HQ 111627: Coastwise Trade; passengers; non-coastwise-qualified vessel; medical/dental hospital ship; 46 U.S.C. App. 289; 46 U.S.C. App. 883

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 111627

                          May 23, 1991


VES-3-02/07-CO:R:IT:C 111627 BEW

CATEGORY:  Carriers

Mr. Ronald A. Danforth
Danforth Marine Consultants
100 Uranus Court
Indialantic, Florida 32903

RE:  Coastwise Trade; passengers; non-coastwise-qualified vessel;
     medical/dental hospital ship; 46 U.S.C. App. 289; 46 U.S.C.
     App. 883

Dear Mr. Danforth:

     This is in response to your letter dated November 12, 1990,
requesting a ruling on the legality of the proposed operation of
a foreign built (Germany 1955) ship that is presently documented
by the U.S. Coast Guard for recreation (yacht).

FACTS:

     Your letter states that the vessel is presently owned by a
non-profit corporation, Project Hospital Ship Oceanic, Inc.,
which proposes to use the vessel as a hospital ship to provide
medical care to undeveloped countries.

     You state that the owner has been unsuccessful in raising
money to upgrade the vessel into an operating condition.  You
state that your company proposes to set up a limited partnership,
Oceanic Shipholding Partnership (Oceanic Shipholding) to purchase
the vessel and upgrade it to its operating condition.  Subsequent
to the upgrading, Oceanic Shipholding will bareboat charter the
vessel to the International School of Continuing Medical
Education, Inc., relinquishing complete management and control
of the vessel.  You state that the school will donate the use of
the vessel, fully operational including crew and with all
expenses paid, to Project Hospital Ship Oceanic, Inc., for their
use as a hospital ship.  You state that the vessel will not carry
passengers for hire or engage in coastwise trade.  You inquire as
to whether there a violation of the coastwise laws will occur
when the vessel is used as outlined above.

ISSUE:

     Are medical and dental personnel aboard a non-coastwise
qualified vessel which is used as an ocean-going hospital ship,
and other persons employed on the vessel in a non-traditional
capacity, considered to be "passengers" for purposes of the
coastwise passenger law, 46 U.S.C. App. 289.

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 ....

     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.

     "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.

     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" (19 CFR 4.509b).  Section 4.80a of the
Customs Regulations (19 CFR 4.80a) is interpretive of section
289.

     Given the foregoing definition of "passenger", the Customs
Service has ruled that medical, dental, and missionary personnel
of a vessel used in such activities and other persons employed on
the vessel in a non-traditional capacity are not considered
"passengers" for purposes of the coastwise laws, provided that
they are actually connected with the operation, navigation,
ownership, or business of the vessel (see 110541 PH).

     Customs has also ruled that non-coastwise-qualified vessels
used as medical or dental clinics in ports of the United States
would not be engaged in the coastwise trade when they carry
supplies, equipment for their navigation, and personnel necessary
for the vessels' operation as clinics.  Thus, the supplies and
equipment and the personnel necessary for the vessels' operation
as clinics and their navigation were not considered to be
merchandise or passengers, respectively, for purposes of the
coastwise laws, nor were such personnel considered "passengers"
as that term is defined in section 4.50(b), Customs Regulations.
We have ruled that such a vessel would have to be documented
otherwise than for pleasure (see 107024 PH).

     We have consistently held that vessel equipment and stores
are not considered "merchandise" for purposes of section 883
when transported in the vessel by which they are used (see
Customs letter rulings 106910, dated July 9, 1984, and 108223,
dated March 13, 1986).

     The sole use of a non-coastwise-qualified vessel as a bona
fide ocean going hospital ship does not constitute coastwise
trade within the meaning of 46 U.S.C. App. 289.

     Accordingly, if the subject vessel is used only for such
medical and dental care and to transport either salaried or
volunteer medical or dental personnel who render medical and
dental services aboard the vessel, it would not be engaged in the
coastwise trade, however, it must be documented with the Coast
Guard.

     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.  Merely designating persons as
support personnel for the ship's business will not necessarily
exempt the vessel from the application of the coastwise laws,
e.g. in the past, Customs has held that the transportation of
persons who leave the ship at U.S. ports to solicit or to obtain
good will, or to move property from one U.S. point to another; or
to observe the ship's operation, are engagements in the coastwise
trade.

     Legitimate equipment and stores of the hospital ship for its
use, 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.

HOLDING:

     The sole use of a non-coastwise-qualified vessel as a bona
     fide hospital ship does not constitute coastwise trade
     within the meaning of 46 U.S.C. App. 289.

     Medical and dental personnel of a vessel used as an ocean-
     going hospital ship, and other persons employed on the
     hospital vessel in a non-traditional capacity are not
     considered "passengers" for purposes of the coastwise laws,
     provided that they are actually connected with the
     operation, navigation, ownership, or business of the vessel
     as discussed above.  Mere employment by the vessel operator
     will not remove individuals from the status of passengers,
     even if their duties are conducted aboard the ship, unless
     the described nexus with the vessel's operation or business
     is clearly delineated.

     Legitimate equipment and ship stores for use of the vessel
     and crew and said personnel may be transported from a
     coastwise port to other coastwise points without violating
     the coastwise laws.

                                     Sincerely,




                                     B. James Fritz
                                     Chief
                                     Carrier Rulings Branch