Foreign-flag Yacht; Cruising License; 46 U.S.C. App. 104

HQ 112404 August 14, 1992 VES-4-01-CO:R:IT:C 112404 GEV CATEGORY: Carriers Sam Israeloff President Pearl Yacht Line 800 East Broward Boulevard, Suite 510 Ft. Lauderdale, Florida 33301 RE: Foreign-flag Yacht; Cruising License; 46 U.S.C. App. 104 Dear Mr. Israeloff: This is in response to your letter of July 27, 1992, requesting a ruling regarding the issuance of cruising licenses to two foreign-flag yachts while they are in the United States. Our ruling on this matter is set forth below. FACTS: Pearl Yacht Line is the managing agent for a fleet of French-flag yachts which operate in St. Martin, French West Indies. The yachts operate as mini-cruise vessels and take only eight, ten or twelve passengers on weekly cruises in the Caribbean. The yachts are registered as commercial vessels. The managing agent will be taking two of the aforementioned yachts (the PEARL SERENADE and PEARL CHORUS) to the United States in September for a two month East Coast tour to allow travel agents to inspect the yachts, and to show the yachts at boat shows in Newport, R.I., Stamford, Conn., Annapolis, Md., and Ft. Lauderdale, Fla. It is requested that these two vessels be allowed to obtain cruising licenses from Customs. This request is based on the following: (1) the vessels are designed and built as yachts; (2) the vessels will not be engaged in trade while in U.S. waters; (3) the vessels will not be carrying cargo; (4) the vessels will be entering U.S. waters to be shown only as examples of a cruise product that can be purchased elsewhere; and (5) once the yachts have entered U.S. waters it is contended that continuing inspections in each U.S. port will place an unnecessary cost upon both Customs and the yacht owner. - 2 - ISSUE: Whether a foreign-flag yacht, registered as a commercial vessel and operated for passenger cruises, may be issued a cruising license pursuant to 46 U.S.C. App. 104 when brought to the United States for the purpose of allowing travel agents to inspect it, and to be shown at various boat shows in the United States. LAW AND ANALYSIS: Section 4.94, Customs Regulations (19 CFR 4.94) concerns the issuance of cruising licenses which exempt foreign yachts from formal entry and clearance procedures (e.g., filing manifests, obtaining permits to proceed and exemptions from the payment of tonnage tax and entry and clearance fees) at United States ports. Section 4.94 was promulgated pursuant to title 46, United States Code Appendix, section 104 (46 U.S.C. App. 104) which authorizes the issuance of cruising licenses to pleasure vessels of countries which extend reciprocal privileges to United States vessels. France is on the list of countries appearing in section 4.94(b) whose yachts may be issued cruising licenses. It should be noted, however, that 46 U.S.C. App. 104 provides that on the basis of reciprocity, foreign yachts may be granted cruising licenses provided they are "...used and employed exclusively as pleasure vessels..." Although the two French- flag vessels under consideration may not be used in trade during the course of their East Coast tour, neither would they be used and employed exclusively as pleasure vessels. Accordingly, cruising licenses may not be issued to these two vessels. HOLDING: A foreign-flag yacht, registered as a commercial vessel and operated for passenger cruises, may not be issued a cruising license pursuant to 46 U.S.C. App. 104 when brought to the United States for the purpose of allowing travel agents to inspect it, and to be shown at various boat shows in the United States. Sincerely, B. James Fritz Chief