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HQ 113096





December 16, 1994

VES-3-02-CO:R:IT:C 113096 GOB

CATEGORY: CARRIER

Sven Budzisch
President
Laser In-Vitro Testing Limited
16 Angela Crescent
Cambridge, Ontario
N1S 4B6, Canada

RE: Coastwise transportation; 46 U.S.C. App. 289, 289c(a), 877, 883; Puerto Rico

Dear Mr. Budzisch:

This is in response to your letter dated November 29, 1994.

FACTS:

You ask the following questions.

1. Does the "Jones Act" apply to the waters of Puerto Rico.

2. You are in the process of purchasing a used vessel from a French company in Marseille for $100,000. The vessel will undergo an extensive retrofit in the United States. The estimated cost of the retrofit is $850,000. After the retrofit, the vessel will be reclassified by the ABS and inspected by the U.S. Coast Guard. Will the vessel be considered U.S.-built for purposes of the Jones Act?

3. What legal or regulatory requirements exist with respect to establishing a tourist submarine operation in Puerto Rico or Florida using a 47 passenger tourist submarine with an approximate displacement of 120 tons.

ISSUES:

Whether the proposed activity may be undertaken in compliance with the coastwise laws.

LAW AND ANALYSIS:

Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. A vessel that is built in, documented under the laws of, and owned by citizens of the United States, and which obtains a coastwise endorsement from the U.S. Coast Guard, is referred to as "coastwise qualified."

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

46 U.S.C. App. 883, the coastwise merchandise statute often called the "Jones Act", provides in part that no merchandise shall be transported between points in the United States embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States.

The coastwise law applicable to the carriage of passengers is found in 46 U.S.C. App. 289 and 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 a penalty of $200 for each passenger so transported and landed.

Section 4.50(b), Customs Regulations (19 CFR 4.50(b)) states as follows:

A passenger within the meaning of this part is any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business.

Pursuant to 46 U.S.C. App. 877, the coastwise laws are extended to the islands and possessions of the United states, including Puerto Rico.

46 U.S.C. App. 289c(a) states in pertinent part:

...passengers may be transported on passenger vessels not qualified to engage in the coastwise trade between ports in Puerto Rico and other ports in the United States, directly or by way of a foreign port, except as otherwise provided in this section.

The legislative history of 46 U.S.C. App. 289c(a) makes it clear that that provision was intended to permit passenger movement on non-coastwise-qualified vessels only between Puerto Rico and the United States mainland.

Accordingly, pursuant to 46 U.S.C. App. 289, passengers may not be transported from one point within Puerto Rico to a second point within Puerto Rico on a non-coastwise-qualified vessel.

The U.S. Coast Guard is the entity that is responsible for making the determination as to whether the retrofitted vessel will be considered U.S.-built.

However, regardless of that determination, the vessel will not be eligible for a coastwise endorsement qualifying it for use in the coastwise trade because the vessel was at one time owned by a non-U.S. citizen. Accordingly, subject to the exception of 46 U.S.C. App. 289c(a), the vessel may not transport passengers or merchandise between coastwise points.

With respect to your inquiry concerning a "tourist submarine operation in Puerto Rico or Florida using a 47 passenger tourist submarine," we note the following.

As indicated above, if the vessel is not coastwise-qualified, with the exception of 46 U.S.C. App. 289c(a), it may not transport passengers or merchandise between coastwise points. Such a prohibition applies to transportation from one point in Florida to a second point in Florida; the prohibition also applies to transportation from one point in Puerto Rico to a second point in Puerto Rico.

However, also as indicated above, pursuant to 46 U.S.C. App. 289c(a), a non-coastwise-qualified vessel may transport passengers between a port in Puerto Rico and a port on the U.S. mainland.

With respect to your inquiry regarding legal and regulatory requirements, we suggest that you contact the U.S. Coast Guard, as well as any other applicable state or local authorities.

HOLDING:

The U.S. Coast Guard handles the documentation of vessels, including the issuance of coastwise endorsements. However, as described above, the vessel which you propose to purchase is not, and will not, be eligible for a coastwise endorsement. Accordingly, with the exception of the activity permitted by 46 U.S.C. App. 289c(a), the vessel may not transport passengers or merchandise from one coastwise point to a second coastwise point. Pursuant to 46 U.S.C. App. 289c(a), the vessel may transport passengers between a port in Puerto Rico and a port on the U.S. mainland.

Sincerely,

Arthur P. Schifflin
Chief

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