HQ 110734: Carriage of passengers in a raft.

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                            HQ 110734

                        February 23, 1990

VES-3-03-CO:R:P:C  110734 KVS

CATEGORY:  Carriers

Mr. Randall B. Farish
P.O. Box 390292
Kailua, Kona, HI  96739

RE:  Carriage of passengers in a raft.

Dear Mr. Farish:

     This is in response to your letter of December 15, 1989, in
which you request a ruling allowing the carriage of passengers in
the coastwise trade in a foreign-built, Zodiac inflatable craft.

FACTS:

     You state that the raft, part of which was imported from
France in a bag, is under 5 net tons.  The rubber tubes (made of
DuPont Hypalon from the U.S.) were purchased from France at a
cost of $6,000.00.  After importation into the United States, the
raft was assembled and reinforced for use in open waters in
Oregon, by the Inflatable Boat Center of Portland, Oregon.

     You have enclosed invoices detailing the extent and cost of
work done by the Inflatable Boat Center:

      1) assembly of the floor system, placement of the keel
     and sponsons, and installed in, or attached to the
     tubes which were fabricated in France by Zodiac out of
     DuPont Hyplalon (U.S.);

      2) installation of the transom assembly and floor
     brace to fit 2 40 HP Mercury outboard motors;

      3) reinforcement of all seams in and outside of the
     vessel to bring it up to heavy duty range for
     commercial use;

      4) additional fabric reinforcement on top of tubes for
     protection of fabric from oils and other agents (ultra
     violet);

      5) addition of beaching strips on bottom of the vessel
     to reinforce those areas that will come in contact with
     sand, etc., while beaching;
                              - 2 -


      6) bottom of vessel fabricated with double thick
     DuPont hypalon for an inner fabric strength of 1880
     Denier.  This gives the vessel an extra strong bottom
     for off-shore use and in beaching the vessel;

      7) transom cross-angled to add extra strength to
     counter the cave-in and lay back typical to dual
     outboard installation.  Large ovals of fabric
     installed to better handle the twin outboards;

      8) a marine grade white oak thrustboard installed to
     better handle the aluminum floorboards, which were
     installed for commercial use;

      9) installation of aluminum console, seatbox, battery
     box, and gas tank holders (which were purchased in the
     U.S.);

      10) front bow cover fabricated to protect the front of
     the vessel and protect the life jacket area from
     exposure;

      11) installation of removable lights for night
     navigation;

      12) special protection material sprayed to coat
     floors, console, and all other areas exposed to sea and
     weather.

     The cost of the preceding modifications to the hull and
fittings completed by the Inflatable Boat Center was $6,078.92.

     An invoice from Steven's Marine of Tigard, Oregon is also
enclosed, indicating that two forty horsepower engines ($5,290)
and instruments, steering, and wiring ($1,988) were supplied and
installed at a total cost of $7,278.00.

     An invoice from Koffler Boats of Eugene, Oregon, indicates
that the console, seat box, driver's seat, transom reinforcement
plate, and fuel tank trays were custom built for the vessel and a
protective coating for the floor was supplied at a cost of
$2,100.00.

     An invoice from the Noble Warrant Co. of Aloha, Oregon,
indicates that two sets of teak floor stringers were furnished at
a cost of $588.00.

     An invoice from Howard Upholstery, Inc. of Clackamas,
Oregon, indicates that custom upholstery and a resin coating were
supplied for a cost of $600.00.

                              - 3 -


     Finally, an invoice from West Marine Products indicates that
safety and other miscellaneous equipment (i.e., life vest, fire
extinguisher, position fixing equipment, radio, antennae, tarp,
etc.) for the vessel was purchased at a cost of $1,385.71.  Your
letter indicates that West Marine Products is located in
Portland, Oregon, and that the equipment was installed by the
Inflatable Boat Center of Portland, Oregon.

ISSUE:

     Is an inflatable raft of less than 5 net tons, part of which
was imported from France in a bag and part added in the United
States, considered built in the United States, for purposes of
the coastwise laws.

LAW AND ANALYSIS:

     Generally, the coastwise laws prohibit the transportation of
passengers or merchandise 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:

          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.

     Pursuant to 46 U.S.C. 12106 and 12110 and their predecessors
(46 U.S.C. 65i and before them, 46 U.S.C. 11), and consistent
with 46 U.S.C. App. 883 (the coastwise merchandise law) the
Customs Service has consistently held that the prohibition in 46
U.S.C. App. 289 applies to all non-coastwise-qualified vessels.
Such vessels include any vessel other than a vessel built in,
properly documented under the laws of, and owned by citizens of
the United States, with certain exceptions (see 46 U.S.C.
12106(a)(2)(B) and 19 CFR 4.80(a)(2) and (3)).

     In its interpretation of the coastwise laws, 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.  Transportation of passengers from a point in the United
States to the high seas or foreign waters and back to the point
of original embarkation, often called a "voyage to nowhere", is
not considered coastwise trade.  However, the Customs Service has
also ruled that the carriage of fishing parties for hire, even if
the vessel proceeds beyond territorial waters and returns to the
                              - 4 -


point of the passengers' original embarkation is considered
coastwise trade subject to the coastwise laws.

     Normally, the process of documenting a vessel is completed
by the United States Coast Guard.  For the purpose of
documentation and the issuance of a coastwise license, the Coast
Guard first makes a determination that a vessel measures at least
5 net tons and has been built in the United States.  However,
vessels measuring less than 5 net tons cannot be documented under
the United States flag by the United States Coast Guard.  In the
case of such vessels, the United States Customs Service
determines questions on certain qualifications which are germane
to the vessel's activities.  In particular, the Customs Service
must determine whether vessels of less than 5 net tons have been
built in the United States for purposes of the coastwise laws.

     Of course, 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)(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, if the vessel under consideration in this case is
considered built in the United States, it may be used in the
coastwise trade, but if it is not considered built in the United
States, it may not be so used.

     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 for its determination of whether a vessel that is
exempt from documentation because it is less than 5 net tons, may
be considered built in the United States and, therefore, may be
used in the coastwise trade.  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.
                              - 5 -


     Under section 67.09.5 of the Coast Guard Regulations (46 CFR
67.09-5), a vessel is considered foreign-built if it does not
meet the requirements of section 67.09.3, as listed above.

     The Customs Service has ruled that a vessel undergoing
substantial rebuilding or modification, although originally built
abroad, may be considered built in the United States for purposes
of the coastwise laws.  The Customs Service considers the
alterations and modifications done to the hull, fittings, and
superstructure of the vessel in the United States the crucial
factor in making its determination as to whether an imported
vessel was rebuilt in the United States (see Customs Letter
109050 (dated November 4, 1987)).  Customs also takes into
account the value added to the vessel in the United States (see
Customs Letter 108906 (dated June 15, 1987)).

     In the case currently under consideration, although the raft
was originally imported from France in a bag, the invoices
submitted demonstrate that substantial work was carried out in
Portland, Oregon.  Under the facts given, the cost supplied for
the raft as imported is approximately $6,000.00.  The cost of
the modifications and improvements made in Portland to the hull,
fittings, and superstructure total $18,030.63.  As a result of
the rebuilding, the value of the vessel increased approximately
300 per cent.

HOLDING:

     An inflatable raft of less than 5 net tons, part of which
was imported from France in a bag with a substantial part added
in the United States after extensive work in this country, as
described in the FACTS portion of this ruling, is considered
built in the United States, for the purposes of the coastwise
laws.

                                     Sincerely,




                                     B. James Fritz
                                     Chief
                                     Carrier Rulings Branch