HQ 109537: Definition of the term "Licensed Yacht or Undocumented American Pleasure Vessel" for Purposes of 19 U.S.C. 1441(3) and 46 U.S.C. App. 91

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 109537

                                 September 26, 1988

          VES-4-01/VES-5-07 CO:R:P:C 109537 PH

          CATEGORY: Carriers

          Mr. Thomas Mattina
          District Director of Customs
          77 Southeast 5th Street
          Miami, Florida 33131

          RE:  Definition of the term "Licensed Yacht or Undocumented
          American Pleasure Vessel" for Purposes of 19 U.S.C. 1441(3)
          and 46 U.S.C. App. 91

          Dear Mr. Mattina:

              This is with reference to your memorandum of May 11, 1988
          (Your Reference:  VES-5-DD:I:S AKL), concerning the status of
          a state-numbered vessel owned and operated by a foreign
          citizen who is a resident of the United States.

          ISSUE:

              What is a "licensed yacht or undocumented American
          pleasure vessel," within the meaning of the provisions in
          19 U.S.C.  1441(3) and 46 U.S.C. App. 91 exempting such
          vessels from entry and clearance under certain
          circumstances?

          LAW AND ANALYSIS:

              Section 441(3), Tariff Act of 1930, as amended (19 U.S.C.
          1441(3)), provides, in pertinent part, that:

              The following vessels shall not be required to make entry
              at the customhouse:

              (3)  ... licensed yachts or undocumented American
              pleasure vessels not engaged in trade:  Provided, That
              such vessels do not in any way violate the customs or
              navigation laws of the United States and have not visited
              any hovering vessel:  Provided further, That the master
              of any such vessel which has on board any article
              required by law to be entered shall be required to report
              such article to the appropriate customs officer within
              twenty-four hours after arrival.


          The statute requiring vessel clearance of a vessel bound to a
          foreign port or place (46 U.S.C. App. 91) contains a similar
          pro- vision under which "a licensed yacht or an undocumented
          American pleasure vessel not engaged in any trade nor in any
          way violating the customs or navigation laws of the United
          States" is exempt from clearance.

              In interpreting the meaning of the term "undocumented
          American pleasure vessel," we have held that:

              To be considered an undocumented American pleasure vessel
              (see 19 U.S.C. 1441(3)), a vessel must be wholly owned by
              a citizen and resident of the United States ....  [A]n
              undocu- mented pleasure vessel is not considered
              "American" by the Customs Service merely because it
              receives a state number
              ....  [Ruling letter dated April 22, 1982, File:
              105332.]

          More recently, we stated, in this regard, that:

              For purposes of the navigation laws administered by the
              Customs Service, a pleasure boat not documented by a
              foreign nation which has been issued a state number is
              considered to be an undocumented American pleasure
              vessel, regardless of its ownership.  [Ruling letter
              dated August 29, 1986, File:  108354.]

              You ask that we clarify these interpretations of the term
          "undocumented American pleasure vessel" with regard to an
          undocu- mented pleasure vessel numbered under a state
          numbering system and owned by someone other than a United
          States citizen.

              Initially, we note that a pleasure vessel documented by
          the United States Coast Guard under 46 U.S.C. Chapter 121
          would be considered a "licensed yacht" under 19 U.S.C.
          1441(3) and 46 U.S.C. App. 91 (see 46 U.S.C. 12109, providing
          for the issuance of recreational vessel licenses, and 46
          U.S.C. 2101(10), defining "documented vessel" as a vessel for
          which a certificate of docu- mentation has been issued under
          Chapter 121 of Title 46).  A pleasure vessel documented under
          a foreign flag would not be con- sidered a licensed yacht or
          undocumented American pleasure vessel under sections 1441(3)
          and 91 regardless of whether it was li- censed under a state
          numbering system (see 46 U.S.C. 2101(12), defining "foreign
          vessel" as a vessel of foreign registry or operated under the
          authority of a country except the United States; see also,
          Whiteman, Digest of International Law, vol. 9, pp. 25-27).
          An undocumented pleasure vessel owned by a citizen and
          resident of the United States would, of course, be considered
          an undocumented American pleasure vessel under sections
          1441(3) and 91 (see Whiteman, supra., Vol. 9, p. 37).

              With regard to an undocumented pleasure vessel owned by a
          citizen who is not a resident of the United States, we note
          that we stated in the April 22, 1982, letter ruling quoted
          above that "[t]o be considered an undocumented American
          pleasure vessel ..., a vessel must be wholly owned by a
          citizen and resident of the United States.  (Emphasis
          added.)  (See also, ruling letter to the District Director of
          Customs in Seattle, Washington, dated March 26, 1968, and
          letter dated April 29, 1982, File:  105288.)

              We have thoroughly considered this issue.  It is not
          apparent to us from the legislative history of the amendment
          (section 501, Customs Simplification Act of 1954; 68 Stat.
          1140) which added the provision regarding undocumented
          American pleasure vessels to sections 1441(3) and 91 that
          such vessels must be owned by a United States citizen and
          resident (see Senate Report No. 2326, August 6, 1954, printed
          at 1954 U.S.C.C.A.N. 3900; see also, the memorandum providing
          the views of the Department of the Treasury on a similar
          provision transmitted to the Chairman of the House Committee
          on Ways and Means with a letter dated April 23, 1954, from
          the Acting Secretary of the Treasury).  Nor do our early is-
          suances concerning this provision contain such an
          interpretation (see, e.g., letter to Senator George Smathers
          dated February 18, 1955, and Marine Circular No. 143, dated
          May 19, 1955).

              We believe that the most rational resolution of this
          issue is to be found in the United States vessel
          documentation require- ments.  An undocumented American
          pleasure vessel should be the same as a documented American
          pleasure vessel except that it is not documented.  To be
          eligible for documentation, a vessel must be:  (1) of at
          least 5 net tons; (2) not registered under the laws of a
          foreign country; and (3) owned by a citizen of the United
          States (see 46 U.S.C. 12102; 46 CFR Subpart 67.03; see al-
          so, 19 CFR 4.80(a)(2) and (3) in which allowance is made for
          ves- sels which may not be documented because of their
          tonnage).  There is no residency requirement for United
          States vessel docu- mentation.  On this basis, we conclude
          that an undocumented plea- sure vessel which is owned by a
          United States citizen would be considered an undocumented
          American pleasure vessel for purposes of sections 1441(3) and
          91, regardless of whether or not that United States citizen
          is a United States resident.

              Consistent with this conclusion, we believe that an
          undocumented pleasure vessel which is numbered under a State
          num- bering system may not be considered an undocumented
          American pleasure vessel unless it qualifies, except for
          tonnage, for documentation under 46 U.S.C. 12102 (i.e., it
          must be United States owned and may not be registered under
          the laws of a foreign country).  Thus, the August 29, 1986,
          ruling letter (File:  108354), is modified.  This position is
          consistent with footnote 9 to section 4.3, Customs
          Regulations, and other authorities on this subject (see The
          Chiquita, 19 F.2d 417 (1927); Moore, International Law, vol.
          2, pp. 1002-1009, cited in The Chiquita; and 80 Corpus Juris
          Secundum 569, citing The Chiquita; but see, contra, 46
          U.S.C.  2101(46) defining "vessel of the United States" to
          include numbered vessels for purposes of 46 U.S.C. Subtitle
          II).

              With regard to the above determination, we note that
          under the Coast Guard Regulations on state numbering, a
          state numbering system may require the numbering of any
          vessel subject to the ju- risdiction of the state, with
          certain exceptions not applicable in this case (see 33 CFR
          174.11(b)).  Thus, the fact that an un- documented pleasure
          vessel may be numbered under a state number- ing system is
          not conclusive evidence that the vessel qualifies, except for
          tonnage, for documentation under 46 U.S.C. 12102.

          HOLDINGS:

              1.  A "licensed yacht or undocumented American pleasure
          vessel," within the meaning of the provisions in 19 U.S.C.
          1441(3) and 46 U.S.C. App. 91 exempting such vessels from
          entry and clearance under certain circumstances, includes:

              (a)  A pleasure vessel documented by the United States
              Coast Guard under 46 U.S.C. Chapter 121; and

              (b)  An undocumented pleasure vessel owned by a citizen
              of the United States, regardless of whether the United
              States citizen is a resident of the United States and
              regardless of whether the vessel is numbered under a
              state numbering system.

              2.  A "licensed yacht or undocumented American pleasure
          vessel," within the meaning of the provisions in 19 U.S.C.
          1441(3) and 46 U.S.C. App. 91 exempting such vessels from
          entry and clearance under certain circumstances, does not
          include:

              (a)  A pleasure vessel documented under a foreign flag,
              regardless of whether it is owned by a citizen of the
              United States and regardless of whether it is numbered
              under a state numbering system; and

              (b)  An undocumented pleasure vessel owned by a foreign
              citizen, regardless of whether it is numbered under a
              state numbering system.


          EFFECT ON OTHER RULINGS:

              Ruling letter dated August 29, 1986 (File:  108354), is
          modified.

                                Sincerely,


                                  John E. Elkins
                                  Acting Director, Regulatory
                                  Procedures and Penalties Division