VES-3-23/4-03-CO:R:IT:C 111674 KVS
Mr. Ron Dettlaff
12952 Candela Place
San Diego, CA 92130
RE: Use of a foreign-built vessel measuring less than 5 net tons
to carry offshore fishing parties for hire
Dear Mr. Dettlaff:
This is in response to your letter dated April 21, 1991,
which requests a ruling regarding the use of a foreign-built
vessel measuring less than 5 net tons for charter fishing
operations. Our findings are set forth below.
FACTS:
Your letter states that the RELENTLESS, is a Pacific
Bluefin, model 35, which was built in Honduras in 1978. Recent
admeasurement services completed by the American Bureau of
Shipping indicate that the vessel measures less than five net
tons. Your proposed usage of the RELENTLESS would entail
offering the vessel for hire to carry 4-6 people for sport
fishing.
ISSUE:
Whether a foreign-built vessel measuring less than 5 net
tons may be used to carry offshore fishing parties.
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
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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.
In interpreting section 289, we have ruled that the carriage
of passengers entirely within territorial waters, even though the
passengers 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, however,
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 (see T.D. 55193(2)).
As you may be aware, pursuant to 67.11-1, Coast Guard
Regulations (46 CFR 67.11-1) vessels which are of less than 5 net
tons cannot be documented under the United States flag by the
Coast Guard. However, qualified vessels of less than 5 net tons
are not precluded from engaging in the coastwise trade simply
because they cannot be documented under the laws of the United
States. Section 4.80(a), Customs Regulations (19 CFR 4.80(a)),
enumerates the vessels which are qualified to engage in the
coastwise trade. Subparagraph (2) of this section (19 CFR
4.80(a)(2)) provides that no vessel exempt from documentation
(e.g., of less than 5 net tons) shall transport any passengers or
merchandise between United States coastwise points unless the
vessel is owned by a citizen of the United States and is entitled
to or, except for its tonnage, would be entitled to be documented
with a coastwise license. As stated above, to be entitled to be
documented with a coastwise license a vessel must, among other
things, be built in the United States (46 U.S.C. 12106(a)(2)),
with an exception inapplicable in this case.
Therefore, although the RELENTLESS is exempt from
documentation by reason of its size, it would not otherwise be
coastwise qualified since the vessel was built in Honduras.
Therefore, it may not engage in coastwise trade, i.e., carry
fishing parties for hire.
However, the Customs Service has ruled that a vessel
measuring less than 5 net tons which undergoes substantial
rebuilding or modification, although originally built abroad, may
be considered built in the United States for purposes of the
coastwise laws. Therefore, if the RELENTLESS undergoes such
substantial rebuilding in the United States so that Customs
considers it to have been built in the United States, and if the
vessel meets the other applicable criteria (i.e. is owned by a
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citizen of the United States), the vessel would, but for its
tonnage, be a coastwise-qualified vessel, and would be permitted
to engage in the coastwise trade, i.e. carry fishing parties for
hire.
In making a determination as to whether a vessel may be
considered built in the United States for purposes of the
coastwise laws, and therefore, be used in coastwise trade (i.e.
to carry fishing parties for hire), the Customs Service has
adopted the provisions in section 67.09-3 of the Coast Guard
Regulations (46 CFR 67.09.3), as a guideline. Section 67.09.3
states:
A vessel is considered built in the United
States if:
(a) All major components of its hull and
superstructure are fabricated in the United
States; and
(b) The vessel is assembled entirely in the
United States.
We stress, however, that such determinations are made on a
case-by-case basis. The Customs Service considers the
alterations and modifications done to the hull, fittings and
superstructure of the vessel the crucial factor in making its
determination as to whether an imported vessel was rebuilt in the
United States. Customs also takes into account the value added
to the vessel in the United States. Any ruling request which
requests that we make such a determination, therefore, must
necessarily contain a detailed account of all work performed,
itemized invoices indicating the cost of such work, and evidence
of the value of the vessel upon its previous importation into the
United States.
HOLDING:
In the absence of a determination that the vessel has been
"substantially rebuilt" in the United States, a foreign-built
vessel measuring less than 5 net tons may not be used to carry
offshore fishing parties for hire.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch