VES-4-02-RR:IT:EC 114198 CC
Matthew Ruane
P.O. Box 148
24 Union Street
St. Helier, Jersey JE4 8QL
England
RE: Cruising License; 19 CFR 4.94; "Sovereign Sea"
Dear Mr. Ruane:
This is in response to your facsimile transmission of
December 17, 1997, concerning your request that a vessel be
issued a cruising license.
FACTS:
You state that the British Registered Yacht "Sovereign Sea"
is a pleasure vessel currently en-route to the United States from
the Caribbean. You state that the yacht is operating under a
bareboat charter agreement with Charter Yachts (UK) Limited, and
currently has on board a skipper, crew, and two "charter guests."
You ask whether the yacht may obtain a cruising permit.
ISSUE:
Whether the subject yacht may be issued a cruising license.
LAW AND ANALYSIS:
46 U.S.C. App. 289, the passenger coastwise law, prohibits
the transportation of passengers between points embraced within
the coastwise laws of the United States, either directly or by
way of a foreign port, in a non-coastwise-qualified vessel (i.e.,
any vessel not built in and documented under the laws of the
United States and owned by persons who are citizens of the United
States). For purposes of 46 U.S.C. App. 289, the term
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).
Concerning bareboat charters, the Customs Service has
consistently held that when a vessel is chartered under a bona
fide bareboat charter, the bareboat charterer is treated as the
owner of the vessel for the period of the charter, and, because
the owners are not considered "passengers" for the purposes of
the coastwise laws, the charterer is not proscribed by the
coastwise laws from using the vessel during the charter for
pleasure purposes only. A vessel 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 vessel chartered under a
bareboat charter would also be subject to penalties if the
bareboat charterer used it in the coastwise trade (e.g., to
transport passengers (other than bona fide guests) between
coastwise points or entirely within territorial waters).
In our review of charter arrangements to determine whether
or not they are bareboat charters, we have generally held the
following:
The nature of a particular charter arrangement is
a question of fact to be determined from the
circumstances of each case. Under a bareboat charter
or demise charter the owner relinquishes complete
management and control of the vessel to the charterer.
On the other hand, if the owner retains a degree of
management and control, however slight, the charter is
a time or voyage charter, and the vessel is deemed to
be engaged in trade. The crux of the matter is whether
complete management and control have been wholly
surrendered by the owner to the charterer so that for
the period of the charter the charterer is in effect
the owner. Although a charter agreement on its face
may appear to be a bareboat or demise charter, the
manner in which its covenants are carried out and the
intention of the respective parties to relinquish or to
assume complete management and control are also factors
to be considered.
We have insufficient information before us to determine
whether bona fide bareboat charters exists in the factual
situation you have presented.
Concerning the entry and clearance of foreign registered
pleasure vessels, the applicable law and regulations require a
master of any foreign vessel arriving in a United States port,
whether from a foreign port or another United States port, to
make an immediate report of arrival (19 U.S.C. 1433, 19 CFR
4.2), and to make vessel entry (19 U.S.C. 1434, 19 CFR
4.3).
46 U.S.C. App. 104 authorizes the issuance of cruising
licenses to exempt pleasure vessels of foreign registry from
these formal entry and clearance procedures. That exemption,
however, is limited to pleasure vessels of countries that extend
reciprocal privileges to United States pleasure vessels.
Countries that have satisfied this reciprocity requirement are
listed in section 4.94(b) of the Customs Regulations (19 CFR
4.94(b)). Great Britain is listed in 19 CFR 4.94(b);
therefore, vessels of British registry may be issued a cruising
license. Please be aware that a cruising license does not exempt
the master or owner of a foreign vessel from the requirement that
a report of arrival be made immediately upon arrival at a port in
the United States. 19 U.S.C. 1433.
The regulations restrict the issuance of a cruising license
to a period of one year. 19 CFR
4.94(c). In addition, that regulation states that a cruising
license shall be granted subject to the condition that the vessel
shall not engage in trade or violate the laws of the United
States in any respect.
HOLDING:
If a bona fide bareboat charter exists and the guests on
board are bona fide guests and not passengers, then the subject
vessel may be issued a cruising license pursuant to 19 CFR
4.94.
Sincerely,
Jerry Laderberg
Chief
Entry Procedures and Carriers
Branch