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HQ 113958

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June 27, 1997

VES-3-02-RR:IT:EC 113958 CC

CATEGORY: CARRIER

Sandra Hunt
Office Manager
Herndon & Thompson Leasing Co.
41745 Bear Creek Court
Homer, Alaska 99603-9439

RE: Coastwise Trade; 46 U.S.C. App. ? 289, ? 883

Dear Ms. Hunt:

This is in response to your letter of May 19, 1997, requesting a determination whether the use of your vessel is considered coastwise trade.

FACTS:

You state that the vessel recently purchased by the construction company for which you work will be used to transport employees, equipment, and supplies to various job sites. The job sites are located on the Kachemak Bay and the Cook Inlet in Alaska; therefore, the vessel will be transporting merchandise between points in those areas. When you sought documentation of the vessel, you state that the U.S. Coast Guard requested that you seek a determination concerning whether the vessel would be engaging in coastwise trade. According to your submission, the vessel will also be used for pleasure from time to time.

ISSUE:

Whether the subject vessel is engaged in coastwise trade.

LAW AND ANALYSIS:

Generally, the coastwise laws (i.e., 46 U.S.C. App. ? 289, ? 883) prohibit the transportation of passengers or merchandise between points embraced within the coastwise laws of the United States, either directly or by way of a foreign port, in a non-coastwise-qualified vessel (i.e., any vessel not built in and documented under the laws of the United States and owned by persons who are citizens of the United States).

In interpreting the coastwise laws Customs has ruled that a point in the United States territorial waters is a point in the United States embraced within the coastwise laws. The territorial waters of the United States consist of the territorial sea, defined as the belt, 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 coastline differ.

The Kachemak Bay and Cook Inlet are within the U.S. territorial waters and are thus coastwise points. Transportation of supplies and equipment on the vessel between points in those areas would constitute transportation of merchandise between coastwise points. Thus, use of the vessel in that manner would be a violation of the coastwise trade laws and would be prohibited, unless the vessel is U.S.-owned and U.S.-built, and is properly documented (a coastwise endorsement) by the U.S. Coast Guard.

The use of the vessel for pleasure purposes would not be in violation of the coastwise trade laws if there is no transportation of merchandise or passengers. For purposes of the coastwise trade law, the term 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." 19 CFR 4.50(b). We have held that the family and legitimate guests of the owner or bareboat charterer of a vessel used for pleasure purposes are not considered passengers. See, e.g., Headquarters Ruling (HQ) 111731 of February 19, 1992.

HOLDING:

The subject vessel is engaged in coastwise trade, which would be prohibited by the coastwise laws unless it is a U.S.-owned and US.-built vessel, and is properly documented by the U.S. Coast Guard.

Sincerely,

Jerry Laderberg
Acting Chief
Entry and Carrier Rulings Branch


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