VES-3-02/07-CO:R:IT:C 111396 BEW

Mr. Andrew K. Horton
Manager - Ships Operation
Regency Cruises
8880 N.W. 20th Street
Miami, Florida 33172

RE: Coastwise Trade: Passengers; Foreign-Flag Vessel: 46 U.S.C. App. 289: Distant Foreign Port: Nearby Foreign Port

Dear Mr. Horton:

This is in response to your letter dated November 8, 1990, requesting a ruling concerning the application of the Jones Act to a proposed three (3) and four (4) days cruise itinerary on a foreign flag vessel as set forth below.

FACTS:

You state both in your letter and in a telephone conversation with Ms. Whiting of my staff that the cruise itineraries are as follows:

1. The passengers will embark at the port of San Juan, Puerto Rico and travel to St. Barts (Barthelow), St. Kilts, St. Croix and disembark at Ponce, Puerto Rico.

2. The passengers will embark at the port of Ponce, Puerto Rico, and travel to St. Maarten, Virgin Gorda and disembark at San Juan, Puerto Rico. ISSUE:

Whether the transportation of passengers on a foreign-flag vessel as described above constitutes violations of 46 U.S.C. App. 289.

LAW AND ANALYSIS:

Generally, the coastwise laws (e.g., 46 U.S.C. App. 289 and 883, and 46 U.S.C. 12106 and 12110) 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 and documented under the laws of the United States, and owned by persons who are citizens of the United States.

The coastwise law pertaining to the transportation of merchandise, section 21 of the Act of June 5, 1920, as amended (41 Stat. 999: 46 U.S.C. App. 883, often called the Jones Act), provides that:

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, to be recovered from any consignor, seller, owner, importer, consignee, agent, or other person or persons so transporting or causing said merchandise to 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 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 ....

The passenger coastwise law, 46 U.S.C. App. 289, 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 penalty of $200 for each passenger so transported and landed.

"Merchandise," as used in section 883, includes any article, including valueless merchandise pursuant to the recent amendment of section 883 by the Act of June 7, 1988 (Public Law 100-329; 102 Stat. 588).

For purposes of the coastwise laws, a vessel "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." (Section 4.50(b), Customs Regulations.) Section 4.80a, Customs Regulations (19 CFR 4.80a) is interpretive of section 289.

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. 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.

In interpreting the coastwise laws, Customs has ruled that a point in United States territorial waters is considered a point embraced within the coastwise laws. The coastwise laws generally apply to points in the territorial sea, defined as the belt, three (3) 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.

If a passenger on a voyage to a distant foreign port embarks at a coastwise point and goes ashore temporarily to take sight seeing excursions at an intermediate U.S. port there is no violation provided that the passenger proceeds on the voyage to the distant foreign point. The relevancy of whether an intermediate foreign port is a "nearby foreign port" (as defined in 19 CFR 4.80a(a)(2)) or a "distant foreign port" (as defined in 19 CFR 4.80a(a)(3)) is crucial in determining whether or not a violation of section 289 has occurred.

The focus of section 289 is on the route of the vessel. Section 4.80a(b)(2) of the Customs Regulations (19 CFR 4.80a(b)(2) provides that, "if the passenger is on a voyage to one or more one or more coastwise ports and a nearby foreign port or ports (but at no other foreign port) and the passenger disembarks at a coastwise point other than the port of embarkation, there is a violation of the coastwise law" (46 U.S.C. App. 289). We have ruled that if a passenger is on a voyage to one or more coastwise ports and a nearby foreign port or ports (but at no other foreign port) and the passenger disembarks the vessel at a nearby foreign port or if the passengers embark and disembark at the same coastwise port, there is no violation of section 289.

In both fact patterns set forth above, the passengers embark at a coastwise point. In the first itinerary, the passengers embark at a coastwise port San Juan, Puerto Rico, on a voyage to several nearby foreign ports, returning to Ponce, Puerto Rico, a coastwise port where the passengers disembark from the vessel. In view of the fact that the passengers are disembarking at Ponce, (a coastwise port other than the port of embarkation) there is a violation of section 289 (see 19 CFR 4.80a(b)(22). The same analysis holds true for the second itinerary, the passengers embark at a coastwise point (Ponce, Puerto Rico) on a voyage to several nearby foreign ports, returning to San Juan (a coastwise port other than the port of embarkation, resulting in a violation of section 289. Accordingly, both of the proposed itineraries would be in violation of section 289.

HOLDING:

The transportation of passengers on foreign-flag vessels as described in both of the proposed itineraries constitutes a violation of 46 U.S.C. App. 289 as discussed above.

Sincerely,

B. James Fritz
Chief
Carrier Rulings Branch