HQ 112203: Coastwise; Guam; Foreign Owner; Voyage to Nowhere; Sport Fishing; 46 U.S.C. 12102; 46 U.S.C. App. 289; 46 U.S.C. App. 877.

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 112203

                          June 9, 1992

VES-3/3-02   CO:R:IT:C  112203  JBW

CATEGORY:   Carriers

Charles J. Walsh, President
Walsh Yachts, Inc.
1900 S.E. 15th Street
Ft. Lauderdale, FL 33316

RE:  Coastwise; Guam; Foreign Owner; Voyage to Nowhere; Sport
     Fishing; 46 U.S.C. 12102; 46 U.S.C. App. 289; 46 U.S.C.
     App. 877.

Dear Mr. Walsh:

     This letter is in response to your inquiry of April 10,
1992, in which you request a ruling on the application of the
United States coastwise laws in Guam.

FACTS:

     Your client, a Japanese national, operates a sport fishing
charter business in Guam.  You state that your client possesses
a United States Coast Guard license, with a restrictive
endorsement: "uninspected/undocumented small passenger carrying
vessels, due to non U.S. citizenship."  From this statement, we
infer that the vessels owned by your client are not eligible for
documentation under 46 U.S.C. 12102.  You state that your
research indicates that Coast Guard documentation is not required
for vessels operating outside of the coastwise or fisheries
trade.  You ask whether the chartering of a vessel not documented
by the Coast Guard for sport fishing in Guam constitutes
coastwise trade.

ISSUE:

     Whether a vessel not documented by the Coast Guard may be
chartered to transport passengers for sport fishing in Guam.

LAW AND ANALYSIS:

     The coastwise passenger law 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.

46 U.S.C. App. 289.  The Customs Service has consistently
interpreted this proscription to apply to any vessel except a
United States built, owned, and properly documented vessel. See
46 U.S.C.A. 12106 & 12110 (West Supp. 1991), 46 U.S.C. App.
289, and 19 C.F.R. 4.80(a) (1991). Generally, the coastwise
laws apply to points within the territorial sea of the United
States, 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.  Headquarters
Ruling Letter 111275, dated November 13, 1990.

     Pursuant to Section 21 of the Merchant Marine Act of 1920,
46 U.S.C. App. 877, the coastwise laws, including the above-
described statutes, are applicable to Guam.  Under 46 U.S.C.
12105(b), however, a vessel for which a registry is issued by
the United States Coast Guard may be employed in trade with Guam.
Under that statute and 46 U.S.C. 12102, a foreign-built, United
States-owned vessel may be issued a registry.  In interpreting
these statues, the Customs Service has ruled that foreign-built,
United States-registered vessels may be used to transport
merchandise or passengers between points in Guam as well as
between United States coastwise points and Guam.  Headquarters
Ruling Letter 109455, dated August 4, 1988.  Similarly, a
foreign-built, United States-registered vessel could be used to
tow another vessel between points in Guam as well as between
United States coastwise points and Guam.  In applying these rules
to the issues raised in your letter, we conclude that a vessel
that cannot be documented in the United States because of foreign
ownership may not be used in the coastwise trade in Guam.

     In interpreting the coastwise laws as applied to the
transportation of passengers, 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 point, is considered
coastwise trade subject to the coastwise laws.  E.g.,
Headquarters Ruling Letter 110990, dated May 21, 1990.  However,
the transportation of passengers to the high seas or foreign
waters and back to the precise point of embarkation, often called
a "voyage to nowhere," is not considered coastwise trade.  Id.
An important corollary to this rule is that a "voyage to nowhere"
assumes the passengers do not leave the vessel, even temporarily,
at another United States point.  Id.  Furthermore, the carriage
of fishing parties for hire, even if the vessel proceeds beyond
territorial waters and returns to the point of the passengers'
embarkation, is considered coastwise trade.  Headquarters Ruling
Letter 111051, dated August 16, 1990.

     Based on the foregoing provisions and interpretations, the
use of a vessel to transport passengers for sport fishing would
constitute an engagement in the coastwise trade.  This conclusion
applies regardless of whether the vessel stays within or goes
beyond the territorial waters of Guam.  A vessel engaged in such
activity in Guam would be required to have a registry or a
coastwise endorsement.

     We note for your information that a vessel without a
coastwise endorsement may be chartered in a manner that is
consistent with the coastwise laws.  The Customs Service has 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,
19 C.F.R. 4.50(b) (1991), the charterer is not proscribed by the
coastwise laws from using the vessel during the charter for
pleasure purposes only.  Headquarters Ruling Letter 109638, dated
July 22, 1988.  A vessel chartered under a charter arrangement
other than a bareboat charter (e.g., a time or voyage charter)
and used in coastwise transportation would be subject to
penalties under the coastwise laws.  Id.  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).  Id.

     The United States Supreme Court stated:

          To create a demise [or bareboat charter] the
          owner of the vessel must completely and
          exclusively relinquish "possession, command,
          and navigation" thereof to the demisee.... It
          is therefore tantamount to, though just
          short of, an outright transfer of ownership.
          However, anything short of such a transfer is
          a time or voyage charter party or not a
          charter party at all.

Guzman v. Pichirilo, 369 U.S. 698, 699-670 (1962); see also,
Leary v. United States, 81 U.S. 607, 611 (1871), 2B Benedict on
Admiralty 52 (6th ed. 1990).

     In our review of charter arrangements to determine whether
they are bareboat charters for Customs purposes, we have held, in
addition to the above-described principles, that:

          The nature of a particular charter
          arrangement is a question of fact to be
          determined from the circumstances of each
          case.  Under a bareboat charter or demise
          charter the owner relinquishes complete
          management 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 the 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.

Headquarters Ruling Letter 109638 (emphasis added).  In that
regard, it is well established that a vessel may be demised
complete with captain if he is subjected to the orders of the
demisee during the period of the demise.  Guzman, 369 U.S. at
701.  Furthermore, the Customs Service has held that the mere
fact that the crew is furnished to the charterer would not render
the agreement a time charter provided the charterer had full
authority to hire, discharge, or replace the crew.  See
Headquarters Ruling Letter 108278, dated April 2, 1988.

     A bareboat charter agreement conforming to these guidelines
will permit a vessel without a coastwise endorsement to be
chartered for pleasure purposes.  We note, however, the part of
this ruling relating to bareboat chartering of the vessel is
advisory and suggest that your client submit to the Customs
Service a copy of the bareboat charter agreement if this option
is exercised.

HOLDING:

     A vessel that cannot be documented in the United States
because of foreign ownership may not be used in the coastwise
trade in Guam.  Moreover, the carriage of fishing parties for
hire, even if the vessel proceeds beyond territorial waters and
returns to the point of the passengers' embarkation, is
considered coastwise trade. The use of a vessel for transporting
passengers on a "voyage to nowhere" or the charter of a vessel
pursuant to a bona fide bareboat charter would not be considered
an engagement in the coastwise trade.

                              Sincerely,



                              B. James Fritz
                              Chief
                              Carrier Rulings Branch