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HQ 115018

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June 19, 2000

VES-3-06-RR:IT:EC 115018 GEV

CATEGORY: CARRIER

Richard Ploss
Art Anderson Associates
202 Pacific Avenue
Bremerton, Washington 98337-1932

RE: Coastwise Trade; Foreign-Built Vessel; Exhibition Center; 46 U.S.C. App. §§ 289, 883

Dear Mr. Ploss:

This is in response to your fax dated April 20, 2000, requesting verification/concurrence regarding your understanding of the applicability of the coastwise laws to the use of a foreign-built vessel as a exhibition center. Our ruling on this matter is set forth below.

FACTS:

Your client is interested in converting a foreign-built vessel into an exhibition center. As an exhibition center, the vessel will visit international and U.S. ports. With respect to such use, you state that the vessel will:

Provide service functions similar to an amusement park. These will be interactive exhibits such as concerts, seminars, stage plays and audio/visual presentations. 2) Offer the service functions to the public only while the vessel is in port and moored to a pier. 3) Charge the public an admission fee to board the vessel.
Have revenue enhancements similar to those of an amusement park. These will be in the form of gift shops and dining facilities. 5) Have an estimated gross tonnage between 15,000 to 22,5000 tons.
6) Be owned and operated by a non-profit organization.

In addition, you state that the vessel will not:

Transport between U.S. ports merchandise which you define as goods that are bought and sold in business commercial wares. Sail between U.S. ports with paying passengers.

Finally, you state that the vessel may:

Have a foreign crew.
Be registered in a foreign country.

With respect to the information provided above, you ask that we grant or concur with your position that such a vessel:

May sail directly between U.S. ports without being in violation of the Jones Act. Will not be limited to visiting only U.S. ports having fully functional U.S. Customs Service offices. Is not required to have a U.S. citizen owner or crew.

ISSUES:

Whether the use of the subject foreign-built vessel as described above constitutes a violation of the coastwise laws. Whether the subject foreign-built vessel may only visit U.S. ports having fully functional U.S. Customs Service offices. Whether the subject foreign-built vessel is required to have a U.S. citizen owner or crew.

LAW AND ANALYSIS:

The coastwise law pertaining to the transportation of merchandise, § 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, in pertinent part, 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 transpor- tation, 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...

Pursuant to title 19, United States Code, § 1401(c) (19 U.S.C. § 1401(c)), the word “merchandise” is defined as “goods, wares and chattels of every description, and includes merchandise the importation of which is prohibited.” This definition differs from the one set forth in point 7, above.

Section 4.80b(a), Customs Regulations (19 CFR § 4.80b(a)), promulgated pursuant to 46 U.S.C. App. § 883, provides, in part, that:

A coastwise transportation of merchandise takes place, within the meaning of the coastwise laws, when merchandise laden at a point embraced within the coastwise laws (“coastwise point”) is unladen at another coastwise point, regardless of the origin or ultimate destination of the merchandise. (Emphasis added)

The Act of June 19, 1886, as amended (24 Stat. 81; 46 U.S.C. App. § 289, 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.

Customs has consistently interpreted the above prohibitions to apply to all vessels except U.S.-built, owned, and properly documented vessels (see 46 U.S.C. § 12106, 12110; 46 U.S.C. App. § 883; 19 CFR § 4.80). Furthermore, for purposes of 46 U.S.C. App. § 289, a “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.” (See 19 CFR § 4.50(b))

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 internal waters, landward of the territorial sea baseline, in cases where the baseline and the coastline differ.

With respect to the first issue presented for our consideration, at the outset we note that the charging of an admission fee, the vessel’s gross tonnage, and its ownership and operation by a non-profit organization (i.e., points 3, 5, and 6 listed above) are of no consequence with respect to Customs administration of the coastwise laws. What is relevant is the vessel’s engagement in any transportation of merchandise or passengers between points embraced within the coastwise laws.

Accordingly, the mere sailing between U.S. ports (without the transportation of passengers or merchandise) by a non-coastwise-qualified vessel (i.e., one that is not U.S.-built, owned and documented) does not run contra to 46 U.S.C. App. 289 and/or 883. In addition, we note that the mooring of the vessel to a pier during the time it is functioning as an entertainment center (i.e., conducting concerts, seminars, stage plays and audio/visual presentations as described in points 1 and 2, above) also renders inapplicable the aforementioned laws provided no passengers or merchandise are transported between a coastwise point and the place of mooring should the latter also be a coastwise point. This particularly impacts the revenue enhancements described in point 4, above. Should gifts, foodstuffs, etc. be loaded on the vessel in the U.S. and offloaded at another location in the U.S. (e.g., purchased by a patron of the vessel/exhibition center park who subsequently takes it off the vessel), the provisions of 46 U.S.C. App. § 883 would be violated.

In regard to the second issue for our consideration, the Customs Regulations pertaining to the report of arrival, entry and clearance of vessels are clear. Pursuant to 19 CFR § 4.2(a)), the report of arrival “shall be made at the nearest Customs facility or other location designated by the port director.” With respect to entry and clearance, pursuant to 19 CFR § 101.4(a), such functions should not occur at any place “that is not a port of entry, unless entry or clearance is authorized by the director of the port under whose jurisdiction theplace falls”

Accordingly, unless the activities of the subject vessel fall outside the scope of the statutory report of arrival, entry and clearance requirements set forth in 19 U.S.C. §§ 1433, 1434 and 46 U.S.C. App. § 91, respectively (e.g., it is U.S.-flagged and merely sailing between U.S. ports), the vessel would be limited to visiting U.S. ports having fully functional U.S. Customs Service offices (i.e., ports of entry) unless otherwise authorized by the applicable port director.

Finally, you should know that the third issue for our consideration is beyond the jurisdiction of the U.S. Customs Service. Inquiries pertaining to the citizenship of a vessel owner or crew are within the jurisdiction of the U.S. Coast Guard. We suggest you contact that agency regarding this matter.

HOLDINGS:

The use of the subject foreign-built vessel as described above does not constitutes a violation of the coastwise laws provided no passengers or merchandise are transported between points embraced within those laws. Unless not required to report arrival, make entry or clearance, the subject foreign-built vessel may only visit U.S. ports having fully functional U.S. Customs Service offices unless otherwise authorized by the appropriate port director. The subject foreign-built vessel’s U.S. citizen ownership or crew requirements are within the purview of the U.S. Coast Guard.

Sincerely,

Acting Chief

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