VES-5-R:IT:C 113479 LLB
Mr. James N. Candler
One Detroit Center
500 Woodward Avenue
Suite 4000
Detroit, Michigan 48226-3425
RE: Voyage to nowhere; Gambling vessel; Passengers; Non-coastwise-qualified vessel; 46 U.S.C. 289
Dear Mr. Candler:
Reference is made to your letter of June 15, 1995, in which you request that Customs rule upon the proposed use of a vessel to conduct gambling operations outside of the three-mile territorial waters of the United States during the course of so-called voyages to nowhere.
FACTS:
It is intended that a Delaware corporation be formed for the purpose of having a vessel constructed and operating it in off-shore gambling activities. The vessel would be built either in the United States or in Canada, and would be berthed at and operated out of Port Everglades, Florida. The vessel would offer passengers casino gambling activities during the course of three- hour voyages in which passengers would embark at the vessel berth, cruise into international waters, and disembark at the site of embarkation. The vessel would not stop at any point within the territorial waters of the United States, and no gambling activities would be conducted within such waters.
ISSUE:
The question posed by the inquirer concerns whether the proposed use of the vessel as outlined in the Facts portion of this ruling would require that the vessel be documented under United States law, properly endorsed for the coastwise trade.
LAW AND ANALYSIS:
The Act of June 19, 1886, as amended (24 Stat. 81; 46 U.S.C. App. § 289, sometimes called the coastwise passenger law), 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.
For your general information, we have consistently interpreted this prohibition to apply to all vessels except United States-built, owned, and properly documented vessels (see 46 U.S.C. §§ 12106, 12110, 46 U.S.C. App. § 883, and 19 C.F.R. § 4.80).
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. The territorial waters of the United States consist of the territorial sea, defined as the belt, three 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 (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 as well.
Although not specifically made a subject of the ruling request by the requester in this matter, we recognize the potential for certain issues regarding the conduct of gambling operations aboard the vessel and offer some comments concerning this element. Under the Gambling Devices Act of 1962 (Pub. L. 87-840, which enacted 15 U.S.C. § 1178, and amended 15 U.S.C. §§ 1171, 1172, and 1173) the possession, transportation, and use of gambling devices was expressly prohibited on U.S.-flag vessels. On March 9, 1992, the President signed into law Pub. L. 102-251, the Flower Garden Banks National Marine Sanctuary Act, section 202 of which amends section 2 of the Act of January 2, 1951 (15 U.S.C. § 1172, commonly referred to as the "Johnson Act"), section 5 of that Act (15 U.S.C. § 1175), and the first section of that Act (15 U.S.C. § 1171). At this time, we still have not received any formal advice from the Department of Justice as to the legality of gambling on U.S.-flag vessels. Congressional debate, however, indicates that the amendments to the Gambling Devices Act permit U.S.-flag cruise vessels to offer gambling to their passengers when embarked on cruises on the high seas to the same extent currently allowed on foreign-flag vessels, and when the principal use of the vessel is not the operation of a gambling establishment, a practice prohibited by the Gambling Ship Act, 18 U.S.C. §§ 1081 et seq. Congressional debate on this point was conducted in connection with H.R. 3866, 102d Cong., 2d Sess. (see statement of Sen. Davis).
By statute, individual States are granted authority to enact legislation to prohibit gambling on voyages to nowhere and voyages between two points in the same State. Foreign-flag vessels were exempt by Federal law from State gambling device laws prohibiting gambling devices on all voyages because the gambling devices were locked and sealed prior to the entry of vessels into the territorial waters of the United States.
A policy statement which could have a substantial impact on the enforcement of the Gambling Ship Act was issued by the Attorney General to all United States Attorneys in April of 1991. The Gambling Ship Act of April 27, 1948, as amended (codified as sections 1018, 1082, and 1083 of title 18, United States Code), was enacted to prohibit persons who are within the jurisdiction of the United States from having any interest in or engaging in any gambling activities on a gambling ship if such ship is on the high seas or navigable waters not within the jurisdiction of any state.
The term "gambling ship" is defined as "a vessel used principally for the operation of one or more gambling establishments." 18 U.S.C. § 1081. The new policy statement issued by the Department of Justice addresses that phrase as follows:
In making a prosecutorial determination whether a particular ship is a gambling ship within the meaning of this definition, it will be presumed that a ship which operates one or more establishments on board is a "gambling ship", unless it cruises for a minimum of 24 hours with meals and lodging provided for all passengers, or unless it docks at a foreign port. The fact that the presumption applies or does not apply in a given situation, however, is not ultimately determinative of compliance with Section 1081, et seq., but merely provides guidance to U.S. Attorneys in exercising their prosecutorial discretion under the pertinent statutes.
Under the new policy, it appears gambling might no longer be permissible, and gambling equipment on board a "gambling ship" (i.e., operates one or more gambling establishments on board, cruises for less than 24 hours, or does not dock at a foreign port) will no longer be legitimate equipment. However, we are unaware of any guidelines issued by the Department of Justice to Customs or other interested agencies pertaining to the new policy. The Coast Guard is specifically authorized under 33 CFR § 1.07 Appendix to enforce the Gambling Ship Act, and we have been informed that they have not received any guidelines from the Department of Justice.
This leaves Customs in a difficult position. We can not prohibit vessels, either United States or foreign-flag, from offering gambling to passengers outside the territorial waters, but neither can we provide assurance to vessel operators that such activities are permissible under United States law. It is apparently left to the discretion of the local offices of United States Attorney whether to prosecute perceived violations of the Gambling Ship Act, and to the business judgement of vessel operators whether to risk having gambling operations on their vessels.
HOLDING:
A non-coastwise-qualified United States-flag vessel may conduct voyages to nowhere (as defined in the Law and Analysis portion of this ruling). The operation proposed for the vessel in this case satisfies the conditions for a bona fide voyage to nowhere for which coastwise documentation would not be required.
The scope of this ruling is limited to issues concerning the use of a non-coastwise-qualified vessel conducting genuine voyages to nowhere. The ruling does not decide issues concerning shipboard gambling, nor does it constitute any approval to engage in such activities.
Sincerely,
Arthur P. Schifflin
Chief
Carrier Rulings Branch