HQ 0113158 - Coastwise Trade; Great Lakes; Cruise Vessel; Zodiacs; 46 U.S.C. 12107; 46 U.S.C. App. 289 - United States International Trade Commision Rulings

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HQ 113158

July 21, 1994

VES-3-CO:R:IT:C 113158 GEV

CATEGORY: CARRIER

R.J. Morris
Commander, U.S. Coast Guard
Chief, Merchant Vessel Safety Branch
1240 E. Ninth Street
Cleveland, Ohio 44199-2060

RE: Coastwise Trade; Great Lakes; Cruise Vessel; Zodiacs; 46 U.S.C. 12107; 46 U.S.C. App. 289

Dear Commander Morris:

This is in response to your letter dated June 24, 1994, requesting our opinion concerning the use of foreign-owned vessels engaged in transporting passengers on the Great Lakes. Enclosure 1 of your letter contained various advertisements and cruise information regarding the vessels in question. Our ruling on this matter is set forth below.

FACTS:

The U.S. Coast Guard (USCG) has received plans for review of a Russian-flagged cruise ship, the M/V AKADEMIK SHULEYKIN, for the purposes of inspecting the vessel for the transportation of passengers on the Great Lakes. The vessel's agent has also visited two USCG Marine Safety Offices in United States ports on the Great Lakes where the vessels plan to either visit or embark or disembark passengers. Included in the cruise itineraries are side excursions in United States waters of the Great Lakes for the passengers from the cruise ship in foreign-built and owned inflatable zodiacs. The cruises are scheduled to commence on August 1, 1994 and run through September of 1994. The vessel's agent has stated that three Russian-flagged cruise ships are contemplated for such use including the aforementioned M/V AKADEMIK SHULEYKIN, the M/V AKADEMIK IOFFE, and an as yet unidentified vessel.

The cruise schedule indicates that the vessels will be transiting between Toronto, Ontario, Canada and Duluth, Minnesota. Passengers who embark in Toronto will disembark in Duluth. The vessels will then embark new passengers in Duluth and return to Toronto. The vessels plan various port visits in the United States during the transit including: Niagara Falls, - 2 -

New York; Midland, Michigan; Sault. Ste. Marie, Michigan; and Marquette, Michigan. At these ports passengers will leave the vessel for local excursions in the aforementioned zodiacs. Intervening Canadian stops are also planned during these cruises which range from 8 to 10 days.

ISSUES:

1. Whether the transportation of passengers by a foreign- flagged cruise vessel between two ports on the Great Lakes, when the port of embarkation is in Canada and the port of disembark- ation is in the United States, and with various intervening stops at both United States and Canadian ports, constitutes a violation of 46 U.S.C. 12107 and/or 46 U.S.C. App. 289.

2. Whether the transportation of passengers by a foreign- flagged cruise vessel between two ports on the Great Lakes, when the port of embarkation is in the United States and the port of disembarkation is in Canada, and with various intervening stops at both United States and Canadian ports, constitutes a violation of 46 U.S.C. 12107 and/or 46 U.S.C. App. 289.

3. Whether a foreign-built and owned inflatable boat car- ried on board the above-described cruise vessel used to transport passengers on excursions in United States waters for the purpose of sight-seeing constitutes a violation of 46 U.S.C. App. 289.

LAW AND ANALYSIS:

As you know, 12107 of title 46, United States Code, is the documentation provision concerning the Great Lakes trade. Under this provision, a certificate of documentation may be endorsed with a Great Lakes endorsement for a vessel that is eligible for documentation (per 46 U.S.C. 12102), was built in the United States (with an exception not pertinent in this case), and otherwise qualifies under the laws of the United States to be employed in the coastwise trade. Under paragraph (b) of 12107:

Subject to the laws of the United States regulating trade with Canada, only a vessel for which a certificate of documentation with a Great Lakes endorsement is issued may be employed on the Great Lakes and their tributary and connecting waters in trade with Canada.

The predecessor of this provision was the Act of March 2, 1831 (Ch. 98, 4 Stat. 487; see also, the Act of June 17, 1864, Ch. 30, 13 Stat. 134; Revised Statutes 4318, formerly codified in 46 U.S.C. 258). Under these provisions, "[a]ny vessel of the United States, navigating the waters of the northern,
northeastern, and northwestern frontiers, otherwise than by sea" was required to be enrolled and licensed in such form as other vessels. (emphasis added)

Accordingly, it is apparent that the provisions 46 U.S.C. 12107 are applicable only to vessels documented under the laws of the United States and do not act as a prohibition against foreign-flagged vessels transporting passengers and merchandise on the Great Lakes between the United States and Canada.

Notwithstanding the inapplicability of 46 U.S.C. 12107 to the Russian-flagged vessels in question, we note that 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 4.50(b))

Section 4.80a(b)(2), Customs Regulations (19 CFR 4.80a(b)(2); copy enclosed), promulgated pursuant to 46 U.S.C. App. 289, provides that a coastwise violation occurs if a passenger who embarks a non-coastwise-qualified vessel at a coastwise point 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 United States 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 beyond United States 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 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. We further note that as they pertain to the Great Lakes, the territorial waters of the United States include those waters adjacent to the coast of the United States extending to the U.S.-Canada international boundary. (See Customs rulings 110056, dated February 13, 1989 and 112023, dated December 23, 1991)

In regard to the schedules of the Russian-flagged cruise vessels in question, there appears to be no violation of 46 U.S.C. App. 289 either in the Duluth - Toronto or Toronto - Duluth schedules (each of which includes intervening stops at U.S. and Canadian ports) provided no passenger on either schedule "embarks" at a "coastwise port" (e.g., Duluth) and "disembarks" at a different "coastwise port" (e.g., Sault Ste. Marie, Michigan) as those terms are defined in 4.80a(a)(1) and (4).

In regard to the inflatable zodiacs aboard the subject cruise vessels, we note that qualified vessels of less than 5 net tons are not precluded from engaging in the coastwise trade simply because they cannot be documented under the laws of the United States. Section 4.80(a), Customs Regulations (19 CFR 4.80(a)) enumerates the vessels which are qualified to engage in the coastwise trade. Subparagraph (2) of this section (19 CFR 4.80(a)(2)) provides that no vessel exempt from documentation (e.g., of less than 5 net tons) shall transport any passengers or merchandise between United States coastwise points unless the vessel is owned by a citizen of the United States and is entitled to or, except for its tonnage, would be entitled to be documented with a coastwise license. As stated above, to be entitled to a coastwise endorsement a vessel must, among other things, be built in the United States.

Accordingly, the foreign-built and owned inflatable zodiacs could not be used to transport passengers in United States waters for the purpose of sight-seeing.

HOLDINGS:

1. The transportation of passengers by a foreign-flagged cruise vessel between two ports on the Great Lakes, when the port of embarkation is in Canada and the port of disembarkation is in the United States, and with various intervening stops at both United States and Canadian ports, does not constitute a violation of 46 U.S.C. 12107 or 46 U.S.C. App. 289.

2. The transportation of passengers by a foreign-flagged cruise vessel between two ports on the Great Lakes, when the port of embarkation is in the United States and the port of disembarkation is in Canada, and with various intervening stops at both United States and Canadian ports, does not constitute a violation of 46 U.S.C. 12107 or 46 U.S.C. App. 289.

3. A foreign-built and owned inflatable boat carried on board the above-described cruise vessel used to transport passengers on excursions in United States waters for the purpose of sight-seeing constitutes a violation of 46 U.S.C. App. 289.

Sincerely,

Arthur P. Schifflin

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