Coastwise; Foreign-flag; Transportation of Yachts; Foreign- port; 46 U.S.C. App. 883.

HQ 111921 January 21, 1992 VES-3-07 CO:R:IT:C 111921 JBW CATEGORY: Carriers Kenneth E. Johnson, Esquire Baker & Hostetler, McCutchen Black 600 Wilshire Boulevard Los Angeles, California 90017 RE: Coastwise; Foreign-flag; Transportation of Yachts; Foreign- port; 46 U.S.C. App. 883. Dear Mr. Johnson: This letter is in response to your request, dated September 25, 1991, for a ruling on the application of the coastwise laws to the carriage of private yachts between ports in the United States and ports in Mexico. FACTS: Dock Express Shipping, Inc., is a corporation that owns and operates vessels engaged in the foreign trade. This company proposes to transport on its foreign-flag vessels private yachts and other vessels from ports in the United States to Ensenada or other ports in Mexico. After these yachts have been off-loaded in Mexico, the owners, who will have obtained separate transportation to Mexico, will proceed on these yachts under their own power to points in Mexico, the United States, or international waters. Dock Express Shipping will offer this carriage as a one-way service. Dock Express Shipping also plans to advertise this service, including the fact that the vessels it carries to Mexican ports will be able to sail or motor back to the United States. ISSUE: Whether the coastwise merchandise law (46 U.S.C.A. App. 883 (West Supp. 1991)) prohibits the carriage of private yachts or other vessels aboard a foreign-flag vessel from a port in the United States to a port in Mexico when such yachts or other vessels return to the United States under their own power. LAW AND ANALYSIS: Section 883 of Title 46, United States Code Appendix, provides, in pertinent part: 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...), between points in the United States, including Districts, Territories, and possessions thereof 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.... 46 U.S.C.A. App. 883. The Customs Service has ruled that a point within the territorial waters of the United States is a point embraced within the coastwise laws. The territorial waters of the United States consist of the territorial sea, defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and of the internal waters of the United States, landward of the territorial sea baseline, in cases where the baseline and the coastline differ. Headquarters Ruling Letter 111275, dated November 13, 1990. The Customs Service has determined that the transportation by a non-coastwise qualified vessel of automobiles between a port in the United States and a port in Canada does not constitute a coastwise transportation of merchandise when such automobiles are driven back to the United States by the owners. C.S.D. 84-53, 18 Cust. B. & Dec. 969, 972 (1984). This conclusion follows regardless of whether the automobiles are considered merchandise or baggage. Id. The rationale for this determination is that the coastwise merchandise statute prohibits the transportation of merchandise between points in the United States; no transportation occurs when the automobiles return under their own power. Id. The Customs Service has likewise permitted the use of a non-coastwise qualified vessel to transport a vessel from a coastwise point to a non-coastwise point from which the transported vessel proceeds under its own power to a second coastwise point. Headquarters Ruling Letter 110280, dated August 24, 1989. From these principles, we conclude that the coastwise merchandise law does not prohibit the carriage of private yachts or other vessels aboard a foreign-flag vessel from a port in the United States to a port in Mexico when the transported yachts return to the United States under their own power. Whereas the yachts are "transported" to Mexico from the United States, no "transportation" occurs for purposes of the coastwise merchandise law when the vessels return under their own power. Furthermore, the advertisement of this service would not affect our conclusion regarding the legality of the transportation. See C.S.D. 84-53 at 972. HOLDING: The coastwise merchandise law, 46 U.S.C.A. App. 883, does not prohibit the carriage of private yachts or other vessels aboard a foreign-flag vessel from a port in the United States to a port in Mexico when the transported yachts or other vessels return to the United States under their own power. Sincerely, B. James Fritz Chief Carrier Rulings Branch