VES-3-04 CO:R:P:C 110236 BEW
Milton H. Doumit, Jr., Esquire
Ogden Murphy Wallace
Attorneys-at-Law
1601 Fifth Avenue
Seattle, Washington 98101-1626
RE: Use of a foreign-built vessel within the territorial waters
of the United States as a "floating hotel" to accommodate
workers that are involved in the Alaskan oil clean-up.
Dear Mr. Doumit:
This is in reference to your letter of May 12, 1989, in
which you requested a ruling with regard to the application of
the Jones Act to the use of a foreign-flag vessel for overnight
accommodations for workers involved with the oil spill in the
territorial waters of the Prince William Sound area of Alaska.
FACTS:
You state that the S. S. PRINCE GEORGE will be towed from a
Canadian port to a point in Prince William Sound area of Alaska,
and that the vessel will be used as a "floating hotel" for the
workers involved with the oil spill. You state the vessel will
not be able to move under its own power without substantial
repairs, and that the vessel will either be anchored or moored at
a single point in the Prince William Sound prior to taking on
guests or passengers. You state the passengers would be tendered
to and from the vessel on U.S. registered and coastwise trade-
qualified vessels. You state that approximately every three
weeks the vessel will be towed from one point of anchorage to
another within the Sound. You state that no passengers will
remain aboard while the vessel is being towed. You also state
that it is possible that the vessel will be initially provisioned
in Canada, and that reprovisioning of the vessel would occur from
points in Alaska by U.S. registered and coastwise trade-
qualified vessel.
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On May 3, 1989, we issued a ruling concerning the subject
vessel and its use as a "floating hotel" in the Prince William
Sound. In that ruling we held:
1. The use of a foreign-flag vessel as a "floating hotel"
for overnight accommodations, if permanently moored or
anchored, is not a violation of the coastwise laws. The
transportation of the "hotel guest" by a
non-coastwise-qualified vessel, such as your foreign-flag
vessel, from one point in the territorial waters to another
port of place within the Prince William Sound area is a
violation of the coastwise laws.
2. The transportation of merchandise or passengers by a
coastwise-qualified vessel between coastwise points and the
permanently moored or anchored "floating hotel" would not
violate the coastwise laws.
ISSUE:
Whether the transportation on a foreign-flag vessel of
merchandise which has been laden onto the vessel by a coastwise-
qualified vessel is a violation of the coastwise laws when the
foreign-flag vessel either moves or is towed within the
territorial waters of the U.S. from one anchorage to anchorage.
LAW AND ANALYSIS:
Generally, the coastwise laws (e.g., 46 U.S.C. App. 289 and
883, and 46 U.S.C. 12106 and 12110) prohibit the transportation
of merchandise or passengers between points in the United States
embraced within the coastwise laws 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.
Under the provisions of 46 U.S.C. App. 289, 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 violating this section of the law is $200 for each
passenger so transported and landed.
Pursuant to 46 U.S.C. 12106 and 12110 and their
predecessors (46 U.S.C. 65i and 65m and, before them, 46 U.S.C.
11) and consistent with 46 U.S.C. App. 883, the coastwise
merchandise law, the Customs Service has consistently held that
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the prohibition in 46 U.S.C. App. 289, applies to all non-
coastwise-qualified vessels. Non-coastwise-qualified vessels
include any vessel other than a vessel built in, properly
documented under the laws of, owned by citizens of the United
States, and never sold foreign with certain exceptions (46
U.S.C. 12106(a)(2)(B) a 19 CFR 4.80(a)(2) and (3)).
In interpreting the coastwise laws as applied to the
transportation of passengers, we have ruled that the carriage of
passengers entirely within territorial waters, even though they
disembark at their point of embarkation and the vessel touches no
other point, is considered coastwise trade subject to the
coastwise laws. 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.
A point in United States territorial waters is considered a
point in the United States embraced within the coastwise laws
but a point beyond those waters, even if it is within the United
States Exclusive Economic Zone (EEZ), is not considered to be
such a point, with certain exceptions inapplicable in this
context (see, e.g., the Outer Continental Shelf Lands Act of
1958, as amended; 43 U.S.C. 1333, and the amendments to 46
U.S.C. App. 883 regarding the transportation of valueless or
dredged material effected by Public Law 100-329).
The territorial waters of the United States consist of the
belt, 3 nautical miles wide, adjacent to the coast of the United
States and seaward of the territorial sea baseline. The recent
Presidential Proclamation (dated December 27, 1988) proclaiming a
12 nautical mile territorial sea extended the jurisdiction of the
United States only for international purposes and did not extend
or change existing federal and state laws. The territorial
waters of the United States continue to be 3 nautical miles wide,
for purposes of the applicability of the coastwise laws.
The vessel under consideration, as a foreign-flag vessel,
would be precluded from engaging in the coastwise trade. Under
the circumstances stated above, you may not use the vessel in the
coastwise trade if, as is true in this case, it is not qualified
to engage in the coastwise trade. As noted above, 46 U.S.C.
App. 883 and 289, prohibits the transportation between points in
the United States of merchandise and passengers in a
non-coastwise-qualified vessel.
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"Passenger," for purposes of this provision, is defined as
"...any person carried on a vessel who is not connected with the
operation of such vessel, her navigation, ownership, or business"
(19 CFR 4.50(b)). However, a foreign-built vessel not qualified
to engage in the coastwise trade which is permanently moored, can
be used as a bed and breakfast inn or other non-maritime use
without violating the statute. No law or regulation administered
by the United States Customs Service would preclude the use of
the subject vessel as a permanently moored lodging facility since
it would not be considered engaged in transportation. The
subject persons would however, be considered passengers and their
transportation on the vessel within the inland harbor or
territorial waters of the United States would be a violation of
the coastwise laws.
Under the provisions of section 4.80b, of the Customs
Regulations (19 CFR 4.80b) a coastwise transportation of
merchandise takes place, within the meaning of the coastwise
laws, when the merchandise laden at a point embraced with the
coastwise laws ("coastwise point") is unladen at another
coastwise point regardless of the origin or ultimate destination
of the merchandise. The transportation of merchandise to
reprovision the vessel from the dock to the S.S. PRINCE GEORGE on
a non-coastwise-qualified vessel would be a violation of the
coastwise laws. Merchandise which is transported on a coastwise-
qualified vessel and laden on the S.S. PRINCE GEORGE vessel
within the territorial waters of the U.S. may remain on the
vessel when the vessel moves either under its own power or by tow
without violating the coastwise laws. If the merchandise which
is laden on the S.S. PRINCE GEORGE is transported on the S.S.
PRINCE GEORGE and unladen at a point within the territorial
waters, under section 4.80(b) a transportation of the merchandise
will have taken place. Under these circumstances, the
transportation of the merchandise (reprovisions) would be a
violation of the coastwise laws.
Title 46, United States Code, section 316(a) (46 U.S.C.
316(a), the coastwise towing law), prohibits the towing of any
vessel, other than a vessel in distress, by a vessel not
documented under the United States-flag to engage in the
coastwise or Great Lakes trade between ports or places in the
United States embraced within the coastwise laws, either directly
or by way of a foreign port or place, or for any part of such
towing, or such towing between points in a harbor of the United
States. It is the position of the Customs Service that this
provision does not prohibit the continuous towing by the same
foreign-flag (or otherwise non-coastwise-qualified) tug of a
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vessel engaged solely in foreign trade on a voyage from a
foreign port to a United States port or ports, or from a United
States port or ports to a foreign port, merely because both tug
and towed vessel stop at other United States ports to load export
cargo or unload import cargo (see Treasury Decision 70-223(19)).
If a non-coastwise qualified towing vessel is used to tow
the vessel from its Canadian port to its point of anchorage in
the Prince William Sound you would not be in violation of the
towing statute (46 U.S.C. App 316(a)). The use of a non-
coastwise-qualified vessel to tow the vessel when its moves from
its original point of anchorage to subsequent points would be a
violation of the coastwise towing statute.
HOLDING:
The use of a foreign-flag vessel as a "floating hotel" for
overnight accommodations, if permanently moored or anchored, is
not a violation of the coastwise laws. The transportation of
merchandise and/or the "hotel guest" by a non-coastwise-qualified
vessel, such as your foreign-flag vessel, from one point in the
territorial waters to another port or point within the Prince
William Sound area is a violation of the coastwise laws.
The transportation of merchandise or passengers by a
coastwise-qualified vessel between coastwise points and the
permanently moored or anchored "floating hotel" would not violate
the coastwise laws.
The transportation of merchandise which has been laden on a
foreign-flag vessel within the territorial waters would not be a
violation of the coastwise laws if the merchandise so laden is
not unladed from the vessel at a port or point within the
territorial waters.
A non-coastwise qualified towing vessel may not be used to
tow a foreign-flag vessel from it original point of anchorage to
a subsequent point within the territorial waters of the United
States.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch
CO:R:P:C:BEWhiting:5/19/89