HQ 110407: Coastwise Trade; Passenger; Documentation;

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 110407

                       February 6, 1991

VES 3-05-CO:I:T:C 111407 RAH

CATEGORY: CARRIERS

Gene Y. Matsuo, Esquire
MARKS MURASE & WHITE
400 Park Avenue
New York, New York 10022

RE:  Coastwise Trade; Passenger; Documentation;

Dear Mr. Matsuo:

     This is in response to your letter of November 19, 1990,
requesting a ruling regarding a recreational endorsement for the
ownership and operation of four vessels in and around the
Hawaiian Islands.

     In your letter you state that Saiga Corporation, a Japanese
corporation, through Saiga Hawaii Corporation, a wholly-owned
Hawaiian subsidiary would like to create a membership
corporation, Big Island Marine Club, that would be a
recreational membership club.  Big Island would purchase four
vessels, for use limited strictly to the Club's members and their
personal guests.  The vessels include a fifty-nine foot yacht
(net tons 15.2), a small sport fishing boat (net tons-22.4), a
pleasure cruiser (net tons--443.98), and a smaller cruiser (net
tons-64).

     The club will be a membership/owner corporation.  Privileges
to use the club facilities will be limited to individual members
(including spouses), and corporate members consisting of only
four individuals from the member corporation.  The club will be
governed by a Board of Governors and Officers elected from the
membership and Saiga Hawaii will manage the day-to-day operation
of Big Island Marine Club.

     The four vessels in question will not be available for
public use.  Each member will have equal access to the vessels
and will be allowed to bring guests aboard.  Members will sign
for all uses and their guests will not be charged any fees for
usage of the vessel nor will they be allowed to contribute in any
manner to a voyage.

     You specifically request our advise on the following issues:

     (1)  Recognizing that all the vessels are more than 5
          net tons, what documentation is required to build and
                              - 2 -

          own such vessels?

     (2)  How is the necessary documentation acquired?

     (3)  Is there a requirement that the vessels be built
          in the United States?

     (4)  Is there a requirement that the crew be of
          American citizenship?

     (5)  If documentation is required, since the vessels
          will be used for pleasure purposes only, is it possible
          to obtain a recreational endorsement?

     Please be aware that although we will provide you with
general information regarding the coastwise laws, the United
States Coast Guard is the agency responsible for vessel
documentation.  You may contact them by writing to:

                        Thomas L. Willis
                        Chief
                        Vessel Documentation Branch
                        U.S.C.G. (G-MVI-6/13)
                        2100 Second Street, SW., Room 1312
                        Washington, D.C. 20593-0001

     Generally, the coastwise laws (e.g. 46 U.S.C. App. 289, 883
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 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 a penalty of $200 for each passenger so
          transported and landed.

     The coastwise laws generally apply to points in the
territorial sea, defined as the belt, three 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.

     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. 883, the coastwise merchandise law, the
Customs Service has consistently ruled that the prohibition in 46
                              - 3 -

U.S.C. 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, and owned
by citizens of the United States with certain exceptions (see 46
U.S.C. 12106(a)(2)(B) and 19 CFR 4.80 (a)(2) and (3)).

     For purposes of the coastwise laws, "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" (19 CFR 4.50(a)).

     The genesis of section 4.50(b) was General Letter 117 (5-20-
16), of the Bureau of Navigation in the Department of Commerce,
the predecessor of the Customs Service in interpreting and
enforcing the coastwise laws.  This General Letter contains the
definition of "passenger" set forth in section 4.50(b).  The
General Letter also holds that wives and children of the officers
of a vessel and of a company owning a vessel are not passengers.
It holds that if the company owning a vessel is a corporation,
members of the board of directors or their families are not
passengers but stockholders and members of their families are
passengers.  Furthermore, Customs Letter 103196 (1-5-78),
involved a vessel owned by a yacht club, in which yacht club
members were carried on board and used the vessel while in the
United States.  That vessel was operated from club dues with food
and drink purchased by members ashore.  In that case, we held
that despite the argument that yacht club members could be owners
of the vessel by virtue of their membership in the club, they
were nevertheless passengers.

     Accordingly, based on the information provided, the club
members of Big Island Marine Club constitute passengers under 19
CFR  4.50(a), and their transportation upon a non-coastwise-
qualified vessel is prohibited by 46 U.S.C. App.  289.  Officers
and members of the board of directors are not passengers and
their transportation upon a non-coastwise-qualified vessel would
not be prohibited.

     We hope this information has been informative.  Should you
have any further questions regarding this matter, please do not
hesitate to contact our office.  In the interim, we have
forwarded a copy of your letter to Mr. Willis, at the United
States Coast Guard, concerning your vessel documentation
questions.
                             - 4 -

     This letter addresses only those federal requirements that
are administered by the U.S. Customs service.  While we are
unaware of any other 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
                                   Carrier Rulings Branch