Coastwise Trade; Territorial Waters; Navigable Waters; Internal Waters.

HQ 112649 April 22, 1993 VES-3-06-CO:R:IT:C 112649 DEC CATEGORY: Carriers Mr. Jeff LaRoche Box 11017 Zephyr Cove, Nevada 89448 RE: Coastwise Trade; Territorial Waters; Navigable Waters; Internal Waters. Dear Mr. LaRoche: This letter is in response to your inquiry of March 29, 1993, in which you seek clarification of the permissible use of your vessel if it is issued a registry or coastwise endorsement. FACTS: In your correspondence, you indicated that your current efforts to obtain a coastwise endorsement from the United States Coast Guard have been frustrated due to insufficient documentation of the vessel's chain of title. Alternatively, you indicated that the Coast Guard has informed you of the possibility of issuing a registry for your vessel. Your objective is to use your vessel to provide sightseeing tours for six or fewer passengers on Lake Tahoe. Based on your investigation, you have discovered that Lake Tahoe is deemed to be a federally navigable waterway. ISSUE: Whether a non-coastwise qualified vessel that has been issued a registry may legally offer sightseeing tours carrying six or fewer passengers on a federally-deemed navigable internal waterway. LAW AND ANALYSIS: Generally, the coastwise laws prohibit the transportation of merchandise or passengers 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. The coastwise law applicable to the carriage of passengers is found in Title 46, United States Code, Appendix, section 289 (46 U.S.C. app. 289) and 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 and landed. 46 U.S.C. app. 289 (1992). The use of your yacht, absent a coastwise endorsement, is restricted by the prohibition contained in the passenger coastwise law. Notwithstanding this coastwise restriction, your yacht may be employed in the following uses. While the Customs Service has ruled, pursuant to 46 U.S.C. app. 289, 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 the coastwise laws, 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. Thus, a vessel with a Coast Guard issued registry could legally engage in such an operation. The Customs Service has held that the coastwise laws, as well as the other navigation laws administered by the Customs Service, are applicable to vessels engaged in activities in the territorial and navigable waters of the United States, its territories and possessions. Headquarters Ruling Letter 110994 (May 24, 1990); Headquarters Ruling Letter 108345 (May 13, 1986). 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, landward of the territorial sea baseline, in cases where the baseline and coastline differs. Our definition notwithstanding, reference to the term territorial waters frequently includes both territorial seas and internal waters. I. Brownlie, Principles of Public International Law 183, n.2, (3d ed. 1979). This concept is reflected in the term navigable waters, which, as defined in Coast Guard regulations, include the territorial sea of the United States, the internal waters of the United States subject to tidal influence, and certain other internal waters that are not subject to tidal influence. 33 C.F.R. 2.05-25 (1992). An alternative use of a non-coastwise qualified vessel is to execute a bareboat charter. Under a bona fide bareboat charter, the owner relinquishes complete control and management to the charterers for the charter period. The charterer is, therefore, treated as the owner of the yacht for the period of the charter and, because owners are not considered "passengers" for purposes of the coastwise laws, the charterer is not proscribed by the coastwise laws from using the yacht during the charter for pleasure purposes only, including the transportation of family and guests. If the owner retains any degree of management or control, however slight, the charter is a time or voyage charter. The decisive factor is whether complete control and management has been surrendered by the owner to the charterers so that for the charter period the charterers are, in effect, the owners pro hac vice (i.e. for this turn; for this one particular occasion). The situation you depicted in your letter (i.e sightseeing with you or your agent on board) appears to preclude this option. A yacht chartered under a charter arrangement other than a bareboat charter (e.g., a time or voyage charter) and used in coastwise transportation would be subject to penalties under the coastwise laws. A yacht chartered under a bareboat charter agreement could also be subject to these penalties if it were used for other than pleasure purposes or if the actions of these parties negated the term of the bareboat charter agreement (e.g., if "guests" paid for or contributed to the expense of the trip). The issue of the characterization of a charter, either as a bareboat or a time charter, is determined on a case by case basis, depending upon the circumstances of each charter. Before Customs can issue a binding letter ruling designating the proposed usage as a bareboat charter, it is necessary that you submit a copy of the charter agreement. You may obtain a ruling by contacting the U.S. Customs Service at the following address: Chief, Carrier Rulings Branch U.S. Customs Service 1301 Constitution Avenue, N.W. Washington, D.C. 20229 Attention: Franklin Court HOLDING: 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. Consequently, use of your vessel for sightseeing tours on Lake Tahoe, a coastwise area, with a registry or absent a coastwise endorsement would be a violation of Customs law. Sincerely, Acting Chief