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HQ 113322





February 1, 1995

VES-3-CO:R:IT:C 113322 LLB

CATEGORY: CARRIER

Ms. Barbara Ehrich Locke
Holland and Knight
701 Brickell Avenue
Miami, Florida 33131

RE: Coastwise trade; Passengers; Pleasure vessel; Sale samples; Moored vessels; Direct sales to customers

Dear Ms. Locke:

Reference is made to your request of January 17, 1995, that this office issue a ruling regarding the proposed use of a United States-documented pleasure vessel in the promotion and sale of merchandise. You have requested that the identity of your client remain confidential for the purpose of protecting on-going negotiations regarding the vessel in question.

FACTS:

It is proposed that a United States-flag pleasure vessel be utilized to entertain past, present, and potential purchasers of jewelry products. It is reported that the vessel would remain moored at dockside during which period these persons would board and view jewelry samples. It is also possible that certain of the jewelry items would be sold while aboard the vessel.

ISSUE:

Whether the proposed use of the vessel as stated raises issues concerning the coastwise laws enforced by the Customs Service.

LAW AND ANALYSIS:

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 trans- portation, 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 Act of June 19, 1886, as amended (24 Stat. 81; 46 U.S.C. App. § 289, sometimes called the coastwise passenger law), 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.

For your general information, we have consistently interpreted this prohibition to apply to all vessels except United States-built, owned, and properly documented vessels (see 46 U.S.C. §§ 12106, 12110, 46 U.S.C. App. § 883, and 19 C.F.R. § 4.80).

The coastwise laws generally apply to points in the territorial sea, defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in the internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ. These laws have also been interpreted to apply to transportation between points within a single harbor. Merchandise, as used in section 883, includes any article, including even materials of no value (see the amendment to section 883 by the Act of June 7, 1988, Pub. L. 100-329; 102 Stat. 588).

Since it is stated that at all times during which persons will board and remain aboard the vessel, the yacht will be moored at a dock, there is no issue of passenger transportation between points in the United States which arises under the facts under consideration. The persons boarding the vessel will not be considered to be passengers under the provisions of section 289.

We turn now to a consideration of the jewelry items which will be aboard the vessel. The facts do not reveal whether these items will be placed aboard at one coastwise location and taken to one or more different such locations. Such a lading and transportation is not problematic under the merchandise statute so long as the merchandise is not unladed from the vessel at a location other that its point of lading. If, however, the merchandise were to be laded at one coastwise point and sold aboard the vessel at a different point, an unlawful unlading would occur when a purchaser left the vessel with the merchandise at the point of sale.

If it is contemplated that jewelry be placed aboard at one point and taken from the vessel at another, it would be necessary to obtain a coastwise endorsement on the vessel document from the United States Coast Guard. Other means of avoiding a violation would involve either transporting the jewelry between points by alternative methods and placing it aboard once the vessel is moored, or merely accepting orders aboard the vessel for delivery to customers after the vessel unlades the jewelry at the original point of lading.

HOLDING:

The coastwise passenger statute is not violated when persons embark and disembark a vessel which at all times remains stationary. The coastwise merchandise statute will be violated if merchandise is placed aboard a vessel at one coastwise point and is taken off at another point after having been sold to customers aboard the vessel.

Sincerely,

Arthur P. Schifflin

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