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