HQ 110051: The applicability of the coastwise trade passenger statute to hovercraft of greater and lesser than 5 net tons, operating at least in part on inland waters in the United States.

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 110051

                          May 10, 1989



VES-3-CO:R:P:C 110051 LLB

CATEGORY: Carriers

Mr. Harvey C. Cook
Director, Hovercraft Training
     and Operations
Hover Systems, Inc.
1500 Chester Pike
Eddystone, Pennsylvania 19013

RE:  The applicability of the coastwise trade passenger
     statute to hovercraft of greater and lesser than 5 net
     tons, operating at least in part on inland waters in
     the United States.

Dear Mr. Cook:

     This is in response to your letter of January 17, 1989, in
which you ask that we rule on several questions regarding the use
of hovercraft for passenger carriage in the United States.

FACTS:

     It is proposed to use hovercraft of either over or under 5
net tons to carry passengers for hire (anywhere between 3 and 50
persons), in any of various situations.  Some carriage,
apparently, may be between coastal areas, some on inland state
controlled waters (natural or man-made lakes closed to the sea)
which may have been designated as non-navigable by the U.S. Coast
Guard and/or U.S. Army Corps. of Engineer's, and some on nontidal
rivers otherwise accessible only by canoe or kayak.
Additionally, some carriage may include inland lakes and rivers
bordering two or more states.

ISSUE:

     1.   Is a hovercraft considered a "vessel" for
          purposes of the coastwise laws.

     2.   May a non-coastwise-qualified hovercraft, regardless of
          size, be used in the coastwise trade.

     3.   Does coastwise trade include the
          transportation for hire of passengers on a
          non-qualified vessel when that transportation
          occurs on:
                                2

          a.   Inland waters designated as non-navigable by the
               U.S. Coast Guard or the U.S. Army Corps. of
               Engineers.

          b.   Inland waters designated by the U.S. Coast Guard
               as sole state waters (lakes, either man-made or
               natural) and solely within the jurisdiction of a
               single state.

          c.   Inland white water, non-tidal rivers accessible
               only by canoe or kayak.

          d.   Inland waters, closed to the sea, and bordering on
               two or more states.

LAW AND ANALYSIS:

     Generally, the coastwise laws 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, documented under the laws of, and owned by
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.

     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. App. 883, the coastwise merchandise
law, the Customs Service has consistently held that the
prohibition in 46 U.S.C. App. 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)).

     The Customs Service has held that hovercraft are considered
"vessels" for purposes of the navigation laws, of which the
coastwise passenger statute is one (see T.D. 56390(1), April 8,
1965).  This Treasury Decision remains a viable statement of
agency policy, having been consistently cited since its issuance
(Ruling Letter 104772, dated October 12, 1980).  It is settled,
therefore, that hovercraft are "vessels."

     Qualified vessels of less than 5 net tons are not precluded
from engaging in the coastwise trade simply because they cannot
be documented under the laws of the United States, however.

                                3

Section 4.80(a), Customs Regulations (19 CFR 4.80(a)), enumerates
the vessels which may engage in the coastwise trade.
Subparagraph (a)(2) of this section (i.e., 19 CFR 4.80(a)(2))
provides that no vessel exempt from documentation (e.g., of less
than 5 net tons) shall transport any passengers or merchandise
between United States coastwise points unless the vessel is owned
by a citizen of the United States and is entitled to or, except
for its tonnage, would be entitled to be documented with a
coastwise license.  As stated above, to be entitled to be
documented with a coastwise license a vessel must, among other
things, be built in the United States (46 U.S.C. 12106(a)(2)),
with an exception inapplicable in this case.

     It is a well established principle that federal law
determines navigability under federal statutes.  Furthermore,
the test of navigability has been established by the federal
courts through the years.  This test consists of 4 essential
elements which, when taken together, state that a navigable
waterway of the United States must (1) be or have been (2) used
or susceptible of use (3) in the customary modes of trade and
travel on water (4) as a highway for interstate commerce.  The
Daniel Ball, 10 Wall. 557, 563, 77 U.S., 557, 563, 19 L.Ed. 999
(1871); The Montello, 20 Wall. 430, 441, 87 U.S. 430, 441, 22
L.Ed. 391 (1874); United States v. Utah, 283 U.S. 64, 76, 51
S.Ct. 438, 441, 75 L.Ed. 844 (1931); United States v. Appalachian
Electric Power Co., 311 U.S. 377, 406-408, 61 S.Ct. 291, 298-99
85 L.Ed. 243 (1940).

     The 4 elements listed above are reflected in the
regulations of the U.S. Coast Guard (33 CFR 2.05-25(a)(3)(i))
which state, in pertinent part, that navigable waters of the
United States include:

          Internal waters of the United States not subject
          to tidal influence that: (i) are or have been used
          or are or have been susceptible for use, by
          themselves or in connection with other waters, as
          highways for substantial interstate or foreign
          commerce notwithstanding natural or man-made
          obstructions that require portage.

These same 4 elements are also reflected in the regulations of
the Army Corps of Engineers (33 CFR 329.4) which define navigable
waters of the United States, in pertinent part, as:

          ...those waters that are subject to the ebb
          and flow of the tide and/or are presently
          used, or have been used in the past, or may
          be susceptible for use to transport
          interstate or foreign commerce.

                                4

Customs has no similar regulations pertaining to the statutes it
enforces, preferring to look to court decisions and the
regulations of these two federal agencies instead.  Accordingly,
in cases where specific determinations of non-navigability have
been made by Coast Guard or the Corps. of Engineers, great weight
is given those determinations, absent evidence to the contrary.

     The occasion has arisen where there has been no
determination of navigability made with respect to a particular
body of water.  In such cases, the procedures outlined in Customs
Circular VES-3-MD of February 6, 1961, are applied.  Paragraph
two (2) of the "BACKGROUND" section of that document states:

          The navigation laws administered by the
          Bureau are applicable only on waters to which
          the Federal jurisdiction extends, which
          waters are known as the navigable waters of
          the United States.  The ultimate
          determinations as to navigability are made by
          decisions of courts of competent jurisdiction
          and by acts of Congress. If no such
          determination has been made as to whether a
          body of water is part of the navigable waters
          of the United States, the Bureau and the
          United States Coast Guard, after consulting
          the Corps of Engineers, apply the principles
          set forth in the various court decisions and
          administratively determine whether a
          particular body of waters is part of the
          navigable waters of the United States for the
          purposes of the laws administered by those
          agencies.  These determinations are made on a
          cooperative basis as a question may arise.

     The above-cited language does not compel Customs to defer to
the U.S. Coast Guard or the Corps of Engineers regarding
determinations of navigability.  Indeed, it is merely a statement
that both Customs and the Coast Guard will apply existing case
law to reach an administrative determination within their own
areas of jurisdiction.  Where the matter is peculiarly within the
competence of one agency, it will not consult with others.

     Any reference to the above-cited Customs Circular should
focus not on the language under the heading "BACKGROUND" but
rather on the language in paragraph three (3) under the heading
"ACTION" which states:

          When a question arises as to whether a
          particular body of water is part of the
          navigable waters of the United States, the
          question shall be submitted to the Bureau for
          determination.  There shall be included with
                                5

          the request for determination (1) any
          available maps showing the body of water and
          its connecting and tributary waters; (2)
          information concerning the size and depth of
          the particular waters; (3) information on
          navigability and any determination on that
          point from the local District (or Division)
          Engineer, Corps of Engineers, United States
          Army; (4) a brief statement of the present
          and past use of the waters with respect to
          commerce or pleasure including the size of
          the vessels using the particular body of
          water; (5) any further relevant information
          that may be available; (6) a statement of the
          opinion of your office as to the navigability
          of the particular body of water.

     In summary, the prohibitions imposed by the coastwise laws
extend to all vessels regardless of their size, and to the
internal waters of the United States as well as to the coastal
waters.  Their applicability is not affected by the fact that a
body of water may be wholly within the jurisdiction of a single
state, or whether its course or boundaries intrude on the
territory of two or more states.  Likewise, it is not a
consideration whether a body of water is tidal or non-tidal, is
accessible to the sea, is easily reached, or is man-made.  The
only factor impacting upon the propriety of the use of a non
coastwise-qualified vessel, is whether the particular body of
water is determined to be navigable under the above-cited
criteria.  A specific finding of non-navigability is not akin to
the absence of a determination of navigability.

HOLDING:

     The coastwise laws prohibit the use of non-coastwise
qualified vessels on inland as well as coastal waters.  A
specific ruling may only be issued after consideration of whether
a particular body of water has been determined to be navigable.

                              Sincerely,





                              B. James Fritz
                              Chief
                              Carrier Rulings Branch