Coastwise; Passengers; Floating Hotel; Bareboat Charter; Pleasure Use; 46 U.S.C. 289; 19 C.F.R. 4.80.

HQ 112104 May 6, 1992 VES-3-02/3-04 CO:R:IT:C 112104 JBW CATEGORY: Carriers Mr. Larry W. Larison 566 N. E. Geraldine Drive Hillsboro, OR 97124 RE: Coastwise; Passengers; Floating Hotel; Bareboat Charter; Pleasure Use; 46 U.S.C. 289; 19 C.F.R. 4.80. Dear Mr. Larison: This letter is in response to your inquiry of February 5, 1992, in which you seek a ruling on the application of the coastwise laws to the use of a foreign-built, United States-flag vessel. FACTS: In your letter, you state that you intend to start a fishing charter service in southeastern Alaska. You state that you would like to use a Canadian-built, United States-flag vessel to provide lodging for your customers. You state that the lodging vessel will be anchored and will never be under way while the customers are on board the vessel. United States-flag vessels will take the customers on day-long fishing excursions from the lodging vessel. The customers will be transported from shore to the lodging vessel either by air-taxi or by the fishing boats. ISSUES: (1) Whether the use of an anchored, foreign-built lodging boat for overnight lodging of guests is prohibited by 46 U.S.C. App. 289. (2) Whether vessels must be coastwise-qualified to transport fishing parties from a lodging vessel anchored in United States territorial waters. 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). The territorial waters of the United States are defined to include 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. The Customs Service has determined that a vessel not qualified for the coastwise trade may be used as a hotel without violating the coastwise statute provided the vessel remains stationary by mooring or anchoring while the passengers are on board. Headquarters Ruling Letter 111423, dated January 9, 1991; Headquarters Ruling Letter 110542, dated November 21, 1989. Any movement by the vessel from its stationary location with passengers on board would constitute a violation of 46 U.S.C. App. 289. From these rules, we determine that the proposed use of the Canadian-built, United States-flag vessel would not constitute a violation of the coastwise laws provided that it remains anchored while the customers are on board. In your letter, you do not state whether or not the lodging vessel will be anchored in United States territorial waters. 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. Alternatively, 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. The transportation, therefore, of the customers on the day- long fishing trips from the lodging vessel anchored in territorial waters would be considered an engagement in coastwise trade, and the boats must be coastwise-qualified. Likewise, transportation of passengers from shore to the lodging vessel anchored in territorial waters would be considered an engagement in coastwise trade. This ruling does not address issues within the purview of other governmental agencies, e.g., the United States Coast Guard for issues relating to vessel documentation, safety, and inspection requirements and the Department of Transportation, regarding use of the air taxi. If you wish to contact the Coast Guard about these matters, you may communicate with your local Coast Guard office or Coast Guard Headquarters at the following address: Thomas Willis Chief, Vessel Documentation U.S. Coast Guard (GMVI-6/13) 2100 Second Street, S.W. (Room 1312) Washington, D.C. 20593-001 HOLDING: (1) The Customs Service has determined that a vessel not qualified for the coastwise trade, which is moored or anchored, may be used as a hotel without violating the coastwise statute, provided the vessel is not moved from its moored or anchored position with passengers aboard. (2) The transportation of customers on day-long fishing trips from a lodging vessel anchored in territorial waters would be considered an engagement in coastwise trade. Likewise, transportation of passengers from shore to the lodging vessel anchored in territorial waters would be considered an engagement in coastwise trade. Any vessel used for such transportation must be coastwise-qualified. Sincerely, B. James Fritz Chief Carrier Rulings Branch