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HQ 116610

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February 13, 2006

VES-3-02-RR:BSTC:CCI 116610 GOB

CATEGORY: CARRIER

Brian Wesley
President
The Great Little Boat Company
110-174 Wilson Street
Victoria, BC
Canada V9A 7N7

RE: Coastwise Trade; 46 U.S.C. App. § 289, 883; First Proviso to 46 U.S.C. App. 883

Dear Mr. Wesley:

This letter is in reply to your letter of February 6, 2006 with respect to coastwise trade eligibility. Our ruling follows.

FACTS:

You inquire with respect to the eligibility for coastwise trade of a vessel of less than five net tons which was built in the United States in 2000. The vessel has never been documented in the United States and has been used in the United States only as a private recreational vessel. After construction, the vessel was sold to a United States citizen. In 2004, the vessel was sold to a Canadian party, who transported the vessel to Canada. An agreement was recently reached for the sale of the vessel to a United States citizen who wishes the use the vessel as a small passenger ferry.

ISSUE:

Whether the vessel may be employed in coastwise transportation?

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. In this letter, we will use the term “territorial waters” to include internal waters and navigable waters of the U.S.

The coastwise law applicable to the carriage of passengers is found in title 46, United States Code Appendix, § 289 (46 U.S.C. App. § 289; the Passenger Vessel Services Act) 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. The penalty for violation of 46 U.S.C. App. § 289 is $300 for each passenger so transported and landed.

Section 4.80(a)(2), Customs and Border Protection (“CBP”) Regulations (19 CFR § 4.80(a)(2)) provides as follows:

No vessel shall transport, either directly or by way of a foreign port, any passenger or merchandise between points in the United States embraced within the coastwise laws, including points within a harbor, or merchandise for any part of the transportation between such points, unless it is: . . .
(2) Owned by a citizen, is exempt from documentation, and is entitled to or, except for its tonnage, would be entitled to be documented with a coastwise license . . .

Because the subject vessel is less than five net tons, it is not eligible for documentation with the U.S. Coast Guard (46 CFR § 67.5).

Section 4.50(b), CBP Regulations (19 CFR § 4.50(b)) provides 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.

Title 46, United States Code Appendix, § 883 (46 U.S.C. App. § 883), the coastwise merchandise statute often called the “Jones Act”, provides in part that:

No merchandise . . . shall be transported . . . between points in the United States . . . 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 . . .

The First Proviso to 46 U.S.C. App. § 883, as amended by Public Law 104-324 (1996), provides:

. . . no vessel of more than 200 gross tons (as measured under chapter 143 of title 46, United States Code) having at any time acquired the lawful right to engage in the coastwise trade, either by virtue of having been built in, or documented under the laws of the United States, and later sold foreign in whole or in part, or placed under foreign registry, shall hereafter acquire the right to engage in the coastwise trade[.]

We interpret this proviso to mean that vessels of 200 gross tons or less, as measured under the International Tonnage Convention,

We are advised by the U.S. Coast Guard that if a vessel is less than 70 feet in length, it is probably less than 200 gross tons, as measured by the International Tonnage Convention. may reacquire the right to engage in the coastwise trade, after having been sold to a foreign citizen in whole or in part, or placed under foreign registry, if the vessel previously (prior to being sold foreign or placed in foreign registry) had the right to engage in the coastwise trade.

We have consistently interpreted 46 U.S.C. App. § 289, the Passenger Vessel Services Act, in concert with 46 U.S.C. App. § 883, the Jones Act, i.e., to the extent possible, and to the extent consistent with the applicable precedents, we have tried to interpret these statutes with the same underlying principles. HQ 111302 dated March 4, 1991 and HQ 110840 dated April 18, 1990.

Based upon the above authorities, particularly the First Proviso to 46 U.S.C. App. § 883, we conclude that the subject vessel may engage in the coastwise transportation of passengers and merchandise if it is 200 gross tons or less, as measured by the International Tonnage Convention and if it purchased by a United States citizen, as proposed.

HOLDING:

The subject vessel may engage in the coastwise transportation of passengers and merchandise if it is 200 gross tons or less, as measured by the International Tonnage Convention, and if it is purchased by a United States citizen.

Sincerely,

Glen E. Vereb
Chief

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