VES 3-02 CO:R:P:C 110837 BEW
Captain Richard A. Roberts
298 Ellesmere Avenue (North)
North Burnaby, B.C. V5B 1J8 Canada
RE: Applicability of the coastwise trade laws to the
transportation of passengers between United States ports or
places on a United States-built vessel which has been sold
foreign.
Dear Captain Roberts:
This is in reference to your letter concerning the
transportation of passengers for hire on the "EL PRIMERO" a
United States-built vessel which was sold foreign to a non-U.S.
citizen.
FACTS:
You state that the subject vessel has been taken out of U.
S. registry because it was sold to a Ms. Trudy Kalke of West
Vancouver B.C. The operation which you are considering would
involve the use of a non-coastwise-qualified vessel to carry
passengers on charter cruises within the territorial waters of
the San Francisco Bay or Puget Sound.
ISSUE:
Are there any restrictions imposed by U.S. law on the
operation of a United States-built vessel, sold foreign, in the
carriage of passengers for hire between coastwise points in the
United States.
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
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.
A United States-built vessel which has been sold foreign,
would be precluded from engaging in the coastwise trade. The
vessel could be used to transport passengers from a point in the
United States, to the high seas beyond territorial waters and
back to the same point, assuming that the vessel touched at no
other coastwise point during the transportation. However, the
vessel would be prohibited from carrying passengers on such a
voyage if the passengers disembarked the vessel at another
coastwise point.
The carriage of paying passengers within the territorial
waters of the United States on the subject vessel, a non-
coastwise-qualified vessel, would be a violation of the coastwise
laws.
HOLDING:
The transportation of passengers for hire on a
non-coastwise-qualified vessel, such as the EL PRIMERO, between
coastwise points, would be a violation of the coastwise laws.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch
CO:R:P:C:BEWhiting:4/17/1989