HQ 113101: Coastwise Trade; Passengers; Americas Cup; 46 U.S.C. App. 289

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 113101

                           May 18, 1994

VES-3-07-CO:R:IT:C 113101 GEV

CATEGORY:  Carriers 

P. Clais
Director, Marine Department
Stardust Marine
11 Rue de Cambrai
75019 Paris, France

RE:  Coastwise Trade; Passengers; Americas Cup; 
     46 U.S.C. App.  289

Dear Mr. Clais:

     This is in response to your fax dated May 10, 1994,
requesting a ruling regarding the operation of a foreign-flagged
passenger vessel in conjunction with the Americas Cup.  Our
ruling on this matter is set forth below.

FACTS:

     Stardust Marine would like to bring the PANORAMA, a foreign-flagged passenger vessel, to San Diego for a 3 month visit to
coincide with the Americas Cup Races.  The purpose of the visit
is to provide accommodations and a viewing platform for the
French Americas Cup Challenging Team participating in the races
and their sponsors.

     The vessel will be berthed in the Port of San Diego for the
duration of the races, providing accommodations and meals for the
French team staff as well as providing a hospitality venue for
the team and its sponsors to host various social functions.

     During many of the days in port the vessel will follow the
race boats out into San Diego Bay to serve as a viewing platform
and to provide technical and administrative support for the
French race boat.  The vessel will return to its berth at the end
of the day.  Aboard the vessel for these short sailings will be
the French race team shore staff, sponsors and the sponsors'
invited guests.
                              - 2 -

     The vessel will be under charter for a period of 3.5 months,
commencing the end of January 1995 until the beginning of May
1995.  The duration of the vessel's stay in the United States
will be dependent upon the success of the French Challenging
Team.  If the team is defeated, or if they retire from the
competition, the vessel will depart with the team.

ISSUE:

     Whether the use of a foreign-flagged passenger vessel in San
Diego Bay as a viewing platform and hospitality venue, as well as 
providing accommodations and meals for the French Americas Cup
Racing Team, shore staff, sponsors and their guests during the
Americas Cup Races constitutes a violation of 46 U.S.C. App. 
 289.

LAW AND ANALYSIS:

     Title 46, United States Code Appendix,  289 (46 U.S.C. App.
 289, the passenger coastwise law), prohibits the transportation
of passengers between points in the United States embraced within
the coastwise laws, either directly or by way of a foreign port,
in a non-coastwise-qualified vessel (i.e., a vessel that is not
U.S.-built, owned and documented).  For purposes of  289,
"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." (see  4.50(b), Customs
Regulations, (19 CFR  4.50(b))    
     
     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.

     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 (29 O.A.G.
318 (1912)).   

     In addition, the Customs Service has consistently held that
when a vessel is chartered under a bona fide bareboat charter,
the bareboat charterer is treated as the owner of the vessel for
the period of the charter, and, because the owners are not
considered "passengers" for purposes of the coastwise laws, the 

                              - 3 -

charterer is not proscribed by the coastwise laws from using the
vessel during the charter for pleasure purposes only.  A vessel
chartered under a charter arrangement other than a bareboat
charter (e.g., a time or voyage charter) and used in coastwise
transportation (see discussion above on the carriage of
passengers entirely in territorial waters or to the high seas or
foreign waters) would be subject to penalties under the coastwise
laws.  A vessel chartered under a bareboat charter would also be
subject to penalties if the bareboat charterer used it in the 
coastwise trade (e.g., to transport passengers (other than bona
fide guests) between coastwise points or entirely within
territorial waters).

     In our review of charter arrangements to determine whether
or not they are bareboat charters we have generally held that:

          The nature of a particular charter arrangement is a
          question of fact to be determined from the circum-
          stances of each case.  Under a bareboat charter or 
          demise charter the owner relinquishes complete man-
          agement and control of the vessel to the charterer.
          On the other hand, if the owner retains a degree of
          management and control, however slight, the charter
          is a time or voyage charter, and the vessel is deemed
          to be engaged in trade.  The crux of the matter is
          whether complete management and control have been 
          wholly surrendered by the owner to the charterer so
          that for the period of the charter the charterer is
          in effect the owner.  Although a charter agreement on
          its face may appear to be a bareboat or demise 
          charter, the manner in which its covenants are 
          carried out and the intention of the respective 
          parties to relinquish or to assume complete 
          management and control are also factors to be 
          considered.

     Upon reviewing the information submitted, it is apparent
that the PANORAMA would be operated under other than a bareboat
charter.  Furthermore, it is apparent that the French Americas
Cup Team, shore staff, sponsors and their invited guests carried
aboard the vessel are "passengers" within the meaning of 
 4.50(b), Customs Regulations.  Accordingly, the use of the
vessel to transport passengers in San Diego Bay would be pro-hibited by 46 U.S.C. App.  289 unless such transportation was
pursuant to a valid "voyage-to-nowhere" (i.e., the passengers
would be transported from their point of embarkation in the Port
of San Diego to a point beyond the 3-mile U.S. territorial seas
and back to their point of embarkation without having gone ashore
at any other coastwise point).  The use of the vessel in pro-
viding accommodations, meals and as a venue for social functions
does not violate 46 U.S.C. App.  289 provided the vessel remains
stationary (i.e., it does not leave its berth) during such use.
                              - 4 -

HOLDING:

      The use of a foreign-flagged passenger vessel in San Diego
Bay as a viewing platform and hospitality venue, as well as
providing accommodations and meals for the French Americas Cup
Racing Team, shore staff, sponsors and their guests during the
Americas Cup constitutes a violation of 46 U.S.C. App.  289
unless the vessel remains stationary during such use or the
transportation of the aforementioned passengers is pursuant to a
"voyage-to-nowhere" as discussed above.

                              Sincerely,




                              Arthur P. Schifflin
                              Chief
                              Carrier Rulings Branch