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HQ 114492

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October 6, 1998

VES-3-06-RR:IT:EC 114492 GEV

CATEGORY: CARRIER

Allen von Spiegelfeld, Esq.
Fowler, White, Gillen, Boggs,
Villareal & Banker, P.A.
Post Office Box 1438
Tampa, Florida 33601

RE: Coastwise Trade; Foreign-flag vessel; Floating hotel; Casino;
46 U.S.C. App. ?? 289, 883

Dear Mr. von Spiegelfeld:

This is in response to your letter of September 15, 1998, requesting our opinion regarding an activity that has been proposed by a client of yours involving the use of a foreign-flag passenger vessel to be anchored offshore as a floating hotel/casino. Our opinion is set forth below.

FACTS:

Your client wishes to purchase a foreign-flag cruise ship and sail it to a position between nine and 20 miles off the St. Petersburg/Clearwater/Tarpon Springs beaches. Although this vessel would be capable of moving, it is planned that it would only move on rare occasions and then only short distances. The primary purpose of the vessel would be to act as a floating hotel/casino off the coast of Florida. The visitors to the hotel/casino would be brought to the vessel on U.S.-flag vessels from various load positions in Pinellas and Pasco Counties. Each person taken out to the hotel/casino would have a pass which would indicate the port from which they departed, and they would only be permitted to return to the same port.

ISSUE:

Whether the use of a foreign-flag cruise vessel as a floating hotel/casino as described above is violative of any statute administered by the U.S. Customs Service.

LAW AND ANALYSIS:

Title 46, United States Code Appendix, ? 883 (46 U.S.C. App. 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 and documented under the laws of the United States and owned by persons who are citizens of the United States (i.e., a coastwise-qualified vessel).

Title 46, United States Code Appendix, ? 289 (46 U.S.C. App. of passengers 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).

Points embraced within the coastwise laws include all points within the territorial waters of the United States, including points within a harbor. The territorial waters of the United States consist of the territorial sea, 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, in cases where the baseline and coastline differ.

Furthermore, ? 4(a) of the Outer Continental Shelf Lands Act of 1953, as amended (67 Stat. 462; 43 U.S.C. ? 1333(a)) (OCSLA), provides, in part, that the laws of the United States are extended to:

... the subsoil and seabed of the outer Continental Shelf and to all artificial islands, and all installations and other devices permanently or temporarily attached to the seabed, which may be erected thereon for the purpose of exploring for, developing, or producing resources therefrom ... to the same extent as if the outer Continental Shelf were an area of exclusive Federal jurisdiction within a State.

With regard to your client's proposal, it should be noted that the use of a foreign-flag vessel as a floating hotel within U.S. territorial waters has long been held by Customs not to violate 46 U.S.C. App. ?? 289 and/or 883 provided the vessel remains stationary during such use. (See Headquarters ruling letter 108359, dated May 21, 1986) The use of the subject vessel as described above would yield the same result in view of the fact that it would be operated at a location not embraced within the coastwise laws (i.e., between nine and 20 miles off the Florida coast). The fact that it may occasionally move short distances is of no consequence as long as such movement does not constitute the transportation of passengers or merchandise between coastwise points.

Furthermore, since the subject vessel itself would not be considered a coastwise point as provided for in the OCSLA, those individuals transported to it from the mainland and back to their point of embarkation need not be ferried by a coastwise-qualified vessel.

Notwithstanding the absence of any violations of the coastwise laws with regard to the use of the above-described vessels in your client's proposal, you should also know that those vessels transporting passengers to and from the floating hotel/casino will have to report their arrival with Customs, make formal entry, and obtain clearance pursuant to 19 U.S.C. ?? 1433, 1434, and 46 U.S.C. App. ? 91, respectively. The same requirements would apply to the foreign-flag cruise vessel in the event it calls at a U.S. port.

In addition, since your proposal involves the operation of a casino, you should also know that monetary instruments brought into the U.S. totaling in excess of $10,000 are subject to the reporting requirements of 31 U.S.C. ? 5316. Pursuant to 31 CFR Part 103, Subpart F, the issuance of administrative rulings regarding ? 5316 Reports is a matter within the purview of the Office of Financial Crimes Enforcement Network ("FIN CEN") at the Department of Treasury. Should you wish to seek such a ruling regarding your client's proposal, your request should be directed to that office at the following address:

Director
FIN CEN
U.S. Department of Treasury
1500 Pennsylvania Avenue, N.W.
Treasury Annex, Rm. 3190
Washington, D.C. 20220

HOLDING:

As discussed in the Law and Analysis portion of this ruling, the use of a foreign-flag cruise vessel as a hotel/casino as described above is not violative of any statute administered by the U.S. Customs Service.

Sincerely,

Jerry Laderberg

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