HQ 113088 - Coastwise trade; Recreational endorsement; Registry endorsement; Chartering; Voyage to nowhere; Puerto Rico and U.S. Virgin Islands - United States International Trade Commision Rulings

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November 16, 1994

HQ 113088

VES-3-CO:R:IT:C 113088 LLB

CATEGORY: CARRIER

Mr. John H. Thomas
3037 S.W. Fourth Avenue
Miami, Florida 33129

RE: Coastwise trade; Recreational endorsement; Registry endorsement; Chartering; Voyage to nowhere; Puerto Rico and U.S. Virgin Islands

Dear Mr. Thomas:

Reference is made to your request for a ruling on the applicability of the Customs and navigation laws to the operation of vessels configured as yachts under specific circumstances. Our response to your specific questions is presented below.

FACTS:

Several questions are posed regarding the use of vessels configured as yachts, both inside and outside of the territorial waters of the United States. A restatement of the questions posed follows:

1. Are there any restrictions on the use of a vessel for pleasure purposes as well as commercial purposes, so long as the vessel is documented as a vessel of the United States and is endorsed for recreational, registry, and coastwise trades?

2. If a vessel is chartered out with a crew included for operation within the waters of Puerto Rico as well as the U.S. Virgin Islands, is it necessary that the vessel be endorsed for the coastwise trade?

3. If a vessel is chartered out with a crew included for operation on a cruise to nowhere from a port of the United States to the high seas and back to the port of origin, is it necessary that the vessel be endorsed for the coastwise trade?

ISSUE:

What are the implications of and requirements for documentation of a vessel under United States law with endorsements for pleasure use as well as foreign and coastwise trades.

LAW AND ANALYSIS:

The vessel documentation laws of the United States provide that a vessel which is owned by a citizen and which is at least 5 net tons may be documented. Five different "endorsements" are possible on a document, three of which are the registry, recreational, and coastwise endorsements which are the subject of the present inquiry.

A registry may be issued to any vessel documented under United States law and allows the vessel to be employed in foreign trade. A recreational endorsement, likewise, may be issued to any U.S.-documented vessel, and permits the vessel to be used for pleasure (non-commercial) purposes only. A coastwise endorsement may be issued to a U.S.-documented vessel which is built in this country and which has never been under foreign ownership or documentation. An endorsement for coastwise trade permits a vessel to be used to transport persons or merchandise from one coastwise point to another. The documentation laws specify that a vessel may hold multiple endorsements.

The coastwise laws of the United States extend to the 50 States and Puerto Rico, including the navigable inland waters and the three mile territorial waters adjacent to those areas. The United States Virgin Islands are specifically excluded from consideration under the coastwise laws by statute (46 U.S.C. App. 877). Therefore, the use of a vessel in commercial trade between points in Puerto Rico or within the three mile territorial waters there would require a document with a coastwise endorsement. The use of a vessel in trade between points in the U.S. Virgin Islands or between a point in Puerto Rico and points in the U.S. Virgin Islands may be accomplished without the issuance of a coastwise endorsement.

A vessel which departs from a coastwise point, proceeds beyond the territorial waters, does not stop even temporarily at any other coastwise point, and returns to the point of departure is said to be engaged in a voyage to nowhere. Since there is but a single United States point involved in such an itinerary, there are no coastwise trade implications and a coastwise endorsement is not required.

A vessel which is chartered out with a crew supplied as part of the charter agreement is said to be "time" or "voyage" chartered. Under such a charter agreement, the persons transported aboard the vessel, other than the crew, are considered to be passengers for purposes of the coastwise laws. Their carriage between United States points is commercial trade which would require that the transporting vessel be documented with a coastwise endorsement.

In relating the foregoing to the questions posed in this matter, we are able to state the following.

1. Since the law provides that a vessel may be documented with more than one endorsement, there is no restriction regarding the use of a vessel with recreational, registry, and coastwise endorsements being employed part of the time in recreational uses and part of the time in commercial uses.

2. A coastwise endorsement would be necessary for a vessel under time or voyage charter to operate legally within the waters of Puerto Rico. Such a vessel could operate within the waters of the U.S. Virgin Islands without a coastwise endorsement, but would need a registry endorsement since the charter agreement would place the vessel outside of the permissible uses for a recreational vessel.

3. Likewise, a coastwise endorsement would not be required for a vessel engaging in a bona fide voyage to nowhere, but it would be necessary that the vessel have a registry endorsement for engagement in the commercial carriage of passengers under a time or voyage charter.

HOLDING:

Our determinations in this matter are reported in the Law and Analysis portion of this ruling.

Sincerely,

Arthur P. Schifflin

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