Applicability of the coastwise laws to proposed passenger and cargo vessel movements between Guam and points in the Commonwealth of the Northern Mariana Islands

HQ 109583 July 7, 1988 VES-3-02 CO:R:P:C 109583 LLB CATEGORY: Carriers Mr. John T. K. Sun Foremost Maritime Corporation 50 Broad Street New York, New York 10004 RE: Applicability of the coastwise laws to proposed passenger and cargo vessel movements between Guam and points in the Commonwealth of the Northern Mariana Islands Dear Mr. Sun: Reference is made to your letter of June 22, 1988, in which you request that we rule upon a proposed foreign-flag regular passenger/cargo operation plying the waters between Guam and the islands of Rota and Saipan in the Commonwealth of the Northern Mariana Islands (CNMI). Your letter indicates you are inquiring as to any potential prohibitions imposed upon your proposal by the coastwise laws of the United States. FACTS: Your client proposes to start regular vessel service carrying cargoes and/or passengers between Guam, Rota, and Saipan. ISSUE: Whether the coastwise passenger or merchandise statutes apply to vessel itineraries involving transportation between Guam and points in the Northern Mariana Islands. LAW AND ANALYSIS: Generally speaking, the coastwise laws (46 U.S.C. App. 289 and 883, and 46 U.S.C. 12106 and 12110) prohibit the transportation of passengers and merchandise 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. Pursuant to 46 U.S.C. App. 877, the coastwise laws are made applicable to Guam. - 2 - 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. The transportation of passengers to the high seas or foreign locations and back to the point of embarkation, assuming the passengers do not go ashore, even temporarily, at another United States point, is not considered coastwise trade. The territorial waters of the United States consist of the territorial sea, defined as the belt, 3 nautical miles wide, adjacent to the coast of the United States and seaward of the territorial sea baseline. This definition also applies to the waters adjacent to Guam. We do not know whether you are familiar with the terms of Article V of the Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union with the United States of America (Pub. L. 94-241, March 4, 1976, 90 Stat. 263, at note following 48 U.S.C. 1681) (Covenant). Section 503 (b) of the Covenant provides, through section 502 (b), that the coastwise laws of the U.S. are applicable in the Northern Mariana Islands only to the activities of the U.S. Government and its contractors. Customs Service interpretations have been consistent with the language of the Covenant. (Ruling letter 106982, dated November 15, 1984). We note that section 101 of Article 1 of the Covenant provides that upon termination of the Trusteeship Agreement, the Northern Marianas will become a self-governing commonwealth, in political union with and under the sovereignty of the United States. We interpret sections 502 and 503 of Article V of the Covenant to state that upon termination of the Trusteeship Agreement, the Congress will have to enact specific legislation to extend applicability of the coastwise laws to the Northern Marianas. By proclamation 5564, appearing in the Federal Register of November 7, 1986 (51 FR 216), the President declared that as of November 3, 1986, the political status of the Northern Mariana Islands has changed and that residents there now enjoy U.S. Citizenship. We are not aware of any specific Congressional action regarding the coastwise laws. - 3 - HOLDING: Accordingly, since Guam is the only coastwise point involved in your proposed itinerary, Saipan and Rota, being a part of the CNMI and not subject to the coastwise laws, you may engage the services of a foreign-flag vessel to provide passenger and cargo service between Guam, Saipan, and Rota without violating the coastwise laws of the United States. Sincerely, B. James Fritz Chief Carrier Rulings Branch