VES-3-02-CO:R:IT:C 111828 LLB
Mr. William Giles
Executive Vice President
Mergo Submarines (USA)
426 West Broadway
New York, New York 10012
RE: 46 U.S.C. App. 289; Coastwise Trade; Passenger;
Territorial Waters; Submarine
Dear Mr. Giles:
This is in response to your letter of July 30, 1991,
requesting a ruling on the applicability of the coastwise laws
to a submarine tour service to be operated off the coast of
Florida.
FACTS:
The operation you propose will involve a shuttle craft and
tender craft which are U.S.-built and certified, as well as a
foreign-built submersible. The shuttle craft will transport
passengers from a docking facility located just off of Highway
U.S. 1 in Key Largo, Florida. The shuttle craft will shuttle
passengers from the docking facility to the submersible located
in the area of Molasses Reef, approximately 6.2 nautical miles
offshore from Key Largo. The passengers will be disembarked from
the shuttle craft onto the submersible on the leeward side of
Molasses Reef. The submersible will then proceed southeast and
descend in order to view the Florida reefs. The submarine will
not be operated with passengers closer than 6.2 nautical miles
from the Florida coast.
It is stated that the proposed operation is identical to one
already considered and ruled upon by Customs in a ruling letter
of November 19, 1990 (Case Number 111288). In fact, the party to
whom that ruling was issued has contracted to lease and operate a
submersible built by your company. During the 10-month period of
time anticipated for the construction of that vessel, your
company proposes to contract for the operation of an identical
vessel in the location specified. The operating site will be
turned over to the recipient of our previous ruling when that
party is prepared to begin operations. Actual operation of the
submersible vessel during the initial 10-month start-up period
will be undertaken by an operating company which may have less
than 75 percent United States ownership.
ISSUES:
(1) Whether the transportation of passengers in a U.S.-built and
certified vessel to a point 6.2 miles off the coast of Florida
and back constitutes coastwise trade.
(2) Whether the transportation of passengers in a foreign-built
submersible beginning and ending 6.2 miles off the coast of
Florida constitutes coastwise trade.
(3) Whether a foreign-owned operating company may undertake to
transport passengers between points located outside of the
territorial waters of 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 a penalty of $200 for each passenger so
transported and landed.
In interpreting the coastwise laws as applied to the
transportation of passengers, the Customs Service has 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. However, the
transportation of passengers to the high seas or foreign waters
and back to the point of embarkation, assuming the passengers do
not go ashore, even temporarily, at another United States point,
often called a "voyage to nowhere, is not considered coastwise
trade. See, 108228 PH (4-18-86). The territorial waters of the
United States consist of the territorial sea, defined as the
belt, 3 nautical miles wide, adjacent to the coast of the United
States and seaward of the territorial sea baseline.
The first of these positions, regarding transportation of
passengers entirely within territorial waters on a voyage in
which they embark and disembark at the same coastwise point is
based on a 1900 decision (see Treasury Decision 22275). Our
rulings have consistently followed this position.
The second of these positions, regarding transportation of
passengers from a point in the United States to the high seas or
foreign waters and back to the same point, is based on a 1912
opinion of the Attorney General of the United States (29
Opinions of the Attorney General 318). We have consistently
followed this position.
Although you state that both the shuttle and tender vessels
are U.S.-built and certified, there is insufficient information
to determine whether such vessels are coastwise qualified.
Nevertheless, under the facts you propose it is not necessary for
the vessels to be so qualified. The passengers would be
transported to a point 6.2 miles off the Florida coast, which is
outside the territorial waters of the United States. The
transportation would thus constitute a "voyage to nowhere", and
accordingly would not violate the coastwise laws. Furthermore,
the transportation of passengers in the submersible will be
outside the territorial waters of the United States and will not
violate the coastwise laws. The ownership of such vessels
operating outside of the territorial waters is not a matter of
concern under the coastwise laws.
HOLDINGS:
(1) The transportation of passengers in a U.S.-built and
certified vessel to a point 6.2 miles off the coast of Florida
and back does not constitute coastwise trade.
(2) The transportation of passengers in a foreign-built
submersible to and from points located 6.2 miles off the coast of
Florida does not constitute coastwise trade.
(3) The ownership of a submersible operating in passenger trade
outside the territorial waters of the United States is not a
matter of concern under the coastwise laws. This letter
addresses only those federal requirements that are administered
by the U.S. Customs service.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch