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HQ 113267




February 6, 1995

VES-3-02/07-CO:R:IT:C 113267 BEW

CATEGORY: CARRIER

Ms. Letty Wheeler
School of Ocean Sailing
Post Office Box 7359
Portland, Maine 04112

RE: Coastwise Trade; Passengers; Foreign-Flag Vessel; Sailing School; 46 U.S.C. App. 289; 46 U.S.C. App. 883

Dear Ms. Wheeler:

This is in response to your letter of October 26, 1994, concerning the use of a non-coastwise-qualified vessel in the territorial waters of Portland, Maine, as a sailing school.

FACTS:

You state that you and your husband operate the School of Ocean Sailing aboard the sailing vessel SAMANA in the Gulf of Maine. You state that you plan to operate the subject sailing vessel out of the port of Portland, Maine, and that you wish to include a stop in Yarmouth, Nova Scotia. The SAMANA is a foreign built vessel documented as a US registry vessel. You inquire as to whether the Customs laws and regulations would permit the vessel to stop in Nova Scotia.

ISSUE:

Whether, under the stated facts, the use of a non-coastwise-qualified vessel as a sailing school would be in violation of the coastwise passenger law, 46 U.S.C. App. 289.

LAW AND ANALYSIS:

Generally, the coastwise laws (e.g., 46 U.S.C. App. 289 and 883, and 46 U.S.C. 12106 and 12110) prohibit the transportation of merchandise or passengers between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in and documented under the laws of the United States, and owned by persons who are citizens of the United States. The coastwise law pertaining to the transportation of merchandise, section 27 of the Act of June 5, 1920, as amended (41 Stat. 999; 46 U.S.C. App. 883, often called the Jones Act), provides that:

No merchandise shall be transported by water, or by land and water, on penalty of forfeiture of the merchandise (or a monetary amount up to the value thereof as determined by the Secretary of the Treasury, or the actual cost of the transportation, whichever is greater, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to 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 other vessel than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States ....

The passenger coastwise law, 46 U.S.C. App. 289, 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 penalty of $200 for each passenger so transported and landed.

For purposes of the section 289, vessel "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." (Section 4.50(b), Customs Regulations.) Section 4.80a, Customs Regulations (19 CFR 4.80a) is interpretive of section 289.

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. 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 passenger's embarkation, is considered coastwise trade (TD 55193(2)). In interpreting the coastwise laws, Customs has ruled that a point in United States territorial waters is considered a point embraced within the coastwise laws. The coastwise laws generally apply to points in the territorial sea, defined as the belt, three (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.

Given the foregoing definition of "passenger", the Customs Service has held that a person being trained or receiving instruction in the handling or navigation of a vessel, and whose presence on board the vessel is necessarily required in order to receive such training or instruction, is not a "passenger" within the meaning of the coastwise laws. Accordingly, if the vessel is used only for such training it would not be required to have a license to engage in the coastwise trade (see Customs Letter Rulings 109850, dated December 27, 1988 and 109287, dated February 24, 1988).

We have consistently held that vessel equipment and stores are not considered "merchandise" for purposes of section 883 when transported in the vessel by which they are used (see Customs letter rulings 106910, dated July 9, 1984, and 108223, dated March 13, 1986).

Therefore, the sole use of a non-coastwise-qualified sailing vessel in connection with a bona fide instructional course in sailing and navigation does not constitute coastwise trade within the meaning of 46 U.S.C. App. 289.

However, all persons being carried in the vessel must be involved with the operation, navigation, or business of the vessel. A person who is carried on board a vessel for recreational purposes and who pays a fee for such carriage would be considered a "passenger" and his carriage between places in the United States or entirely within U.S. waters would be in violation of the coastwise laws.

HOLDING:

The sole use of a non-coastwise-qualified sailing vessel in connection with a bona fide instructional course in sailing and navigation does not constitute coastwise trade within the meaning of 46 U.S.C. App. 289.

Sincerely,

Arthur P. Schifflin
Chief

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