-built (i.e., coastwise-qualified).

In addition, the passengers in the second proposed itinerary will embark and disembark at the same coastwise port (Seattle) with intervening port calls at a U.S. port (the San Juan Islands) and Canada (Victoria or Sydney, both of which are nearby foreign ports as defined in 19 CFR 4.80a(a)(2)). Accordingly, pursuant to 19 CFR 4.80a(b)(2) there would be no violation of 46 U.S.C. App. 289 with respect to either the U.S. or foreign-flagged vessel.

Parenthetically, we note that aside from the provisions of the passenger coastwise law discussed above, the U.S.-flagged and foreign-flagged vessels engaging in the cruises in question must report their arrival immediately upon their return to Seattle pursuant to 19 U.S.C. 1433 and make entry pursuant to 19 U.S.C. 1434.

HOLDING:

The use of a foreign-flagged vessel in the first cruise itinerary described above constitutes an engagement in the coastwise trade in violation of 46 U.S.C. App. 289 whereas the use of a U.S.-flagged vessel would not provided it is U.S.-built (i.e., coastwise-qualified). The use of either a U.S.-flagged or foreign-flagged vessel in the second cruise itinerary described above would not constitute an engagement in the coastwise trade in violation of 46 U.S.C. App. 289.

Sincerely,

Arthur P. Schifflin

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