HQ 110757: Coastwise trade; foreign-built vessel; sailing school

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 110757

                        February 21, 1990


VES-3-19-CO:R:P:C 110757 KVS

CATEGORY:  Carriers

Mr. Mike Compton
The Inn at St. Thomas Court
101 South Second Street
Wilmington, NC  28401

RE:  Coastwise trade; foreign-built vessel; sailing school

Dear Mr. Compton:

     This is in response to your letter of December 29, 1990, in
which you request a ruling which permits the use of a foreign-
built sailing vessel in U.S. territorial waters.

FACTS:

     You propose to operate a 41-foot, British-built, sailing
vessel, the GULF SIROCCO, as a sailing school vessel.  You state
that you intend to transport up to six students at a time for
day, and possibly some night sailing exercises.  This instruction
will be given in conjunction with onshore classroom lessons.

     You state that the sailing waters will be the Cape Fear
River, the Intracoastal Waterway, and the inshore coastal waters
of North Carolina, up to 20 miles offshore.  You state that the
ports of departure/arrival will be Wilmington, North Carolina,
Wrightville Beach, North Carolina (which you mention as the
vessel's probable home port), and possibly Beaufort, North
Carolina, and Charleston, South Carolina.

     Although the GULF SIROCCO is currently under British
registry, you indicate that you intend to re-register the vessel
under the American flag in the near future.




                              - 2 -


ISSUE:

     Whether, under the stated facts, the use of a foreign-built
vessel as a sailing school would be in violation of the coastwise
passenger law, 46 U.S.C. App. 289.

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 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 65m 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.  Non-coastwise-qualified vessels include any
vessel other than a vessel built in, properly documented under
the laws of, owned by citizens of the United States, and never
sold foreign with certain exceptions (46 U.S.C. 12106(a)(2)(B)
and 19 CFR 4.80(a)(2)and (3)).

     Points in the United States embraced within the coastwise
laws include the United States territorial waters.  The
territorial waters of the United States consist of a belt, three
nautical miles wide, adjacent to the coast of the United States
and seaward of the territorial sea baseline.  The Customs
Regulations define "passenger" for purposes of section 289 as
"any person carried on a vessel who is not connected with the
operation of such vessel, her navigation, ownership, or
business" (see 19 CFR 4.50(b).

     Given the foregoing definition of "passenger", the Customs
Service has held that a person being trained or receiving
instruction in the handling or navigation of a vessel, and whose
presence on board the vessel is necessarily required in order to
receive such training or instruction, is not a "passenger" within
the coastwise laws.  Accordingly, if the vessel is used only for
such training it would not be required to have a license to
engage in the coastwise trade (see Customs Letter Ruling 109850
LLB (dated December 27, 1988) and Customs Letter Ruling 109287
DHR (dated February 24, 1988)).

     Therefore, the sole use of a foreign sailing vessel in
connection with a bona fide instructional course in sailing and
navigation does not constitute coastwise trade within the meaning
                               -3-

of 46 U.S.C. App. 289.

     However, all persons being carried in the vessel must be
involved with the operation, navigation, or business of the
vessel.  A person who is carried on board a vessel for
recreational purposes and who pays a fee for such carriage would
be considered a "passenger" and his carriage between places in
the United States or entirely within U.S. waters would be in
violation of the coastwise laws.

     Your letter also expresses your intention to re-register the
vessel under the American flag in the near future.  Questions
regarding documentation should be addressed to:

          Mr. Thomas Willis
          Chief, Vessel Documentation
          U.S. Coast Guard (GMVI-6/13)
          2100 Second Street, S.W.
          Room 1312
          Washington, D.C.  20593-0001

HOLDING:

     The sole use of a foreign sailing vessel in connection with
a bona fide instructional course in sailing and navigation is not
coastwise trade in violation of 46 U.S.C. App. 289.

                                     Sincerely,




                                     B. James Fritz
                                     Chief
                                     Carrier Rulings Branch