HQ H017887 - Coastwise Transportation; 46 U.S.C. § 55103 - United States International Trade Commision Rulings

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HQ H017887

October 5, 2007

VES-3-02-OT:RR:BSTC:CCI H017887 JLB

CATEGORY: CARRIER

Mr. David B. Marvel
Robertson & Hollingsworth
Wachovia Center
177 Meeting Street, Suite 300
Charleston, South Carolina 29401

RE: Coastwise Transportation; 46 U.S.C. § 55103

Dear Mr. Marvel:

This letter is in response to your correspondence dated September 27, 2007, in which you request a ruling on whether the proposed transportation of passengers aboard the S/V ADDAGIO constitutes a violation of 46 U.S.C. § 55103. Our ruling on your request follows.

FACTS

The proposed voyage in question involves the transportation of passengers for hire aboard the S/V ADAGIO (“the vessel”). The vessel is a 52 foot sail catamaran owned by British citizens with British registry. You have proposed to charter the vessel under a bareboat charter to provide tours for observing dolphin, whales, and nature in general. The vessel will carry six or less passengers for hire and will travel beyond the three mile territorial limit. The passengers will embark and disembark from Hilton Head Island, South Carolina with no intermediate stops.

ISSUE

Whether the transportation of passengers aboard the subject vessel beyond the territorial limit with no stops at coastwise ports constitutes a violation of 46 U.S.C.

LAW AND ANALYSIS

The coastwise passenger statute, former 46 U.S.C. App. § 289 recodified as 46 U.S.C. § 55103, pursuant to P.L. 109-304 (October 6, 2006), states that no foreign vessel shall transport passengers “between ports or places in the United States to which the coastwise laws apply, either directly or by way of a foreign port,” under a penalty of $300 for each passenger so transported and landed. See also 19 C.F.R. § 4.80(b)(2). 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. Under 46 U.S.C. § 55103, a “passenger” is any person carried aboard a vessel “who is not connected with the operation of the vessel, her navigation, ownership, or business.” See also 19 C.F.R. § 4.50(b).

U.S. Customs and Border Protection (“CBP”) has held that the transportation of passengers entirely within territorial waters, even if the passengers disembark at their point of embarkation and the vessel touches no other point, is considered coastwise trade subject to the coastwise passenger statute. However, the transportation of passengers to the high seas or foreign waters and back to the point of embarkation, often called a "voyage to nowhere," is not considered coastwise trade, assuming the passengers do not go ashore, even temporarily, at another coastwise point. See Headquarters Decision 109759, dated October 25, 1988; see also Headquarters Decision 109638, dated July 22, 1988. It should be noted that the carriage of fishing parties for hire, even if the vessel proceeds beyond territorial waters and returns to the point of the passenger's embarkation, is considered coastwise trade. Treasury Decision (T.D.) 55193(2).

CBP has consistently ruled that when a vessel is chartered under a bona fide bareboat charter, the bareboat charterer is treated as the owner of the vessel for the period of the charter. See Headquarters Decision 109638, dated July 22, 1988; see also Headquarters Decision 113362, dated March 20, 1995. Since the owners are not considered "passengers" for purposes of the coastwise laws, the charterer is not prohibited by the coastwise passenger statute from using the vessel during the charter for pleasure purposes only. However, a vessel chartered under a bareboat charter would be subject to penalties if the bareboat chartered vessel was used in coastwise trade. See Headquarters Decision 112120, dated May 26, 1992; see also Headquarters Decision 113362, dated March 20, 1995.

Accordingly, while we are unable to determine whether your proposed charter should be classified as a bareboat charter since you did not submit a copy of the charter agreement, such a determination is irrelevant in this case. As stated above, since the vessel will be transporting the passengers beyond territorial waters to the high seas, and returning them to their point of embarkation without any intermediate stops, such transportation is a “voyage to nowhere” which is not considered coastwise trade. Therefore, regardless of whether the charter is a bona fide bareboat charter, the vessel can conduct charter tours for passengers for hire as proposed without violating the passenger coastwise statute, 46 U.S.C. § 55103.

Pursuant to 46 U.S.C. § 12102, “a vessel may engage in a trade only if the vessel has been issued a certificate of documentation with an endorsement for that trade under this chapter.” Since the vessel is not engaging in coastwise trade, a coastwise endorsement pursuant 46 U.S.C. § 12112 would not be necessary. However, since vessel documentation is a matter within the purview of the U.S. Coast Guard, we defer to that agency should you have further questions in that regard.

HOLDING

The subject vessel is not engaging in coastwise trade within the meaning of 46 U.S.C. § 55103. Therefore, the proposed transportation of passengers is not in violation of 46 U.S.C. § 55103.

Sincerely,

Glen E. Vereb, Chief

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