HQ 111292: Coastwise Trade; Passengers; Foreign-Flag Vessel; 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 111292

                        February 22, 1991

VES-3-02/07-CO:R:IT:C 111292 BEW

CATEGORY:  Carriers

Mr. Kaare Bakke
Superintendent, Maritime Operations
Kloster Cruise Limited
Norwegian Cruise Line * Royal Viking Line
95 Merrick Way
Coral Gables, Florida 33134

RE:  Coastwise Trade; Passengers; Foreign-Flag Vessel;
     46 U.S.C. App. 289

Dear Mr. Bakke:

     This is in response to a letter dated September 12, 1990,
from Captain Gulleik Svalastog, requesting a ruling concerning
the application of the Jones Act to a proposed eight (8) and ten
(10) day cruise itinerary on a foreign flag vessel as set forth
below.

FACTS:

     The letter states that in the 8-day cruise, the passengers
would embark on a cruise on a foreign-flag in Honolulu.  The
vessel travels from Honolulu to various intermediate U.S. ports,
Nawiliwili and Lahaina, the vessel is at sea for two days and
calls at Christmas Island, a distant foreign port, and the cruise
concludes at Honolulu where the passengers disembark.

     The letter states that in the 10-day cruise, the passengers
would embark on a cruise on a foreign-flag in Honolulu.  The
vessel travels from Honolulu to various intermediate U.S. ports,
Nawiliwili, Lahaina, Hilo, and Kona, the vessel is at sea for two
days and calls at Christmas Island, Republic of Kiribati, a
distant foreign port, and the cruise concludes at Honolulu where
the passengers disembark.

     On each cruise, the passengers would presumably either
disembark or go ashore temporarily to take sight-seeing
excursions at the said intermediate U.S. ports.  The letter
states that it is your understanding that the proposed
itineraries would not violate 46 U.S.C. App. 289 or section 4.80a
of the Customs Regulations.

ISSUE:

     Whether the transportation of passengers on a foreign-flag
vessel as described above constitutes violations of 46 U.S.C.
App. 289 if the passengers are allowed to remain on shore at an
intermediate U.S. port for a period of one day, but are on board
when the vessel leaves port?

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," as used in section 883, includes any
article, including valueless merchandise pursuant to the recent
amendment of section 883 by the Act of June 7, 1988 (Public Law
100-329; 102 Stat. 588).

     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."  (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.

     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.

     If passengers embark at a coastwise point and either
disembark (see the definitions of "embark" and "disembark" set
forth in 19 CFR 4.80a(a)(4)) or go ashore temporarily to take
sight-seeing excursions at an intermediate U.S. port there would
be no violation of section 289 if they are allowed to remain on
shore at the intermediate U.S. port for an extended period of
time (e.g., several days), but are on board when the vessel
leaves the United States port for a distant foreign port, in the
subject case, Christmas Island.  Transportation from the distant
foreign port to the port of original embarkation would not be a
coastwise transportation of passengers for purposes of section
289.  The relevancy of whether an intermediate foreign
port is a "nearby foreign port" (as defined in 19 CFR
4.80a(a)(2)) or a "distant foreign port" (as defined in 19 CFR
4.80a(a)(3)) is crucial in determining whether or not a violation
of section 289 has occurred.  In both fact patterns set forth
above, the passengers embark at a coastwise point (Honolulu) on a
voyage to several coastwise points in Hawaii and a distant
foreign port (Christmas Island), returning to the United States
port of original embarkation.  Accordingly, there would be no
violation of section 289 (see 19 CFR 4.80a(b)(3)).

HOLDING:

     The transportation of passengers on foreign-flag vessels as
described in the itineraries above does not constitute violations
of 46 U.S.C. App. 289 as discussed above.

                                     Sincerely,




                                     B. James Fritz
                                     Chief
                                     Carrier Rulings Branch