HQ 109765: Applicability of the coastwise laws to proposed passenger vessel movements between the Federated States of Micronesia and Guam

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 109765

                                   October 6, 1988

          VES-3/VES3-02-CO:R:P:C 109765 KMF

          CATEGORY: CARRIERS

          Passenger Ship Project Department
          Tsuneishi Shipbuilding Co., Ltd.
          1083 Tsuneishi, Numakuma, Hiroshima Pref.
          Japan    Postal Code 720-03

          ATTN:  A. Kurimoto

          RE:  Applicability of the coastwise laws to proposed passenger
          vessel movements between the Federated States of Micronesia and
          Guam

          GENTLEMEN:

               Reference is made to your telex of September 22, 1988, in
          which you request a ruling on whether United States laws permit a
          Japanese Shipping Company to conduct the tour described below.

          FACTS:

               You state that as part of an air/cruise program tour to
          begin and terminate in Japan passengers would be flown from Japan
          to Guam.  At Guam they would board a foreign-built and flagged
          passenger ship for a six-day island tour of Micronesia with calls
          at Ulithi Atoll and Woleai Atoll of the Federated States of
          Micronesia.  The vessel in question would be flagged under
          Panama.  The cruise portion of the tour would terminate at Guam,
          and the passengers would then be flown back to Japan.

          ISSUE:

               Whether the coastwise passenger statute prohibits the
          transportation of passengers in a foreign-flagged vessel from
          Guam to Ulithi Atoll and Wolleai Atoll in the Federated States of
          Micronesia and back to Guam.

          LAW AND ANALYSIS:

               Generally speaking, the coastwise laws (46 U.S.C. App. 289
          and 883, and 46 U.S.C. 12106 and 12110) prohibit the













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          transportation of pasengers 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.   Pursuant to 46 U.S.C. App. 877,
          the coastwise laws are made applicable to Guam, although under 46
          U.S.C. 12102, a vessel documented with a United States registry
          may be employed in trade with Guam.

               In interpreting the coastwise laws as applied to the
          transportation of passengers, 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 point, is considered
          coastwise trade subject to the coastwise laws.  The
          transportation of passengers solely to foreign locations and back
          to the point of embarkation is not considered coastwise trade.
          (See generally 19 C.F.R. 4.80a (1988)).  The territorial waters
          of the United States consist of the territorial sea, defined as
          the belt, 3 nautical miles wide, adjacent to the coast of the
          United States and seaward of the territorial sea baseline.  This
          definition also applies to the waters adjacent to Guam.

               Application of United States law to the Federated States of
          Micronesia is governed by Article VII of the Compact of Free
          Association between the United States and the governments of the
          Marshall Islands and the Federated States of Micronesia
          (Compact), as approved in the Compact of Free Association Act of
          1985.   Pub. L. 99-239 (Jan. 14, 1986), 99 Stat. 1770, as amended
          Pub. L. 99-396, Section 20(a) (Aug. 27, 1986), 100 Stat. 844,
          Pub. L. 99-658, Title I, Sections 103, 104 (c), 100 Stat. 3675,
          3676, cited at note following 48 U.S.C. 1681.

                Pursuant to section 171 of the Compact, "[e]xcept as
          provided in this Compact or its related agreements, the
          application of the laws of the United States to the Trust
          Territory of the Pacific Islands by virtue of the Trusteeship
          Agreement ceases with respect to the Marshall Islands and the
          Federated States of Micronesia as of the effective date of this
          Compact."

                The Compact makes no provision for the application of
          United States coastwise laws to the Federated States of
          Micronesia.  We are aware of no agreement extending the coastwise
          laws of the United States to the members of that Compact.  By
          proclamation 5564, appearing in the Federal Register of November
          7, 1986 (51 Fed. Reg. 40,399 (1986)), the President declared that
          as of November 3, 1986, the Federated States of Micronesia are
          "self-governing and no longer subject to the Trusteeship," and
          that the Compact of Free Association is in effect.  Because the
          proposed tour will embark from an American port, Guam, with stops











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          solely in foreign ports, Ulithi Atoll and Wolleai Atoll, with
          return to the port of embarkation, Guam, it is not considered
          coastwise trade.

          HOLDING:

               Accordingly, in response to your specific inquiry, and in
          consideration of the foregoing facts, law, and analysis, the
          proposed transportation of passengers from Guam to Ulithi Atoll
          and to Wolleai Atoll in the Federated States of Micronesia, with
          return to Guam, may be accomplished with the use of a foreign-
          flagged vessel without violating 46 U.S.C. App. 289.

                                              Sincerely,




                                              B.  James Fritz
                                              Chief
                                              Carrier Rulings Branch