HQ 112437: Coastwise Trade; Passengers; Non-coastwise-qualified United States-built Vessel; Sailing School; 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 112437          

                          April 8, 1993

VES-3-02/07-CO:R:IT:C 112437 BEW

CATEGORY:  Carriers

Ms. Diane Van Dien
Vice President 
International Sailing School
3164 Matecumbe Key Road
Punta Gorda, Florida 33955

RE:  Coastwise Trade; Passengers; Non-coastwise-qualified United
     States-built Vessel; Sailing School; 46 U.S.C. App. 289; 46
     U.S.C. App. 883

Dear Ms. Van Dien:

     This is in response to your letter concerning the use of a
non-coastwise-qualified vessel in the territorial waters of Punta
Gorda, Florida, as a sailing school.

FACTS:

     You state that you are planning to utilize a U.S.-built, U.S.-
owned, non-coastwise-qualified sailboat as a training vessel to
teach students helmsmanship, navigation, sail trim/sail shape, and
boat handling under cruising conditions.  You state that the
students will be required to live aboard the vessel during the
instruction and training.  You ask the following questions:

     1.  Must the vessel(s)[US built/owned] have any specific
     license?

     2.  Must the instructor(s) have a specific license?
     
     3.  What would be considered a violation of the coastwise
     laws?

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 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 ....

     "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 section 289, 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 (TD
55193(2)).

       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).

       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).

       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.  

       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.

       Questions relating to documentation of the vessel and
special licenses for both the sailing school and instructors are
within the jurisdiction of the U.S. Coast Guard.  We are referring
questions one and two to the following for appropriate response: 

            Chief, Merchant Vessel Documentation Division
            G-MVD/13, U.S. Coast Guard
            2100 Second Street, SW. Room 1312
            Washington, D.C. 20593

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 use of the vessel
and crew may be transported from a coastwise point 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.  

                                       Sincerely,




                                       Acting Chief 
                                       Carrier Rulings Branch