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HQ 115106





September 27, 2000

VES-3-02 RR:IT:EC 115106 RSD

CATEGORY: CARRIER

Mr. Robert Chamberlain
Vice President, Operations
Mayflower Ocean Lines
10097 Cleary Boulevard
Suite 323
Plantation, Florida 33324

RE: Coastwise Trade, Passengers, Foreign Built Vessel, Cruise Itinerary, Nearby Foreign Port, Title 46, U.S.C. App. §289, 19 CFR 4.80a

Dear Mr. Chamberlain:

This is in response to your letter dated July 18, 2000, requesting a ruling on a proposed cruise itinerary. Our ruling on this matter is set forth below.

FACTS:

Mayflower Ocean Lines (Mayflower) is a newly incorporated cruise line based in Fort Lauderdale, Florida. They are planning to build and operate a United States-Registered cruise vessel specializing in handling the business meeting and convention industries. It is stated that Mayflower intends to place an order with an American-based shipyard for the construction of a vessel. However, during the construction period (approximately 3.5 years), Mayflower will time-charter a foreign-built cruise ship and commence operations in order to establish a market presence and generate revenues. The foreign-built cruise ship will be re-flagged and registered in the United States and will operate with an American crew on a United States port only itinerary. The proposed round trip itinerary would last eight days and would be as follows:

DAY PORT

Monday Fort Lauderdale

Tuesday At Sea

Wednesday San Juan, Puerto Rico

Thursday St. Thomas, U.S. Virgin Islands

Friday At Sea

Saturday At Sea

Sunday Key West

Monday Fort Lauderdale

All passenger embarkation and debarkation operations will take place at Fort Lauderdale (Port Everglades). There will be no passenger embarkation or debarkations, at any other port. Ports of call will be restricted to same day sightseeing and excursions.

ISSUE:

Whether the use of a U.S.-flagged, foreign-built vessel in the cruise itinerary described above constitutes an engagement in the coastwise trade in violation of 46 U.S.C. App. 289.

LAW AND ANALYSIS:

Generally, the coastwise laws prohibit the transportation of passengers or merchandise between points in the United States embraced within the coastwise laws in any vessel other than a vessel built in, documented under the laws of, and owned by citizens of the United States. A vessel that is built in, documented under the laws of, and owned by citizens of the United States, and which obtains a coastwise endorsement from the U.S. Coast Guard, is referred to as "coastwise-qualified."

The coastwise laws generally apply to points in the territorial sea, which is 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.

The coastwise law applicable to the carriage of passengers is found in 46 U.S.C. App. 289 (sometimes called the “Passenger Vessel Services Act” and the “coastwise passenger statute”) and 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. Section 4.50(b), Customs Regulations (19 C.F.R. §4.50(b)) states as follows:

A passenger within the meaning of this part is any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business.

The applicable Customs Regulations promulgated pursuant to 46 U.S.C. App. § 289 are set forth in § 4.80a, Customs Regulations (19 CFR § 4.80a). Section 4.80a(b)(2), Customs Regulations (19 C.F.R. §4.80a(b)(2)), provides that if a passenger is on a voyage to one or more coastwise ports and a nearby foreign port or ports (but at no other foreign port) and the passenger disembarks at a coastwise port other than the port of embarkation, there is a violation of the coastwise law.

A coastwise port is a "port in the U.S., its territories, or possessions embraced within the coastwise laws." 19 C.F.R. 4.80a(a)(1). A nearby foreign port is defined as "any foreign port in North America, Central America, the Bermuda Islands, or the West Indies (including the Bahama Islands, but not including the Leeward Islands of the Netherlands Antilles, i.e., Aruba, Bonaire, and Curacao." A port in the U.S. Virgin Islands shall be treated as a nearby foreign port. 19 C.F.R. 4.80a(a)(2).

Pursuant to 46 U.S.C. App. 877, “the coastwise laws of the United States shall not extend to the Virgin Islands of the United States until President of the United States shall by proclamation, declare that such coastwise laws shall extend to the Virgin Islands and fix a date for the going into effect of same.” To date, there has been no presidential proclamation extending the coastwise laws to the U.S. Virgin Islands.

With respect to the subject cruise itinerary, the threshold question is whether the passengers who leave the vessel in San Juan and/or Key West are considered to “disembark” the vessel as that term is defined in the Customs Regulations. In this regard we note that the terms "embark" and “disembark” for purposes of § 4.80a, are defined in paragraph (a)(4) of that section as follows:

Embark means a passenger boarding a vessel for the duration of a specific voyage and disembark means a passenger leaving a vessel at the conclusion of a specific voyage. The terms embark and disembark are not applicable to a passenger going ashore temporarily at a coastwise port who reboards the vessel and departs with it on sailing from the port.

In the administration of the above-cited regulation, Customs has held that, “...passengers temporarily leaving the vessel at one intermediate United States port for a brief tour of a few days duration and rejoining the vessel at another intermediate United States port will not have ‘disembarked’ from the vessel.” (Customs Ruling Letter 108124, dated February 13, 1986)

Accordingly, since the passengers on the proposed cruise itinerary would embark at a coastwise point (Fort Lauderdale) on a voyage to several coastwise points and a nearby foreign port (U.S. Virgin Islands), and return to their original point of embarkation (Fort Lauderdale) to disembark, the cruise itinerary would be in accord with § 4.80a(b)(2) notwithstanding that passengers may temporarily leave the vessel at another coastwise point (Key West or San Juan) and rejoin the vessel. However, as specified in 19 C.F.R. §4.80a(b)(2), there will be a violation of 46 U.S.C. App. 289 if a passenger disembarks the vessel at a coastwise port other than the port of embarkation, i.e., a passenger disembarks at Key West after embarking at Ft. Lauderdale or vice versa.

HOLDING:

The use of a U.S.-flagged, foreign-built vessel in the cruise itinerary described above does not constitute an engagement in the coastwise trade in violation of 46 U.S.C. App. 289.

Sincerely,


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