VES-3-CO:R:IT:C 113009 GEV
Manuel Gamboa
President
Fantasy Cruise Lines
9806 Sunset Avenue
La Mesa, California 91941
RE: Coastwise Trade; Passengers; 46 U.S.C. App. 289
Dear Mr.Gamboa:
This is in response to your letter dated December 2, 1994,
requesting a ruling regarding your proposal to operate a
cruise/gambling ship service. Our ruling on this matter is set
forth below.
FACTS:
Fantasy Cruise Lines proposes to initiate a cruise/gambling
service between San Diego, California and Rosarito Port, Mexico.
A chartered, U.S.-flag vessel will be used for this service.
Three round trip voyages per week will be scheduled. It is
anticipated that the passengers will make the round trip and not
disembark at Rosarito Port, however, that possibility may exist.
In conjunction with your effort to comply with the
applicable Customs laws and regulations, you express a particular
concern about the following:
1. Is there a distinction made between scheduling
liner service (regular advertised service) or
chartered service on an irregular basis in terms
of piers/facilities to be utilized?
2. Whether or not there are different rules applicable
to chartered or owned vessels.
3. Rules that may be applicable should passengers
temporarily leave the vessel in Mexico for a return
voyage at a future date.
4. Any rules that may be linked to U.S. Coast Guard
certification.
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ISSUE:
Whether the proposed cruise service described above
constitutes a violation of 46 U.S.C. App. 289.
LAW AND ANALYSIS:
Title 46, United States Code Appendix, 289 (46 U.S.C. App.
289, the passenger coastwise law), prohibits the transportation
of passengers between points embraced within the coastwise laws
of the United States, either directly or by way of a foreign
port, in a non-coastwise-qualified vessel (i.e., any vessel not
built in and documented under the laws of the United States and
owned by persons who are citizens of the United States). For
purposes of section 289, "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." (19 CFR
4.50(b))
The Customs Regulations promulgated pursuant to 46 U.S.C.
App. 289 are set forth in Section 4.80a, Customs Regulations (19
CFR 4.80a). Section 4.80a(b)(1), Customs Regulations (19 CFR
4.80a(b)(1)), provides that a coastwise violation occurs if a
passenger is on a voyage solely to one or more coastwise ports
and the passenger disembarks or goes ashore temporarily at a
coastwise port. Section 4.80a(b)(2), Customs Regulations (19 CFR
4.80a(b)(2)),provides that a coastwise violation occurs if a
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. (see 19 CFR 4.80a(a)(1)(2) and (4) for the
definitions of the terms "coastwise port," "nearby foreign port,"
"embark," and "disembark," as those terms are used in the
regulation)
In its administration of 46 U.S.C. App. 289, 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 coastwise
point, is considered coastwise trade subject to the coastwise
laws. However, the transportation of passengers to the high seas
(i.e., beyond U.S. territorial 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 (29 O.A.G.
318 (1912)).
In interpreting the coastwise laws, Customs has ruled that a
point in United States territorial waters is a point in the
United States embraced within the coastwise laws. The
territorial waters of the United States consist of the
territorial sea, defined as the belt, 3 nautical miles wide,
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seaward of the territorial sea baseline, and to points located in
internal waters, landward of the territorial sea baseline, in
cases where the baseline and the coastline differ.
In regard your proposal, you should know that gambling
activities are not within in the purview of the Customs Service
but rather the Department of Justice. We suggest that you direct
any inquiries you may have in that regard to the following
address:
Organized Crime and Racketeering Section
Criminal Division
Department of Justice
Washington, D.C. 20530
As for those aspects of your proposal that are within
Customs jurisdiction, our comments are as follows.
Although you state that the vessel to be used is U.S.-
flagged, you do not indicate whether it will be U.S.-built
thereby rendering it coastwise-qualified. However, upon
reviewing the proposed cruise itinerary the fact that the vessel
may not be coastwise-qualified is irrelevant since the itinerary
meets the criteria of a "voyage-to-nowhere" discussed above.
Accordingly, the proposed cruises would not constitute coastwise
trade and therefore would not be in violation of 46 U.S.C. App.
289.
In regard to the four particular areas of concern expressed
in your letter and enumerated above, we note the following. For
purposes of 46 U.S.C. App. 289, if the vessel is coastwise-
qualified there is no distinction to be made between its schedule
of service and the piers/facilities to be used. If the vessel is
not coastwise-qualified, the vessel must embark and disembark
passengers at the same coastwise point (i.e., pier/facility) in
order to meet one of the criteria for a "voyage-to-nowhere."
Aside from the ramifications of 46 U.S.C. App. 289, we note that
in regard to scheduling, passenger vessels making three trips or
more a week between a United States port and a foreign port are
exempt from Customs entry requirements pursuant to 19 U.S.C.
1441(2), although they are still required to immediately report
their arrival in the United States from a foreign port pursuant
to 19 U.S.C. 1433(a)(1)(A).
As for whether there are different rules applicable to
chartered or owned vessels (your second point of concern), while
such divergence does exist with respect to the coastwise laws, it
does not appear to be applicable to your proposal in view of the
fact that the transportation in question is not considered
coastwise trade. However, for your reference we offer the
following. The Customs Service has consistently held that when a
vessel is chartered under a bona fide bareboat charter, the
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bareboat charterer is treated as the owner of the vessel for the
period of the charter, and, because the owners are not considered
"passengers" for purposes of the coastwise laws, the charterer is
not proscribed by the coastwise laws from using the vessel during
the charter for pleasure purposes only. A vessel chartered under
a charter arrangement other than a bareboat charter (e.g., a time
or voyage charter) and used in coastwise transportation (see
discussion above on the carriage of passengers entirely in
territorial waters or to the high seas or foreign waters) would
be subject to penalties under the coastwise laws. A vessel
chartered under a bareboat charter would also be subject to
penalties if the bareboat charterer used it in the coastwise
trade (e.g., to transport passengers (other than bona fide
guests) between coastwise points or entirely within territorial
waters).
In our review of charter arrangements to determine whether
or not they are bareboat charters we have generally held that:
The nature of a particular charter arrangement is a
question of fact to be determined from the circum-
stances of each case. Under a bareboat charter or
demise charter the owner relinquishes complete man-
agement and control of the vessel to the charterer.
On the other hand, if the owner retains a degree of
management and control, however slight, the charter
is a time or voyage charter, and the vessel is deemed
to be engaged in trade. The crux of the matter is
whether complete management and control have been
wholly surrendered by the owner to the charterer so
that for the period of the charter the charterer is
in effect the owner. Although a charter agreement on
its face may appear to be a bareboat or demise
charter, the manner in which its covenants are
carried out and the intention of the respective
parties to relinquish or to assume complete
management and control are also factors to be
considered.
In regard to your third area of concern, no violation of 46
U.S.C. App. 289 would occur if passengers temporarily leave the
vessel in Mexico and return on it to San Diego at a later date.
Finally, we defer to the U.S. Coast Guard regarding any
questions you may have concerning that agency's certification
requirements. We do note, however, that the certificate of
documentation for the vessel in question need not have a
coastwise endorsement to engage in the proposed cruise itinerary.
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HOLDING:
The proposed cruise service described above does not
constitute a violation of 46 U.S.C. App. 289.
Sincerely,
Arthur P. Schifflin
Chief
Carrier Rulings Branch