HQ 112111: 46 U.S.C. app. 289; 46 U.S.C. app. 883; Coastwise Trade; Passengers; Foreign-Flag Vessel; Sailing School; EAST WIND

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 112111                  

                          July 14, 1992

VES-3-02/07-CO:R:IT:C 112111 MLR

CATEGORY:  Carriers

David McCreary
President
New York Boardsailing, Inc.
1000 East Shore Drive
Ithaca, New York  14850

RE:  46 U.S.C. app. 289; 46 U.S.C. app. 883; Coastwise Trade;
     Passengers; Foreign-Flag Vessel; Sailing School; EAST WIND

Dear Mr. McCreary:

     This is in reference to your letter of February 11, 1992,
concerning the use of non-coastwise-qualified vessel on Cayuga
Lake as a sailing school.

FACTS:

     In your letter, you state that you intend to use a foreign-
built sailing vessel to offer sailing instruction on Cayuga Lake
near Ithaca, New York.  You do not plan to transport passengers
from one port to another, merely to sail out from and return to
your marina facility.  You also do not plan to transport cargo of
any type. 

     You are planning to have the vessel inspected and documented
by the U.S. Coast Guard, as per their regulations governing
Cayuga Lake, a USCG designated "navigable" lake.  You also state
that, depending on the number of persons on the vessel, you will
have the properly licensed captain as per USCG regulations.

ISSUE:

     Whether, under the stated facts, the use of a non-coastwise-
qualified vessel as a sailing school would be in violation of the
coastwise laws, 46 U.S.C. app. 289, and 46 U.S.C. app. 883.

LAW AND ANALYSIS:

     Generally, the coastwise laws (e.g., 46 U.S.C. app. 289 and
883, and 46 U.S.C. 12106 and 12110) 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 and documented under the laws of the United
States, and owned by persons who are citizens of the United
States.

     The coastwise law pertaining to the transportation of
merchandise, section 27 of the Act of June 5, 1920, as amended
(41 Stat. 999; 46 U.S.C. app. 883, often called the Jones Act),
provides that:

          No merchandise shall be transported by water, or by
          land and water, on penalty of forfeiture of the
          merchandise (or a monetary amount up to the value
          thereof as determined by the Secretary of the Treasury,
          or the actual cost of the transportation, whichever is
          greater, to be recovered from any consignor, seller,
          owner, importer, consignee, agent, or other person or
          persons so transporting or causing said merchandise to
          be transported), between points in the United States
          ... embraced within the coastwise laws, either directly
          or via a foreign port, or for any part of the
          transportation, in any other vessel than a vessel built
          in and documented under the laws of the United States
          and owned by persons who are citizens of the United
          States ....

     "Merchandise" is defined in section 1401(c) of title 19,
United States Code, to include goods, wares, and chattels of
every description, and includes fish, fish products, and fish
packaging materials that are assembled into packages containing
fish.  Section 883 specifically provides that, for purposes of
its provisions, "merchandise" includes valueless material (Pub.L.
100-329; 102 Stat. 588).  The transportation of valueless
material, whether or not it has commercial value, from a point or
place in the United States or point or place on the high seas
within the Exclusive Economic Zone (EEZ) as defined in the
Presidential Proclamation of March 10, 1983, to another point or
place in the United States or a point or place on the high seas
within that EEZ would also be prohibited under the provisions of
section 883.
  
     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.
 
     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.) 
Section 4.80a, Customs Regulations (19 CFR 4.80a) is interpretive
of section 289.

     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 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.  It
should be noted that the carriage of fishing parties for hire,
even if the vessel proceeds beyond territorial waters and returns
to the point of the passenger's embarkation, is considered
coastwise trade.

     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.

     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 meaning of 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
Rulings 109850, dated December 27, 1988 and 109287, dated
February 24, 1988).

     Therefore, the sole use of a non-coastwise-qualified sailing
vessel in connection with a bona fide instructional course in
sailing and navigation does not constitute coastwise trade within
the meaning of 46 U.S.C. app. 289.  Legitimate equipment and
stores of the sailing school vessel for its use, including
groceries purchased by the students are not considered
merchandise covered by section 883.  However, articles
transported on the vessel between points embraced within the
coastwise laws which are not legitimate stores and equipment of
the vessel are subject to section 883.       

     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.

HOLDING:

     The sole use of a non-coastwise-qualified sailing vessel in
connection with a bona fide instructional course in sailing and
navigation does not constitute coastwise trade within the meaning
of 46 U.S.C. app. 289.
     
     Legitimate equipment and ship stores for ongoing and present
use of the vessel and crew may be transported from a coastwise
port to other coastwise points without violating the coastwise
laws.  Personal items, such as groceries, purchased by the
students for their use would be considered ship stores.  

     This letter addresses only those federal requirements that
are administered by the United States Customs Service.  While we
are unaware of any federal or state agency requirements that
might pertain to the undertaking you describe, it is possible
that such requirements exist.

                                     Sincerely,




                                     B. James Fritz
                                     Chief