HQ 110840: Applicability of the United States documentation laws restricting the use of vessels in the coastwise and Great Lakes trades, to the use of a passenger vessel documented with a registry.

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 110840
                     April 18, 1990

VES-3-02 CO:R:P:C 110840 LLB

CATEGORY:  Carriers

Milton J. Stickles, Jr., Esq.
Cadwalader, Wickersham & Taft
Washington, D.C. 20036

RE:  Applicability of the United States documentation laws
     restricting the use of vessels in the coastwise and
     Great Lakes trades, to the use of a passenger vessel
     documented with a registry.


Dear Mr. Stickles:

     This is in response to your letters of February 7 and
April 9, 1990 in which you request a ruling on the use of the
U.S.-flag vessel VICTORIAN EMPRESS in passenger service between
Canadian ports on the Great Lakes, with the possibility of
intermediate U.S. ports of call on the Great Lakes.

FACTS:

     By letter of December 12, 1989 (Ruling No. 110619), Customs
ruled on the proposed use of the U.S.-flag vessel COLONIAL
EXPLORER in passenger carriage itineraries between the ports of
Kingston, Ontario, and Clayton, New York.  The vessel was to be
operated under a registry endorsement by a corporate owner which
did not meet the citizenship requirements of 46 U.S.C. App. 802.
The December ruling held that a vessel documented with a registry
may not engage in passenger transportation on the Great Lakes and
their tributary and connecting waters between points in the U.S.
and Canada, by virtue of the restrictions imposed under 46 U.S.C.
12107(b).

     In the present matter, the COLONIAL EXPLORER has been
renamed VICTORIAN EMPRESS.  As before, the citizenship
requirements under 46 U.S.C. App. 802 cannot be satisfied and
the vessel is documented with a registry endorsement pursuant to
46 U.S.C. 12105.  Itinerary adjustments have been made since the

prior request was considered, and the proposed movements would
begin and end in Canada, with ports of call in the U.S. being
made under the following circumstances:

          (a)  for safety, when in peril;

          (b)  for supplies or repairs or other
          services, or to sign on or discharge crew
          members, while in ballast or with passengers
          who stay aboard during the port call; and

          (c)  for an intermediate port call with
          passengers embarked in Canadian ports and who
          will disembark in Canadian ports.  A typical
          voyage would be of four to eight days
          duration and involve five to ten calls at
          Canadian ports, including the port or ports
          of embarkation and disembarkation, and one or
          two intermediate calls at U.S. ports.
          Passengers would go ashore at U.S. ports for
          approximately one and one-half hours to shop
          or to visit museums, historical sites and
          recreational facilities, but would neither
          begin nor terminate their passage at a U.S.
          port.  Activities described in paragraph (b)
          might also take place during a port call of
          this nature.

ISSUE:

     Whether a U.S.-flag vessel documented with a registry
endorsement may operate in Great Lakes Canada to Canada passenger
service, with intermediate temporary calls in United States
Great Lakes ports.

LAW AND ANALYSIS:

     Under section 12107 of title 46, United States Code (46
U.S.C. 12107), as amended by the Act of December 12, 1989 (Pub.
L. 101-225, Sec. 301):

          ... only a vessel for which a certificate of
          documentation with a Great Lakes endorsement
          is issued may be employed on the Great Lakes
          and their tributary and connecting waters in
          trade with Canada.  (Emphasis supplied)

     The coastwise passenger transportation statute, codified in
section 289 of title 46, United States Code Appendix (46 U.S.C.
App. 289), as interpreted in concert with the coastwise laws
generally (46 U.S.C. App. 883, and 46 U.S.C. 12106 and 12110),
prohibits the transportation of passengers between coastwise
points on vessels not properly admitted to that service.  The
statute is triggered when passengers embark at one coastwise
point and disembark (terminate their voyage) at another.  The
February 7, 1990, ruling request expends considerable effort to
distinguish between coastwise passenger transportation and the
proposed transportation here under consideration.
Unquestionably, the present matter does not contemplate a
coastwise transportation of passengers subject to the section 289
prohibitions.

     Notwithstanding the concerted effort made to distinguish
coastwise trade from the contemplated itinerary, the April 9,
1990, follow up correspondence, asks us to apply the same
principles applicable to coastwise trade or foreign trade to the
contemplated Great Lakes venture.  We are requested to find that
the mere calling at intermediate, non-final-destination ports is
not in the contemplation of the statute because such port calls
do not constitute movement "in trade with Canada."

     As concerns vessels documented under the U.S.-flag, section
12107, as amended, creates a unique operating arena for vessels
in trade with Canada in the Great Lakes, reserving that trade for
those with a Great Lakes endorsement.  The impression is
inescapable that by creating a special class of documentation for
Great Lakes service, the Congress intended to draw distinctions
between such service and others (coastwise trade and foreign
trade).  Whereas it is true that the coastwise trade passenger
statute would not prohibit the movement between and temporary
discharge of foreign-origin passengers at coastwise points by
non-coastwise-qualified vessels operating other than in the Great
Lakes, the same cannot be said for U.S.-flag vessels on the Great
Lakes.  This has already been partially established by our ruling
number 110619 which found the movement of passengers on a U.S.-
flag registry vessel to be violation of section 12107 when those
persons embark in Canada and disembark in the U.S.  This is a
radical departure from the rules which govern passenger
transportation from abroad, elsewhere than in the Great Lakes.

     Section 12107, as amended, leaves undefined the phrase "in
trade with Canada", the interpretation of which is central to the
issue at hand.  It is clear that trade with Canada indicates
trade between our two countries, not necessarily originating in
the United States (as evinced by our ruling number 110619).

     If given its commonly accepted meaning, the term "trade"
means "... earning ones living; ... commerce ..." (Webster's New
World Dictionary, Second College Edition, 1968).  Certainly the
"commerce" aspect of a venture which proposes to deliver Canadian
shoppers to American ports can be recognized.



     An appropriate means of determining the status of vessels
arriving in the United States is provided by reference to the
laws governing their formal entry.  Section 434, Tariff Act of
1930, as amended (19 U.S.C. 1434), provides that:

          Except as otherwise provided by law and under
          such regulations as the Commissioner of
          Customs may prescribe, the master of a vessel
          of the United States arriving in the United
          States from a foreign port or place shall ...
          make formal entry of the vessel ...

The exemptions provided by law appear in section 441, Tariff Act
of 1930, as amended (19 U.S.C. 1441), which, in relevant part,
exempts from formal entry:

          Vessels arriving in distress or for the
          purpose of taking on [bunkers], sea stores,
          or ship's stores and which shall depart
          within twenty-four hours after arrival
          without having landed or taken on board any
          passengers ...

This provision relates directly to the previously listed
conditions under which the VICTORIAN EMPRESS would seek to enter
U.S. ports, and establishes that only where entering for safety
reasons or for supplies would formal entry be unnecessary.  This
is because under these special circumstances, the vessel would
not be arriving in a trade context.  In the remainder of the
proposed circumstances, the vessel is arriving in trade with
Canada, enjoying the revenues generated from the carriage of
passengers induced to book passage on voyages which include
sojourns in U.S. ports, just as the U.S. economy also benefits
from the voyages.

     The vessel documentation laws are consistent in regard to
trades on the Great Lakes if they are understood to permit
coastwise trade only by those U.S. vessels properly documented
therefor, and trade involving both U.S. and Canadian ports (trade
with Canada) only by those U.S. vessels documented with a Great
Lakes endorsement.  (Note that under section 12107, only a vessel
qualified for a coastwise license may obtain a Great Lakes
endorsement on its document).  Of course, vessels documented for
either of these trades could qualify for the other.

HOLDING:

     Vessels of the United States operating on the Great Lakes,
between the U.S. and Canada in either direction, must possess a
Great Lakes endorsed document under 46 U.S.C. 12107.  American-
flag vessels arriving at U.S. Great Lakes ports from Canadian
Great Lakes ports, are engaging "in trade with Canada" if they
are required to make formal vessel entry under 19 U.S.C. 1434.

     In light of foregoing, the U.S.-flag registry vessel
VICTORIAN EMPRESS may not engage in passenger carriage on the
Great Lakes with stops in U.S. ports.

                                Sincerely,




                                Stuart P. Seidel
                                Director, Regulatory Procedures
                                and Penalties Division