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HQ 113493



September 29, 1995

VES-3-19 R:IT:C 113493 BEW

CATEGORY: CARRIER

Mr. Jerome C. Scowcroft
Schwabe Williamson Ferguson & Burdell, P.C. 1420 Fifth Avenue
Seattle, Washington 98101-2339

RE: Entry and Clearance; User fees; 19 CFR 24.22

Dear Mr. Scowcroft:

This is in response to your request for a ruling dated July 5, 1995 , concerning the use of the EDGEWATER FORTUNE, a Canadian-Flag vessel, in the territorial waters of the United States.

FACTS:

The record indicates that Captain and Mrs. H.R. Johansen are the owners of the EDGEWATER FORTUNE, a yacht documented in Canada. On January 19, 1995, the vessel entered Roche Harbor, carrying 41 students, 4 teachers, and 2 parent volunteers from Alderman Junior High School in Calgary, Canada. The students were on a five-day voyage in U.S. and Canadian waters. The cruise was being conducted as a part of the School at Sea Program, an educational program which the vessel owner has conducted for numerous schools in Calgary, Edmonton, and other locations in Canada for approximately twenty years.

On each voyage the school for which the voyage is conducted pays a fee to the vessel owner. The owners claim that the voyage is conducted solely for educational purposes, that the students who are enrolled in the classes attend classes at the school before the commencement of the voyage, and that they receive instruction during the voyage. The instruction consists of seamanship as well as subjects such as history, geography and natural science. The owners further claim that the fee paid is charged solely to reimburse the owners for out-of-pocket expenses which they incur in donating their vessel, that the fee is much less than that which the vessel owners would receive in commercial use, and is not sufficient even to compensate the owners for such things as ordinary wear and tear and depreciation of the vessel.

When the vessel entered Roche Harbor on the voyage in question, a user fee in the amount of $397 was assessed for each entry the vessel had made from March 18, 1993, to April 19, 1995, the rate for commercial vessels as provided under 19 U.S.C. 58c and 19 CFR 24.22(a).

The owners contend that the vessel is not carrying passengers for hire and should not be considered a commercial vessel.

ISSUES:

Whether under the stated facts, the use of a Canadian-flag vessel, documented with a Certificate of Registry as a motor twin screw composite-yacht with a gross tonnage of 502.55 tons, for the transportation of students in connection with an educational course in seamanship, history, geography, and natural science, is considered a commercial vessel for the purposes of the assessment of user fees under the provisions of title 19, United States Code, section 58c and 19 CFR 24.22.

LAW AND ANALYSIS:

Title 19, United States Code, section 58c(a)(4), provides for the assessment of a $25 fee in connection with all arrivals made during a calendar year by a private vessel or private aircraft. Under the provisions of section 24.22 (e) of the Customs Regulations, the requirements of this paragraph shall not apply to private pleasure vessels of less than 30 feet in length, so long as they are not carrying any goods required to be declared to Customs, nor to private pleasure vessels granted a cruising license under the provisions of section 4.94 of the Customs Regulations.

It appears from the Canadian Certificate of Registry that the EDGEWATER FORTUNE is a registered as a motor twin screw composite-yacht, having a gross tonnage of 502.55 tons. The School At Sea Program is an educational program which the vessel has conducted for numerous schools in Calgary, Edmonton, and other locations in Canada for approximately twenty years. The voyage is conducted solely for educational purposes. The students attend classes before the commencement of the voyage and receive instruction during the voyage. They receive instruction in seamanship, as well as subjects such as history, geography and natural science. In order for the students to receive hands on seamanship training, the schools enter into a Charter Agreement with the owners of the vessel for the purpose of training the students, who are transported from the Canadian waters to the United States waters. On each voyage the school pays a fee for each student to the vessel owners. The students temporarily leave the vessel in the U.S., but rejoin it to return to Canada where they disembark from the vessel.

Blacks' Law Dictionary defines "commercial" as "relating to or connected with trade and traffic or commerce in general. "Commerce" is "the transportation of persons as well as goods, both by land and by sea." The EDGEWATER FORTUNE is in fact a vessel engaged in the transportation of persons for a fee regardless of the size of the fee and whether its owners profit therefrom. Thus under the subject definitions, the EDGEWATER FORTUNE is being used for commercial purposes.

After complete review of the above stated circumstances, we find that at the time of arrival on the subject dates, the EDGEWATER FORTUNE was being used as passenger vessel for the purposes of U.S. Customs and navigation laws, and as such would be subject to payment of user fees as a commercial passenger vessel.

Accordingly, we find that the subject vessel is not exempt from the payment of user fees. We further find that a user fee in the amount of $397 per entry was properly assessed for each of the subject 29 entries.

HOLDING:

The vessel in question under the stated facts has been determined to be a commercial passenger vessel at the time it arrived in the United States. Commercial passenger vessels are subject to user fees under the provisions 19 U.S.C. 58c at the rate of $397 per entry, not to exceed $5,955 in any one year.

Sincerely,

Arthur P. Schifflin
Chief

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