HQ 111736: Applicability of the coastwise trade laws to the transportation of passengers between United States ports or places on a non-coastwise qualified U.S. vessel. Motor yacht documented with registry endorsement; "voyage to nowhere"; entry procedures for a "voyage to nowhere"

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 111736

                        December 17, 1991

VES 3-02 CO:R:IT:C  111736 BEW

CATEGORY:  Carriers

Mr. Charles Peterson
D-2 Box 34
Chula Vista, California 91910

RE:  Applicability of the coastwise trade laws to the
     transportation of passengers between United States ports or
     places on a non-coastwise qualified U.S. vessel.  Motor
     yacht documented with registry endorsement; "voyage to
     nowhere"; entry procedures for a "voyage to nowhere"

Dear Mr. Peterson:

     This is in reference to your letters of June 6, June 16, and
October 8, 1991, concerning the transportation of passengers for
hire on the "IT's-DA-VA" a non-coastwise-qualified motor yacht.

FACTS:

     You state that the subject vessel is presently documented
for "recreation" and that the U.S. Coast Guard had informed you
that the documentation must be changed to "registry" in order to
meet the requirements necessary to use the vessel for a "6-pack
charter."   You state that all charters will be aimed at those
customers who desire to go from San Diego aboard a "First Class",
meticulously maintained and elegantly appointed vessel, fully
catered and staffed, to watch the "America's Cup" and pre-trial
races.  The passengers would board the vessel in San Diego, go
out beyond the 3-mile limit, watch the races, and return to the
same point of embarkation, where the passengers would disembarked
from the vessel.  In addition, you state that you intend to work
with the Concierges of the Marriot and Hotel Del Coronado hotels
in San Diego to use your vessel to service guests of these hotels
for "voyages to nowhere", embarking and disembarking at the dock
facilities of the said hotels.   You request a ruling that would
exempt your vessel from U.S. Customs entry and clearance
procedures during the aforementioned charters in San Diego,
California.

ISSUE:

     Are there any restrictions imposed by U.S. law on the
operation of a United States vessel documented with a registry
endorsement, in the carriage of passengers for hire between
coastwise points in the United States?

     Whether U.S. vessels on "voyages to nowhere" are exempt from
U.S. entry and clearance requirements.

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) a 19 CFR 4.80(a)(2) and (3)).

     For purposes of the coastwise laws, a vessel "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."  (Section 4.50(b), Customs
Regulations.)

     In interpreting the coastwise laws as applied to the
transportation of passengers, we have ruled that the carriage of
passengers entirely within territorial waters, even though they
disembark at their point of embarkation and the vessel touches no
other point, is considered coastwise trade subject to the
coastwise laws.  The transportation of passengers to the high
seas or foreign waters and back to the point of embarkation,
often called a "voyage to nowhere," is not considered coastwise
trade, assuming the passengers do not go ashore, even
temporarily, at another coastwise point.  We have ruled that the
carriage of fishing parties for hire, even if the vessel proceeds
beyond territorial waters and returns to the point of the
passengers' original embarkation, is considered coastwise trade
subject to the coastwise laws.

     In interpreting the coastwise laws, Customs has ruled that a
point in United States territorial waters is considered a point
embraced within the coastwise laws.  The coastwise laws generally
apply to points in the territorial sea, defined as the belt,
three (3) nautical miles wide, 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.

     A United States documented vessel with a registry
endorsement such as yours, would be precluded from engaging in
the coastwise trade.  The subject vessel could be used to
transport passengers from a point in the United States, to the
high seas beyond territorial waters and back to the same point,
assuming that the vessel touched at no other coastwise point
during the transportation.  However, the vessel would be
prohibited from carrying passengers on such a voyage if the
passengers disembarked from the vessel at another coastwise
point.

     The carriage of paying passengers within the territorial
waters of the United States on the subject vessel, a non-
coastwise-qualified vessel, would be a violation of the coastwise
laws.

     In regard to the question of vessel entry, the Omnibus
Budget Reconciliation Act of 1990, effective November 5, 1990,
amended 46 U.S.C. App. 121 to increase the amount of tonnage
taxes assessed "Upon vessels which shall be entered in the United
States from any foreign port or place..." (emphasis added)
Furthermore, this new legislation provides that vessels
departing a U.S. port and returning to the same port, without
going to another port or place, except vessels of the U.S.,
recreational vessels, and barges, as those terms are defined in
46 U.S.C. 2101, will pay tonnage tax at the rate of 9 cents per
ton, not to exceed in the aggregate of 45 cents per ton per year
for the next five fiscal years.  Therefore, although foreign
vessels on "voyages to nowhere" were previously not liable for
the payment of tonnage tax, as of November 5, 1990, such
liability now exists.   Under this new law foreign vessels on
"voyages to nowhere" are now required to enter and pay tonnage
taxes.  This legislation is not applicable to U.S. vessels on
such cruises.

     Title 19, United States Code, section 1434, requires U.S.
vessels arriving from a foreign port or place to make entry.
When a U.S. vessel arrives in the United States from the high
seas, no entry is required.  In C.S.D. 80-26 Customs held that a
U.S. vessel arriving in the United States from the high seas is
not required to make entry in accordance with section 1434 of
title 19, because the vessel has not visited a foreign port or
place within the meaning of section 1434.  A "foreign port" is
defined as "a port of place exclusively within the sovereignty
of a foreign nation" (see The Winnie, 65 F. 2d 706, 707 3rd Cir.
1933).  Since your vessel, a U.S. flag vessel, would be arriving
from the high seas when it returns from a "voyage to where" no
entry is required. (See also 19 CFR 4.81).

     Under 46 U.S.C. App. 91, any vessel bound to a foreign port
is required to obtain clearance from Customs (see 19 CFR 4.60-
4.75).  However, under the provisions of section 4.60(e) no
vessel shall be cleared for the high seas except, a vessel bound
to another vessel on the high seas to-

     (1) transship export merchandise which it has transported
     from the U.S. to the vessel on the high seas; or

     (2) Receive import merchandise from the vessel on the high
     seas and transport the merchandise to the U.S.

     Under the provisions of section 91, vessels that are being
used solely for "voyages to nowhere" are not required to clear
when departing from the port of embarkation.

     In conclusion, your vessel would not have to enter or clear
when it departs the United States for a "voyage to nowhere", but
you will have to report your arrival when you return to the port
of embarkation.

HOLDING:

     Under the provisions of 19 U.S.C. 1434 a U.S. vessel
arriving in the United States from a "voyage to where" on the
high seas is not required to make entry, nor is it required to
clear under the provisions of 46 U.S.C. App. 91 for the high seas
when it departs from the United States.

                                     Sincerely,




                                     B. James Fritz
                                     Chief
                                     Carrier Rulings Branch












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