VES-3-02:OT:RR:BSTC:CCR H311571 AMW
Mr. Chris Dlugokecki
Cruise Management International, Inc.
4770 Biscayne Blvd.
Miami, FL 33137
RE: M/V OCEAN VICTORY; Tendering; Excursion Vessels; Rigid Inflatable Boats; 46 U.S.C. § 55103; 19 CFR §§ 4.80 and 4.80a.
Dear Mr. Dlugokecki:
This is in response to your June 1, 2020 letter, in which you request a ruling on behalf of Ocean Victory Partners, Ltd., regarding the proposed use of non-coastwise-compliant vessels to transport passengers between coastwise points in Alaska. Our ruling is set forth below.
FACTS
The following facts are from your ruling request and subsequent follow-up communications with U.S. Customs and Border Protection (“CBP”). The present request relates to the M/V OCEAN VICTORY (the “vessel”), a cruise vessel that is currently under construction at China Merchants Heavy Industry (Jiangsu) Co., Ltd. The vessel will be delivered in March 2021. The vessel will be owned by Ocean Victory Partners, Ltd (the “Owners”), a Bahamian entity. The owner will time charter the vessel to Victory Operating Company LLC (the “Operator”) between May 22, 2021 and August 1, 2021. During this time, the Operator will operate cruises between points in Alaska and nearby foreign ports (e.g., Vancouver, Canada). You have provided information demonstrating that the vessel will be 104.4 meters, approximately 345 feet, in length.
During the upcoming season, the Operator plans to offer passenger excursions in remote areas of Alaskan waters using Zodiac-brand rigid-hull inflatable boats deployed from the vessel. Accordingly, you state that the Zodiacs will be used in two manners: (1) transporting passengers from the anchored vessel to shore (i.e., use as tenders), and (2) transporting passengers from anchored vessel to various sightseeing points while the passengers remain onboard the craft before returning to the vessel (i.e., use as excursion vessels).
You have requested to use the vessel’s Zodiacs as tenders at two locations: Wrangell, Alaska and Petersburg, Alaska. You state that it is not safe or feasible for the vessel itself to berth at a pier at these locations. Instead, you state that these locations are “remote areas” with “no berthing facilities available,” thereby necessitating the use of the Zodiacs as tenders. You have also provided the coordinates for nine locations at which the Zodiacs will be used as excursion vessels. At these locations, you state that the Zodiacs will be used to transport passengers to various sightseeing points but that the passengers will not physically disembark the Zodiac vessels due to lack of infrastructure and environmental concerns.
According to your submission, the vessel will arrive in U.S. waters outfitted with fifteen Zodiacs. The Zodiacs are U.S.-made inflatable crafts that will be manned by credentialed U.S. mariners and can carry up to 10-12 passengers. The Zodiacs are less than five net tons, and, as a result, are not eligible for U.S. documentation. Nevertheless, the Zodiacs are not otherwise eligible to be coastwise-qualified because they will be owned by a Bahamian entity. The zodiacs will arrive in and depart from the U.S. aboard the vessel.
ISSUE
Whether the use of the non-coastwise-qualified Zodiacs as tenders to transport passengers from a vessel anchored in U.S. waters to shore constitutes a violation of 46 U.S.C. § 55103 and 19 CFR § 4.80.
Whether the use of the non-coastwise-qualified Zodiacs to transport passengers from a vessel anchored in U.S. waters on various excursions before returning them directly to the vessel constitutes a violation of 46 U.S.C. § 55103 and 19 CFR § 4.80.
LAW AND ANALYSIS
Generally, the coastwise laws prohibit the transportation of 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. Such a vessel, after it has obtained a coastwise endorsement from the U.S. Coast Guard, is said to be “coastwise qualified.”
The coastwise laws generally apply to points in the territorial sea, which is defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline. The coastwise law applicable to the transportation of passengers is found in 46 U.S.C. § 55103 (referred to as the “Passenger Vessel Services Act” or “PVSA”), which provides, in relevant part:
(a) In General. Except as otherwise provided in this chapter or chapter 121 of this title, a vessel may not transport passengers between ports or places in the United States to which the coastwise laws apply, either directly or via a foreign port, unless the vessel-
is wholly owned by citizens of the United States for purposes of engaging in the coastwise trade; and
has been issued a certificate of documentation with a coastwise endorsement under chapter 121 or is exempt from documentation but would otherwise be eligible for such a certificate and endorsement.
Similarly, 19 CFR § 4.80 provides, in pertinent part:
(a) No vessel shall transport, either directly or by way of a foreign port, any passenger or merchandise between points in the United States embraced within the coastwise laws, including points within a harbor, or merchandise for any part of the transportation between such points, unless it is:
Owned by a citizen and is so documented under the laws of the United States as to permit it to engage in coastwise trade….
In addition, 19 CFR § 4.80a(b) provides, in pertinent part:
(b) The applicability of the coastwise law (46 U.S.C. § 55103) to a vessel not qualified to engage in the coastwise trade (i.e., either a foreign-flag vessel or a U.S.-flag vessel that is foreign-built or at one time has been under foreign flag) which embarks a passenger at a coastwise port is as follows:
If the passenger is on a voyage solely to one or more coastwise ports and the passenger disembarks or goes ashore temporarily at a coastwise port, there is a violation of the coastwise law.
If the passenger is on a voyage to one or more coastwise ports and a nearby foreign port or ports (but at no other foreign port) and the passenger disembarks at a coastwise port other than the port of embarkation, there is a violation of the coastwise law.
If the passenger is on a voyage to one or more coastwise ports and a distant foreign port or ports (whether or not the voyage includes a nearby foreign port or ports) and the passenger disembarks at a coastwise port, there is no violation of the coastwise law provided the passenger has proceeded with the vessel to a distant foreign port.
Finally, 19 CFR § 4.80(b)(2) provides:
The penalty imposed for the unlawful transportation of passengers between coastwise points is $300 for each passenger so transported and landed on or before November 2, 2015, and $812 for each passenger so transported and landed after November 2, 2015 (46 U.S.C. § 55103, as adjusted by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015).
With regard to the subject Zodiacs, we note that qualified vessels of less than five 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), U.S. Customs Regulations (19 CFR § 4.80(a)) establishes the vessels that 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., weighing less than five 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 noted above, you have confirmed that, by virtue of their ownership, the subject Zodiac vessels would not be entitled to a coastwise endorsement.
As noted above, the itineraries contemplate two distinct transportation patterns: one in which the Zodiacs will be used to transport passengers from the vessel to shore (i.e., “tendering”), and one in which passengers will be transported on the Zodiacs to various sightseeing points without disembarking before returning to the vessel (i.e., use as “excursion vessels”). This ruling analyzes each transportation pattern.
Tendering
The first transportation pattern discussed in your request involves the use of non-coastwise-qualified Zodiacs as tenders to transport passengers from the vessel to shore and back. In the past, CBP has held that the use of non-coastwise-qualified vessels as tenders in U.S. territorial waters is permissible under limited circumstances. Beginning with Customs Ruling 106114 (Apr. 7, 1983), CBP has held that the use of non-coastwise-qualified vessels as tenders in U.S. territorial waters is permissible when four conditions are met: (1) the tenders must arrive in U.S. territorial waters on board the cruise vessel; (2) the tenders must be used solely to carry the passengers between the shore and the cruise vessel; (3) the tenders must be used solely in such carriage where the CBP Port Director is satisfied that it is not safe or feasible for the cruise vessel to berth at a pier; and, (4) the tenders must depart U.S. territorial waters on board the cruise vessel. See also, HQ H265199 (June 24, 2015); HQ 112799 (July 13, 1993); HQ 112039 (Jan. 6, 1992); HQ 109025 (Aug. 20, 1987). We held in HQ 112039, “[a]bsent any one of these conditions, the transportation of passengers by a non-coastwise-qualified life boat between the cruise vessel in U.S. territorial waters and a point on shore would be in violation of 46 U.S.C. App. 289.”
We find that the proposed tendering operations at Petersburg, Alaska are compliant with the four conditions outlined above. With respect to the first criterion, you have confirmed that the subject Zodiac vessels will arrive in U.S. territorial waters onboard the cruise vessels. Second, you confirm that the tenders will be used to transport passengers directly to shore and back to the vessel. Third, this office has confirmed with the Area Port of Anchorage, Alaska that Petersburg, Alaska does not contain safe or suitable infrastructure for the vessel to dock. Specifically, we have confirmed that although the Port of Petersburg has two piers, neither can accommodate a vessel the length of the M/V OCEAN VICTORY, which is approximately 345 feet in length. Fourth, you have confirmed that the tenders will depart U.S. territorial waters on board the cruise vessels.
The proposed tendering at Wrangell, Alaska does not meet the abovementioned criteria, however. Specifically, we have confirmed with the relevant port director that it would be safe for the vessel to berth at the pier at the Port of Wrangell. The U.S. Coast Guard has further confirmed that the Port of Wrangell has one dock that can accept vessels of approximately 750 feet in length and two additional docks that can accept vessels of approximately 350 feet in length.
Based on the information above, we find the proposed use of foreign-owned Zodiacs carried on board the above-described cruise vessel to transport passengers solely between the subject vessel and Petersburg, Alaska would not violate the PVSA, 46 U.S.C. § 55103. The use of such tenders by the vessel at Wrangell, Alaska would result in a violation of the PVSA, however.
Excursion Vessels
The second proposed transportation pattern involves the use of non-coastwise-qualified Zodiacs to transport passengers on excursions in which the passengers return to the vessel without going ashore. CBP has previously ruled that the carriage of passengers entirely within U.S. territorial waters, even though the passengers disembark at their initial point of embarkation and the vessel touches no other coastwise point, is considered coastwise trade subject to the PVSA. See, e.g., HQ H014892 (Aug. 17, 2007), HQ 113158 (July 21, 1994). In contrast, the transportation of passengers beyond U.S. territorial waters and back to the point of embarkation, even temporarily, at another U.S. point (i.e., a “voyage to nowhere”), is not considered coastwise trade. Id.
CBP has previously ruled that the use of non-coastwise-qualified, rigid-hull inflatable vessels to conduct sightseeing excursions represents coastwise trade in violation of the PVSA. In HQ 113158 (July 21, 1994), for instance, the owner of a Russian-flagged cruise vessel requested to use a non-coastwise-qualified Zodiac to conduct “side excursions in United States waters of the Great Lakes….” In response, CBP ruled that the non-coastwise-qualified Zodiac vessel “could not be used to transport passengers in United States waters for the purpose of sight-seeing.” In doing so, CBP eschewed extending the four-factor tender test to situations in which small crafts would be used for excursions beginning and ending solely at a cruise vessel. See also, HQ H307740 (May 18, 2020) (ruling that the use of foreign-owned Zodiacs carried onboard cruise vessels to transport passengers on excursions in U.S. territorial waters would violate the PVSA).
In the present matter, you request to use non-coastwise-qualified Zodiac vessels to transport passengers from an anchored cruise vessel to “engage in operations that consist of sightseeing, nature watches, and ecotourism, etc.” As in HQ 113158 and H307740, the salient consideration is that the proposed transportation does not contemplate point-to-point tendering but rather a sightseeing journey in which passengers return to the cruise vessel without going ashore. Furthermore, both HQ 113158 and the instant request involve the transportation of passengers entirely within U.S. territorial waters for excursions in which passengers begin and end at a single coastwise point (either a cruise vessel anchored in U.S. waters or docked at a U.S. pier).
Based on this information, we find that the use of foreign-owned Zodiacs carried on board the above-described cruise vessel to transport passengers on excursions in U.S. territorial waters constitutes a violation of 46 U.S.C. § 55103.
HOLDING
The use of foreign-owned Zodiacs as tenders to transport passengers from the vessel to shore at Petersburg, Alaska does not violate 46 U.S.C. § 55103 whereas the use of such Zodiacs as tenders between the vessel and Wrangell, Alaska does constitute a violation.
The use of foreign-owned Zodiacs to transport passengers on excursions in U.S. territorial waters, beginning and ending at the subject vessel, constitutes a violation of 46 U.S.C. § 55103.
Sincerely,
Lisa L. Burley
Chief/Supervisory Attorney-Advisor
Cargo Security, Carriers and Restricted Merchandise Branch
Office of Trade, Regulations and Rulings