VES-3-04 CO:R:P:C 110239 BEW
Ms. Judith L. Renwick
Post Office Box 1066
Seward, Alaska 99664
RE: Use of a United States-built vessel which has been sold
foreign within the territorial waters of the United States
as a "bed and breakfast hotel" and as a residence for the
Alaskan oil clean-up workers.
Dear Ms. Renwick:
This is in reference to your letter of May 11, 1989, in
which you requested a ruling with regard to the application of
the Jones Act to the use of a United States-built vessel which
has been sold foreign, and subsequently, will be purchased and
registered in the United States, as a "bed and breakfast" hotel
and a residence for workers involved with the Alaskan oil spill
in the territorial waters of the United States.
FACTS:
The operation which you are considering would involved the
use of the subject vessel as a "bed and breakfast hotel". You
state that the subject vessel was built in the United States and
sold foreign, and that you intent to purchase it and document it
under a United States-flag. You state specifically that you
intend to use that vessel in Dutch Harbor and Seward, Alaska, as
a bed and breakfast hotel, and in the Prince William Sound area
as a residence for workers involved with the Alaskan oil clean-
up.
ISSUE:
Are there any restrictions imposed by U.S. law on the
operation of a United States-built vessel, sold foreign and
subsequently U.S.-owned, as a permanently moored or anchored bed
and breakfast inn and/or residence for the Alaskan oil clean-up
workers in the territorial waters of the United States.
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LAW AND ANALYSIS:
Generally, the coastwise laws 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, documented under the laws of, and owned by
citizens of the United States. The passenger coastwise law, 46
U.S.C. App. 289, 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 penalty of $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
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)).
For purposes of the coastwise laws, a vessel "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." (Section 4.50(b), Customs
Regulations.)
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. We have ruled that the
carriage of fishing parties for hire, even if the vessel proceeds
beyond territorial waters and returns to the point of the
passengers' original embarkation, is considered coastwise trade
subject to the coastwise laws.
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
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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.
Whether the use of a foreign-flag vessel anchored or moored
within the territorial waters of the U.S., for overnight
accommodations is a violation of the coastwise laws.
The vessel under consideration, a United States built
vessel which has been sold foreign, 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. 289, prohibits
the transportation between points in the United States of
passengers in a non-coastwise-qualified vessel.
"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 non-coastwise-qualified vessel
which is permanently moored, can be used as a "bed and breakfast
hotel" 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 "hotel guest"
and workers 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.
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HOLDING:
The use of a United States-built vessel which has been sold
foreign, as a bed and breakfast hotel or as a residence for
Alaskan oil clean-up workers, 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 vessel, from one point to another port or point in the
territorial waters of the United States 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 vessel would not violate the
coastwise laws.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch
CO:R:P:C:BEWhiting:5/22/89