VES-3-02/07-CO:R:IT:C 111087 BEW
Captain Tom Keegan
Project Hospital Ship Oceanic, Inc.
517 Mountain Avenue, Suite 142
Upland, California 91786
RE: Coastwise Trade; passengers; non-coastwise-qualified vessel;
medical/dental hospital ship; 46 U.S.C. App. 289; 46 U.S.C.
App. 883
Dear Captain Keegan:
This is in response to your letter dated May 29, 1990,
requesting a ruling concerning the application of the Jones Act
to a proposed use of a non-coastwise-qualified vessel to provide
free medical/dental assistance to the poverty-stricken and needy.
FACTS:
Your letter states that Project Hospital Ship Oceanic, Inc.,
is a non-profit public benefit corporation based in Southern
California with the sole purpose of providing free
medical/dental assistance to the poverty-stricken and needy.
You state that it is your intention to help the homeless in our
own U.S. port cities with free medical/dental care and to help
our neighbors to the south in Latin America.
You further state that in addition to providing
medical/dental assistance by volunteer health professionals, you
hope to provide continuing education and medical updating for
specialists in Third World countries. You state that this
project will provide experience and training in international
health care for those U.S. professionals who will from time to
time serve on the vessel.
ISSUE:
Are medical and dental personnel aboard a non-coastwise
qualified vessel which is used as an ocean-going hospital ship,
and other persons employed on the vessel in a non-traditional
capacity, considered to be "passengers" for purposes of the
coastwise passenger law, 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 27 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" is defined in section 1401(c) of title 19,
United States Code, to include goods, wares, and chattels of
every description, and includes fish, fish products, and fish
packaging materials that are assembled into packages containing
fish. Section 883 specifically provides that, for purposes of
its provisions, "merchandise" includes valueless material (Pub.L.
100-329; 102 Stat. 588). The transportation of valueless
material, whether or not it has commercial value, from a point or
place in the United States or point or place on the high seas
within the Exclusive Economic Zone (EEZ) as defined in the
Presidential Proclamation of March 10, 1983, to another point or
place in the United States or a point or place on the high seas
within that EEZ would also be prohibited under the provisions of
section 883.
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" (19 CFR 4.509b). Section 4.80a of the
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 the 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.
Given the foregoing definition of "passenger", the Customs
Service has ruled that medical, dental, and missionary personnel
of a vessel used in such activities and other persons employed on
the vessel in a non-traditional capacity are not considered
"passengers" for purposes of the coastwise laws, provided that
they are actually connected with the operation, navigation,
ownership, or business of the vessel (see 110541 PH).
Customs has also ruled that non-coastwise-qualified vessels
used as medical or dental clinics in ports of the United States
would not be engaged in the coastwise trade when they carry
supplies, equipment for their navigation, and personnel necessary
for the vessels' operation as clinics. Thus, the supplies and
equipment and the personnel necessary for the vessels' operation
as clinics and their navigation were not considered to be
merchandise or passengers, respectively, for purposes of the
coastwise laws, nor were such personnel considered "passengers"
as that term is defined in section 4.50(b), Customs Regulations.
We have ruled that such a vessel would have to be documented
otherwise than for pleasure (see 107024 PH).
We have consistently held that vessel equipment and stores
are not considered "merchandise" for purposes of section 883
when transported in the vessel by which they are used (see
Customs letter rulings 106910, dated July 9, 1984, and 108223,
dated March 13, 1986).
The sole use of a non-coastwise-qualified vessel as a bona
fide ocean going hospital ship does not constitute coastwise
trade within the meaning of 46 U.S.C. App. 289.
Accordingly, if the subject vessel is used only for such
medical and dental care and to transport either salaried or
volunteer medical or dental personnel who render medical and
dental services, it would not be required to have a license to
engage in the coastwise trade. It would, however, have to be
documented otherwise than for pleasure.
However, all persons being carried in the vessel must be
involved with the operation, navigation, or business of the
vessel. A person who is carried on board a vessel for
recreational purposes and who pays a fee for such carriage would
be considered a "passenger" and his carriage between places in
the United States or entirely within U.S. waters would be in
violation of the coastwise laws. Merely designating persons as
support personnel for the ship's business will not necessarily
exempt the vessel from the application of the coastwise laws,
e.g. in the past, Customs has held that the transportation of
goods/persons with their discharge at U.S. ports to solicit or to
obtain good will, or to move property from one U.S. point to
another; or to observe the ship's operation, are violative of
those laws.
Legitimate equipment and stores of the hospital ship for its
use, are not considered merchandise covered by section 883.
However, articles transported on the vessel between points
embraced within the coastwise laws which are not legitimate
stores and equipment of the vessel are subject to section 883.
HOLDING:
The sole use of a non-coastwise-qualified vessel as a bona
fide hospital ship does not constitute coastwise trade
within the meaning of 46 U.S.C. App. 289.
Medical and dental personnel of a vessel used as an ocean-
going hospital ship, and other persons employed on the
hospital vessel in a non-traditional capacity are not
considered "passengers" for purposes of the coastwise laws,
provided that they are actually connected with the
operation, navigation, ownership, or business of the vessel
as discussed above. Questions should be directed to this
office prior to commence of the voyage.
Legitimate equipment and ship stores for use of the vessel
and crew and said personnel may be transported from a
coastwise port to other coastwise points without violating
the coastwise laws.
Sincerely,
B. James Fritz
Chief
Carrier Rulings Branch