Coastwise Trade; Charter Party Fishing; Vessel Less Than 5 Net Tons; 46 U.S.C. App. 289, 883

HQ 112540 January 26, 1993 VES-3-CO:R:IT:C 112540 GEV CATEGORY: Carriers Captain Del Dykes Post Office Box 5619 Kailua-Kona, Hawaii 96745 RE: Coastwise Trade; Charter Party Fishing; Vessel Less Than 5 Net Tons; 46 U.S.C. App. 289, 883 Dear Captain Dykes: This is in response to your letter dated November 23, 1992, regarding your proposed purchase of a vessel to be used in your charter party fishing business. Our ruling on this matter is set forth below. FACTS: You are considering purchasing a 27', undocumented, U.S.-built vessel of less than 5 net tons to be used in your charter party fishing business in Hawaii. Although the current owner is a U.S. citizen, it has been brought to your attention that this vessel was once owned for a six-day period by a Japanese foreign national. ISSUE: Whether a U.S.-built and owned vessel of less than 5 net tons that was once owned by a foreign national is prohibited from engaging in charter party fishing pursuant to 46 U.S.C. App. 289. LAW AND ANALYSIS: Title 46, United States Code Appendix, §883 (46 U.S.C. App. 883, the merchandise coastwise law often called the "Jones Act"), provides in part, that no merchandise shall be transported between points in the United States embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any vessel other 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 (i.e., a coastwise-qualified vessel). - 2 - In regard to the ownership requirement of §883 referenced above, the first proviso of the statute provides "[t]hat no vessel having at any time acquired the lawful right to engage in the coastwise trade, either by virtue of having been built in, or documented under the laws of the United States, and later sold foreign in whole or in part, or placed under foreign registry, shall hereafter acquire the right to engage in the coastwise trade." The proviso makes quite clear that the duration of foreign ownership is of no consequence. Title 46, United States Code Appendix, §289 (46 U.S.C. App. 289, the passenger coastwise law) as interpreted by the Customs Service in conjunction with §883, prohibits the transportation of passengers between points in the United States embraced within the coastwise laws, either directly or by way of a foreign port, in a non-coastwise-qualified vessel (see above). For purposes of section 289, "passenger" is defined as "... any person carried on a vessel who is not connected with the operation of such vessel, her navigation, ownership, or business." (19 CFR 4.50(b)) Pursuant to §67.11-1, Coast Guard Regulations (46 CFR 67.11-1), vessels which are of less than 5 net tons cannot be documented under the United States flag by the Coast Guard. However, such vessels are not precluded from engaging in the coastwise trade pursuant to §4.80(a)(2), Customs Regulations (19 CFR 4.80(a)(2)), provided they are otherwise considered to be coastwise-qualified (i.e., U.S.-built and owned). The coastwise laws generally apply to points in the territorial sea, defined as 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. In its administration of 46 U.S.C. App. 289, 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 coastwise point, is considered coastwise trade subject to coastwise laws. However, the transportation of passengers to the high seas (i.e., beyond U.S. territorial waters) and back to the point of embarkation, assuming the passengers do not go ashore, even temporarily, at another United States point, often called a "voyage to nowhere", is not considered coastwise trade (29 O.A.G. 318 (1912)). However, it should be noted that the carriage of fishing parties for hire, even if the vessel proceeds beyond territorial waters and returns to the point of the passenger's embarkation, is considered coastwise trade (T.D. 55193(2)).  - 3 - Accordingly, notwithstanding its tonnage, the proposed use of the vessel in question for charter party fishing would be considered a use in the coastwise trade. Since it was at one time foreign-owned, albeit for only a six-day period, such use would be prohibited pursuant to 46 U.S.C. App. 289. HOLDING: A U.S.-built and owned vessel of less than 5 net tons that was once owned by a foreign national is prohibited from engaging in charter party fishing pursuant to 46 U.S.C. App. 289. Acting Chief Carrier Rulings Branch